# 1. PURPOSE OF AND NEED FOR THE AGENCY ACTION

## 1.1 INTRODUCTION 

This environmental impact statement (EIS) has been prepared by the U.S.
Department of Energy (DOE), in compliance with the National
Environmental Policy Act of 1969 (NEPA) as amended (42 USC 4321
et seq.), to evaluate the potential environmental impacts associated
with the construction and operation of facilities proposed by WMPI PTY,
LLC, for producing electricity, steam, and liquid fuels from coal waste.
WMPI's team members include Nexant, Inc., Shell Global Solutions B.V.,
Uhde GmbH, Sasol Technology Ltd., and Chevron Lummus Global LLC. The EIS
will be used by DOE in making a decision on whether or not to provide
cost-shared funding to design, construct, and demonstrate the proposed
facilities to be located adjacent to the existing Gilberton Power Plant
near Gilberton, Pennsylvania. The project has been selected by DOE under
the Clean Coal Power Initiative (CCPI) to demonstrate the integration of
coal waste gasification and Fischer-Tropsch (F-T) synthesis of liquid
hydrocarbon fuels at the commercial scale.

## 1.2 CLEAN COAL POWER INITIATIVE 

\"Clean coal technologies\" refer to advanced coal utilization
technologies that are environmentally cleaner, and in many cases, more
efficient and less costly than conventional coal-utilization processes.
These technologies contribute to a major objective of the national
energy strategy for reducing U.S. dependence on potentially unreliable
energy suppliers. Because the abundant domestic reserves of coal provide
one of the nation\'s most important resources for sustaining a secure
energy future, DOE has pursued a research and development (R&D) program
to increase the use of coal while improving environmental quality.
However, technologies displaying potential at the proof-of-concept scale
in an R&D program must be operated at a larger scale to demonstrate
readiness for commercialization. The CCPI Program moves promising
technologies from R&D to the commercial marketplace through
demonstration. Successful demonstrations also help position the United
States to supply advanced coal-fired combustion and pollution control
technologies to a rapidly expanding world market.

In Fiscal Year 2002, the U.S. Congress established the CCPI Program by
providing \$150 million in funding to accelerate commercial deployment
of advanced coal-based technologies for generating clean, reliable, and
affordable electricity in the United States. To implement the program,
Congress also provided \$150 million in funding in Fiscal Year 2003 and
directed DOE to include certain previously appropriated funds so that
DOE could offer over \$300 million in cost-shared funding for a first
round of commercial-scale demonstration projects. Congress indicated
that projects in the program should be industry projects assisted by the
government and not government-directed demonstrations. The projects are
expected to showcase technologies in which coal-fired power plants can
continue to generate low-cost electricity with improved efficiency and
in compliance with more stringent environmental standards expected in
the future.

In the CCPI Program, the project participant (i.e., the
non-federal-government participant or participants) must finance at
least 50% of the total cost of the project. The government assists the
project participant by sharing in the project's cost, as detailed in a
cooperative agreement negotiated between the participant and DOE. The
government also shares in the rewards of successful projects. After a
technology has been successfully demonstrated, the participant must
repay the government's financial contribution to ensure that taxpayers
benefit. Specifically, the government's investment is to be repaid
within a 20-year period following completion of the demonstration based,
for example, on revenue from the demonstration project itself and/or
royalties from sales and licensing of the technology in the United
States and abroad. At least 75% of the direct labor cost for the
project, including subcontractor labor, must be incurred in the United
States unless the participant can demonstrate that the U.S. economic
interest would be better served through a greater percentage of the work
being performed outside the United States. An example of the exception
would be if the expertise to develop a proposed technology exists only
outside the United States, but commercialization of the technology would
result in substantial benefits to the United States, such as improved
reliability of electricity, increased employment, and increased exports
of U.S.-manufactured products.

The project participant has primary responsibility for designing,
constructing, and demonstrating the project. During project execution,
the government oversees project activities, provides technical advice,
assesses progress by periodically reviewing project performance with the
participant, and participates in decision making at major project
junctures. In this manner, the government ensures that schedules are
maintained, costs are controlled, project objectives are met, and the
government's funds are repaid according to the terms in the cooperative
agreement.

