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###### Department of Energy

###### Western Area Power Administration

# AGENCY:

Western Area Power Administration, DOE.

# ACTION:

Record of Decision.

# SUMMARY:

The Western Area Power Administration (Western) received an application to interconnect the Big Stone II Power Plant and Transmission Project (Project) into Western's transmission system. The Project entails the construction of a new 600-megawatt (MW) coal-fired electric power generating station adjacent to the existing Big Stone plant in Grant County, South Dakota. The Project also includes approximately 140 miles of new or upgraded transmission lines. On June 26, 2009, Western published a notice of the availability of the Final Environmental Impact Statement (EIS) on the Project (74 FR 30559). Western considered the environmental impacts of the Project and has decided to allow the request to interconnect at Western's Morris and Granite Falls substations located in Minnesota.

# FOR FURTHER INFORMATION CONTACT:

                        For further information, please contact Mr. Matt Blevins, NEPA Document Manager, Big Stone II EIS, Western Area Power Administration, A7400, P.O. Box 281213, Lakewood, CO 80228, telephone (800) 336-7288, fax (720) 962-7263, or e-mail                         *BigStoneEIS@wapa.gov*. For general information on DOE's NEPA review process, please contact Carol M. Borgstrom, Director, Office of NEPA Policy and Compliance, GC-20, U.S. Department of Energy, Washington, DC 20585, telephone (202) 586-4600 or (800) 472-2756.                    

# SUPPLEMENTARY INFORMATION:

                    Western is a Federal agency under the U.S. Department of Energy (DOE) that markets and transmits wholesale electrical power through an integrated 17,000-circuit mile, high-voltage transmission system across 15 western states. The Project is located within Western's Upper Great Plains Region, which operates and maintains nearly                           ( print page 42668)                        100 substations and nearly 7,800 miles of Federal transmission lines in Minnesota, South Dakota, North Dakota, Montana, Nebraska, and Iowa. Western's Open Access Transmission Service Tariff (Tariff) provides open access to its transmission system. Western provides these services through an interconnection if there is available capacity on the transmission system, while protecting the transmission system reliability, and considering the applicant's objectives. Western's Federal involvement is related to the determination of whether to approve the interconnection request for the Project. Western's Proposed Action is to interconnect the Project to Western's transmission system.                

## Applicant's Objectives and Project

The Project proposed by Otter Tail Corporation (dba Otter Tail Power Company), Central Minnesota Municipal Power Agency, Heartland Consumers Power District, Montana-Dakota Utilities Company, and Western Minnesota Municipal Power Agency (dba Missouri River Energy Services), collectively referred to as the Co-owners, is a new 600-MW (net) coal-fired electric generating station and associated transmission lines and substation upgrades.

The Co-owners objectives include a combination of the following:
    - Satisfy load growth;
    - Replace current capacity and energy contracts that expire;
    - Reduce reliance on energy production from existing oil- and gas-fired generating capacity and the associated higher costs and volatility of fuel costs;
    - Reduce reliance on and exposure to power market prices;
    - Address the limited deliverability of future capacity and energy purchases due to transmission constraints.

The Co-owners' proposed Project includes constructing and operating the Big Stone II coal-fired power plant and groundwater system, transmission additions and modifications, and substation additions and modifications. The Project would include a pulverized coal-fired, super-critical boiler using low-sulfur, Powder River Basin coal. The boiler would provide steam to a single steam turbine generator that would convert the mechanical energy of the steam turbine to electrical energy. A water-cooled steam condenser would accept the steam exhausted from the turbine and a circulating water system would supply cooling water from a wet cooling tower to the water-cooled steam condenser to dissipate the energy in the condensing steam. The wet cooling system would use surface water as the primary water supply and groundwater as the back-up water supply. The Project also includes installation of groundwater wells and a pipeline system to convey groundwater to the proposed plant site and other facilities associated with the use of groundwater for the Project.

## Alternatives Considered

                    Western, in its preparation of the EIS, evaluated several categories of alternatives over which Western has no decision-making authority.[1]                                          Western's Federal involvement is related to the determination of whether to approve the Co-Owners' interconnection request for the Project. The Proposed Action was to allow the interconnection request and the resulting Project. Under the No Action alternative, Western would deny the interconnection request. Western analyzed three likely scenarios under the No Action alternative: (1) The Co-owners would not proceed with the proposed Project, and the Co-owners would not secure alternate baseload generation and would not seek alternate transmission configurations, referred to as the                     *No-Build Alternative*                     in the Final EIS; (2) the Co-owners would not proceed with the proposed Project, and the Co-owners would likely fulfill their generation and transmission needs individually or cooperatively through alternative arrangements by seeking generation capacity and energy from other sources, if available, referred to as                     *Sub-Alternative 1*                     in the Final EIS; and (3) the Co-owners would likely proceed with the construction and operation of the proposed Big Stone II Power Plant in order to fulfill their objectives (as discussed above), but instead of obtaining transmission interconnections to the Federal transmission system, the Co-owners would be required to seek an alternative transmission configuration that would provide firm transmission service on the Midwest Independent System Operator (MISO) system or to purchase non-firm transmission rights from MISO over the MISO system, referred to as                    *Sub-Alternative 2*                     in the Final EIS.                

Although the No Action alternative would eliminate Western's role in the Co-owners' proposed Project, the environmental impacts would likely still occur, as described under the sub-alternatives to the No Action alternative (described above), since the Co-owners would likely proceed with the construction and operation of the proposed power plant or would obtain the necessary generation capacity from another facility with similar environmental impacts as the proposed Project.

                    As required by 40 CFR 1505.2(b), Western has identified the                     *No-Build Alternative*                     as its environmentally preferred alternative. Under this alternative, Western would deny the interconnection request and not modify its transmission system to interconnect the proposed Project with its transmission system. Under this alternative, there would be no modifications to Western's transmission system, and thus no new environmental impacts. The Co-owners purpose and need would not be met.                

In addition to analyzing the decision contemplated by Western, the Final EIS discussed several additional alternatives considered by the Co-owners, including two transmission alternatives and two cooling technology alternatives.

Several additional alternatives were considered but dismissed from detailed analysis and include the following: power generation technology alternatives, cooling technology alternatives, power plant location alternatives, transmission line technology alternatives, and transmission line corridor alternatives.

## Mitigation Measures

Through public participation in the NEPA process as well as the concurrent permitting processes the Co-owners have undergone with other agencies, the Co-owners have altered the design of the proposed Project to minimize harm to the environment. For example, the Co-owners modified the original proposed Project to include a back-up water supply system using groundwater to avoid wetlands. Additionally, as part of the settlement agreement with the Minnesota Department of Commerce, the Co-owners are required to offset 100 percent of the carbon dioxide emissions attributable to the proposed Project's Minnesota consumers for a four-year period from the start of commercial operation. The Co-owners have also agreed to install mercury control technology that is most likely to remove at least 90% of mercury emitted from both the existing and proposed plants.

                    The Co-owners have committed to the mitigation measures as described in Tables 2.2-7, 2.2-8 and 2.6-2 of the Final EIS. The measures were designed to avoid and minimize harm to the environment from the proposed Project. In addition, Western will implement mitigation measures applicable to any                           ( print page 42669)                        system modifications performed at Western facilities for proposed Federal action as described in Table 2.2-9 in the Final EIS.                

With the above mentioned project modifications and agreements and implementation of the mitigation measures, all practicable means to avoid or minimize environmental harm from the proposed Project and Western's Federal