The CCPI Program is open to any technology advancement related to
coal-based power generation that results in efficiency, environmental,
and economic improvement compared to currently available
state-of-the-art alternatives. The program is also open to technologies
capable of producing any combination of heat, fuels, chemicals, or other
useful byproducts in conjunction with power generation. Coal for the
demonstration projects is required to provide at least 75% of the fuel
energy input to the process. This provision ensures that multiple-fuel
concepts such as co‑firing are not excluded, but that a focus is
maintained on coal-based power generation. Additionally, projects must
show the potential for rapid market penetration upon successful
demonstration of the technology or concept.

DOE issued the first-round CCPI solicitation in March 2002 and received
36 proposals in August 2002. Eight projects (including the proposed
project) were selected in January 2003. Evaluation criteria used in the
selection process included technical merit of the proposed technology,
potential for a successful demonstration of the technology, and
potential for the technology to be commercialized. DOE considered the
participant's funding and financial proposal; DOE budget constraints;
environmental, health, and safety implications; and program policy
factors, such as selecting projects that represent a diversity of
technologies, utilize a broad range of U.S. coals, and represent a broad
geographical cross-section of the United States.

## 1.3 PROPOSED ACTION 

The proposed action is for DOE to provide cost-shared funding for the
design, construction, and demonstration of proposed facilities near
Gilberton, Pennsylvania, for producing electricity, steam, and liquid
fuels from anthracite coal waste by integrating technologies for coal
gasification and Fischer-Tropsch (F-T) synthesis of liquid hydrocarbon
fuels. The commercial-scale demonstration would allow industries and
utilities to make decisions regarding commercialization of the
integrated technologies.

DOE\'s share of the funding for the 3‑year demonstration project is
expected to be approximately \$100 million (about 16% of the total cost
of approximately \$612 million), which would be subject to a repayment
agreement between WMPI PTY, LLC and DOE. Private sector financing would
provide about \$465 million, while the remaining \$47 million would be
generated through transferable tax credits established in the "Coal
Waste Removal and Ultraclean Fuels Tax Credit" that was signed into
Pennsylvania law in 1999. DOE may also provide a loan guarantee,
pursuant to the Energy Policy Act of 2005, to guarantee a portion of the
private financing for the project. If a loan guarantee is provided,
DOE's contribution of approximately \$100 million to the project would
likely be reduced.

WMPI PTY, LLC and the other project team members (Section 1.1) conceived
and proposed the project in response to the DOE solicitation. Because
DOE's role would be limited to providing cost-shared funding for the
proposed project, DOE's decision is whether or not to fund the project.
DOE's limited involvement constrains the range of alternatives
considered in the EIS (Section 2), and DOE will make its decision based
on those alternatives.

## 1.4 PURPOSE AND NEED

The purpose of the proposed project is to generate technical,
environmental, and financial data from the design, construction, and
operation of the integrated technologies at a sufficiently large scale
to allow industries and utilities to assess the project's potential for
commercial application. The project would demonstrate that coal waste
can be used to produce steam, electricity, and liquid hydrocarbon fuels
that may ultimately help to reduce U.S. dependence on imported oil.
While the individual technologies have been independently operated, this
project would demonstrate the integration of the technologies. A
successful demonstration would indicate that the performance and cost
targets for the integrated technologies are achievable at the commercial
scale.

The need for the proposed project is twofold. First, DOE's need is to
address the Congressional mandate to demonstrate advanced coal-based
technologies that can generate clean, reliable, and affordable
electricity in the United States (Section 1.2). Second, WMPI's need is
to provide steam, electricity, and liquid hydrocarbon fuels that would
promote economic development in the region, while consuming coal waste
that has degraded the quality of regional watersheds. Although DOE
recognizes that the need for the project may be justified on either
basis, its reason for selecting the proposed project is to support the
demonstration of innovative, coal-based technology, not for regional
economic development or reduction in legacy waste.

The cost-shared contribution by DOE for the demonstration would help
reduce the risk to the WMPI team in developing the integrated
technologies to the level of maturity needed for decisions on
commercialization.

## 1.4.1 DOE's Need 

Since the early 1970s, DOE and its predecessor agencies have pursued a
broadly based coal R&D program to ensure available and affordable energy
supplies while improving environmental quality. This R&D program
includes long-term activities supporting the development of innovative,
unproven concepts for a wide variety of coal technologies through the
proof-of-concept stage. However, the availability of a viable technology
at the proof-of-concept stage is not sufficient to ensure its continued
development and subsequent commercialization. Before any technology can
be seriously considered for commercialization, it must be demonstrated
at a sufficiently large scale. Utilities and industries are generally
reluctant to demonstrate technologies at an unproven scale in the
absence of strong economic incentives or firm legal requirements.
Implementation of the CCPI Program, with cost-shared funding from the
federal government, has been endorsed by Congress and industry as a
mechanism to accelerate the commercialization of innovative technologies
to meet near-term environmental goals in the power industry and to
reduce risk to an acceptable level through cost-shared funding. The
proposed project was selected for demonstration in the CCPI Program as
one of the projects that would best further these goals.

Nearly 50% of current electrical generating capacity in the United
States is over 30 years old. Thus, much replacement or refurbishment of
aging facilities is anticipated over the next several decades to
continue to meet current electricity demand, and new capacity will be
needed to keep pace with rising demand for electricity. Currently, about
55% of U.S. electricity requirements are met by power plants fired with
pulverized coal. As the most abundant domestic energy source, coal
continues to represent an attractive option for future power plants,
particularly through advanced technologies that have the potential to
dramatically improve environmental performance and efficiency. The
abundance of U.S. coal reserves makes coal one of the nation's most
important strategic resources for minimizing dependence on imported oil
and sustaining a secure energy future. Based on existing mining
technology, recoverable reserves of coal in the United States could
supply coal consumption at current levels for nearly 300 years. However,
advanced coal utilization technologies must be successfully demonstrated
if coal is to provide an environmentally acceptable and economically
competitive source of energy in the 21st century.

DOE's need is to demonstrate that advanced coal-based technologies, such
as the integrated technologies offered by the proposed project as part
of the CCPI Program, can generate clean, reliable, and affordable
electricity. The ability to show prospective domestic and overseas
customers an operating facility rather than a conceptual or engineering
prototype would provide a persuasive inducement to replicate the
technology. Data obtained on operational characteristics would allow
prospective customers to assess the potential of the integrated
technologies for commercial application. Successful demonstration would
enhance prospects of exporting the integrated technologies to other
nations and could provide the United States with an important advantage
in the global competition for new markets. DOE would work closely with
the project participants to develop plans for technology transfer and
commercialization.

## 1.4.2 WMPI's Need 

The proposed facilities would meet WMPI's need to provide steam,
electricity, and liquid hydrocarbon fuels that would promote economic
development in the region, while consuming coal waste that has degraded
the quality of regional watersheds. The level of unemployment in
Schuylkill County was 7% in 2001, well above the Pennsylvania statewide
average of 4.7%. In addition, the median household income in the county
was only 81.5% of the statewide level in 2001. The project's
construction and operational jobs would improve the regional economy, as
would the indirect jobs created by other industries that could benefit
from the steam and electricity supplied by the proposed facilities.

About 1 billion tons of coal waste exist in Pennsylvania. The proposed
facilities would consume anthracite coal waste that for decades has
polluted regional watersheds. The project would reduce piles of coal
waste from the landscape, increasing the scenic beauty of the land and
eliminating a major source of metals, acidic discharge, and
sedimentation to the area's rivers and watersheds. Some of the solid
residues produced by the proposed facilities would be returned to coal
waste sites, aiding in the restoration of lands adversely impacted by
past mining.

The WMPI team members, as well as DOE, are interested in demonstrating
the commercial viability of the integrated technologies. The potential
exists for application of the technologies across the United States to
accommodate a wide range of feedstocks, environmental conditions, and
market needs. Successful demonstration, which is necessary prior to
widespread market penetration, would provide an appreciable advantage in
the global competition for new markets. The cost-shared funding from the
federal government would reduce the project's risk to an acceptable
level for the WMPI team members.

## 1.5 NATIONAL ENVIRONMENTAL POLICY ACT STRATEGY 

This EIS has been prepared in compliance with NEPA for use by DOE
decision makers in determining whether or not to provide cost-shared
funding for the design, construction, and demonstration of the proposed
project under the CCPI Program. DOE's policy is to comply fully with the
letter and spirit of NEPA, which ensures that early consideration is
given to environmental impacts in federal planning and decision making.
The EIS provides a means for the public to participate in the decision
making process. Actions taken by DOE with regard to any proposal,
including project selection or award, are not considered final decisions
prior to completion of the NEPA process.

An overall strategy for compliance with NEPA has been developed for the
CCPI Program, consistent with the Council on Environmental Quality (CEQ)
NEPA regulations (40 CFR Parts 1500-1508) and DOE regulations for
compliance with NEPA (10 CFR Part 1021). The DOE strategy has two
principal elements. The first element involved proposers completing a
DOE environmental questionnaire, along with submission of a technical
proposal to the CCPI solicitation. The responses to the questionnaire
contained discussions of the site-specific environmental, health,
safety, and socioeconomic issues associated with each project.

The second element consists of preparing site-specific NEPA documents
for each selected project. For this project, DOE has determined that
providing cost-shared funding for the proposed project would constitute
a major federal action that may significantly affect the quality of the
human environment. Therefore, DOE has prepared this EIS to assess the
potential impacts on the human and natural environment of the proposed
action and reasonable alternatives. The EIS has been prepared in
accordance with Section 102(2)(C) of NEPA, as implemented under
regulations promulgated by the CEQ (40 CFR Parts 1500-1508) and as
provided in DOE regulations for compliance with NEPA (10 CFR Part 1021).
The EIS is organized according to CEQ recommendations
(40 CFR Part 1502.10).

A Notice of Intent to prepare the EIS and hold a public scoping meeting
was published by DOE in the *Federal Register* on April 10, 2003
(68 *FR* 17608--11). The Notice of Intent invited comments and
suggestions on the proposed scope of the EIS, including environmental
issues and alternatives, and invited participation in the NEPA process.
An advertisement publicizing the public scoping meeting was printed in
the *Pottsville Republican & Evening Herald* newspaper in Pottsville,
Pennsylvania, on April 17, 18, and 19, and May 1, 2, and 3, 2003. A
flyer announcing the public scoping meeting was posted at the Frackville
Free Public Library in Frackville, Pennsylvania. On April 22, 2003, the
Notice of Intent and the newspaper notice were sent to 12 stakeholders
including federal, state, and local agencies for their information and
comments on the proposed project.

Publication of the Notice of Intent initiated the EIS process with a
public scoping period for soliciting public input to ensure that
(1) significant issues are identified early and appropriately addressed,
(2) issues of little significance do not consume time and effort,
(3) the EIS is thorough and balanced, and (4) delays occasioned by an
inadequate EIS are avoided (40 CFR Part 1501.7). DOE held the scoping
meeting in Pottsville, Pennsylvania, on May 5, 2003. The public was
encouraged to provide oral comments at the scoping meeting and to submit
additional comments in writing to DOE by the close of the EIS scoping
period on May 19, 2003.

DOE received 15 oral responses at the public scoping meeting and
90 responses by comment card, mail, e-mail, fax, and telephone from
members of the public, interested groups, and federal, state, and local
officials. The responses assisted in establishing additional issues to
be analyzed in the EIS and in determining the level of analysis required
for each of the issues. Issues raised during public scoping are
identified in Section 1.6.

## 1.6 SCOPE OF THE ENVIRONMENTAL IMPACT STATEMENT 

This section summarizes the issues and alternatives identified and
considered during the preparation of this EIS for the proposed project.
The following issues were initially identified as requiring analysis and
assessment in the EIS and were included in the Notice of Intent:

1\. Atmospheric Resources: potential air quality impacts resulting from
emissions during construction and operation of the proposed facilities,
including odor impacts;

2\. Water Usage: potential effects on surface and groundwater resources,
including impacts from withdrawals of groundwater and mine pool water
from the Susquehanna River and Delaware River watersheds;

3\. Water Quality: potential impacts resulting from wastewater treatment
and discharge, from water usage, and from reclaiming abandoned
anthracite coal waste (culm);

4\. Infrastructure and Land Use, including Potential Environmental and
Socioeconomic Effects Resulting from: plant construction; delivery of
feed materials; recovery of coal waste and mine pool water; steam and
heat distribution; electric power generation and transmission; product
hydrocarbon liquids transportation, distribution, and use; measures to
prevent soil erosion and degradation; and site restoration;

5\. Solid Waste: pollution prevention and waste management, including
ash, slag, and wastewater treatment facility sludge;

6\. Noise: potential impacts resulting from construction and operation
of the proposed plant and from transportation of feed materials and
plant products;

7\. Construction: potential impacts associated with traffic patterns,
construction-related emissions, and involvement of floodplains and
wetlands;

8\. Safety and health impacts, including construction-related safety,
process safety, and management of chemicals and catalysts;

9\. Ecological: potential onsite and offsite impacts to vegetation,
terrestrial wildlife, aquatic wildlife, threatened and endangered
species, and ecologically sensitive habitats;

10\. Community impacts, including potential impacts from local traffic
patterns, socioeconomic impacts on public services and infrastructure,
and environmental justice;

11\. Visual impacts associated with plant structures and plant
operations;

12\. Reclamation Impacts: potential impacts resulting from recovery of
coal waste from disposal and reclamation sites;

13\. Cumulative effects that result from the incremental impacts of the
proposed project when added to the other past, present, and reasonably
foreseeable future projects, including the existing 80‑MW Gilberton
Power Plant;

14\. Connected actions, including processing of gasifier slag into
aggregate for use in construction applications, use of heat and energy
from the plant, and both processing and use of liquid hydrocarbon
products;

15\. Compliance with regulatory requirements and environmental
permitting; and

16\. Environmental monitoring.

During the scoping process (Section 1.5), local residents expressed
concerns about potential effects that could result from the proposed
project. The issues of most concern were: (1) potential impact to air
quality from emissions, including hazardous air pollutants, from the
proposed facilities; (2) potential effect on surface and groundwater
resources by the withdrawal and discharge of water associated with
process use; and (3) potential impact of solid waste generated by the
proposed facilities. Most of these concerns related to effects on human
health, such as potential deterioration in respiratory function and
potential increases in occurrences of cancer. Other concerns that were
expressed during the scoping process were the potential for odorous
emissions; the possibility of emissions reducing atmospheric visibility
and creating safety issues such as fog affecting Interstate 81; airborne
emissions resulting from vehicles traveling over red anti-skid material
(bottom ash from the Gilberton Power Plant) applied to roads; increased
traffic and emissions from trucks; potential noise impacts; potential
effects on ecological resources including endangered species; potential
depreciation of property values; potential effects on historic
properties; effect of the proposed project on local taxes; potential
impacts to inmates at two nearby state prisons; environmental justice;
regulatory requirements; the possibility of accidents and spills;
cumulative impacts from the proposed facilities in conjunction with
existing cogeneration facilities; global warming impacts; the use of
alternative feedstocks by the proposed facilities; alternative sites;
alternative technologies; and comparisons of technologies and impacts
with those of the operating coal-to-oil facilities in South Africa.

DOE used public input obtained during the scoping process to add to the
list of issues requiring analysis and assessment and to provide
additional focus to analysis of initially identified issues. Table 1.6.1
lists the composite set of issues identified for consideration in the
EIS (i.e., issues identified in the Notice of Intent, and additional
issues identified during public scoping that expanded the scope of the
assessment). Issues are analyzed and discussed in this EIS in accordance
with their level of importance. The most detailed analyses focus on
issues associated with air quality, surface water, groundwater, and
solid waste impacts.

+---------------------+--------------------+---------------------------+
| **Table 1.6.1.      |                    |                           |
| Issues identified   |                    |                           |
| for consideration   |                    |                           |
| in the              |                    |                           |
| environmental       |                    |                           |
| impact statement**  |                    |                           |
+---------------------+--------------------+---------------------------+
| Issues identified   |                    |                           |
| in the Notice of    |                    |                           |
| Intent              |                    |                           |
+---------------------+--------------------+---------------------------+
| Atmospheric         | Construction       | Reclamation impacts       |
| resources           |                    |                           |
|                     | Safety and health  | Cumulative effects        |
| Water usage         | impacts            |                           |
|                     |                    | Connected actions         |
| Water quality       | Ecological impacts |                           |
|                     |                    | Compliance                |
| Infrastructure and  | Community impacts  |                           |
| land use            |                    | Environmental monitoring  |
|                     | Visual impacts     |                           |
| Solid waste         |                    |                           |
|                     |                    |                           |
| Noise               |                    |                           |
+---------------------+--------------------+---------------------------+
| Additional issues   |                    |                           |
| identified during   |                    |                           |
| public scoping that |                    |                           |
| expanded the scope  |                    |                           |
| of the assessment   |                    |                           |
+---------------------+--------------------+---------------------------+
| Property values     | Inmates at prisons | Alternative feedstocks    |
|                     |                    |                           |
| Historic properties | Accidents and      | Technology and impact     |
|                     | spills             | comparisons               |
+---------------------+--------------------+---------------------------+

CEQ requires an EIS to include a discussion of alternatives to the
proposed action. The purpose of and need for the proposed action
determine the range of reasonable alternatives. Alternatives to the
proposed project that were considered initially as candidates for
analysis in this EIS (i.e., approaches that are practical or feasible
both technically and economically) are identified and briefly described
in the following bullets:

• ***No-action alternative***. DOE would not provide cost-shared funding
for the proposed facilities near Gilberton, Pennsylvania, to produce
electricity, steam, and liquid fuels from coal waste by integrating coal
gasification and F-T synthesis of liquid hydrocarbon fuels.
Consequently, it is reasonably foreseeable that the proposed facilities
for demonstrating the technologies would not be built.

• ***Alternative site***. The proposed project would be demonstrated at
another site. However, site selection was governed primarily by benefits
that could be realized by the companies participating in the project.
The site selected for the project had to provide the maximum benefit to
the companies by closely meeting the project's technical needs and
integrating with existing infrastructure. The WMPI team members selected
the site adjacent to the existing Gilberton Power Plant in part because
the cost associated with construction of the proposed facilities at an
undeveloped site would be much higher and the environmental impacts
likely would be much greater than adjacent to the existing plant. Site
selection was also based on the proximity of feed materials (i.e.,
anthracite coal waste) to the site. No additional sites were seriously
considered by the WMPI team members during their site selection process.

• ***Alternative size***. The proposed project would be demonstrated
using a smaller-sized plant. This alternative would not meet DOE's
purpose (Section 1.4). A smaller-sized plant would not be sufficiently
large to demonstrate the commercial viability of the integrated
technologies.

• ***Alternative technologies***. DOE would demonstrate other
technologies. This alternative would not demonstrate the production of
electricity, steam, and liquid fuels from coal waste by integrating coal
gasification and F-T synthesis of liquid hydrocarbon fuels and may not
meet DOE's need to demonstrate advanced coal utilization technologies
with potential to address domestic energy needs (Section 1.4.1).

In addition to the proposed project, the no-action alternative was
determined to require consideration in the EIS. Three alternatives were
dismissed from further consideration: alternative site, alternative
size, and alternative technologies. Alternatives and the basis for their
consideration or dismissal are discussed in detail in Section 2.

## 1.7 APPROACHES AND ASSUMPTIONS 

The following approaches are used and assumptions are made in this EIS:

• Except as specifically noted in the text, potential environmental
effects of the proposed facilities are based on the operating
characteristics discussed in Section 2.

• One major exception to the above is that air quality impacts predicted
by air dispersion modeling are based on the conservative assumption that
the proposed facilities operate at a 100% capacity factor rather than
the expected 85% capacity factor.

• Potential environmental impacts are assessed for the surrounding
environment (beyond the boundary of the facilities), as described in
Section 3.

• Potential environmental impacts resulting from construction and
operation of the proposed facilities during the demonstration period are
assessed in Section 4. Section 5 addresses potential impacts of
commercial operation following completion of the demonstration.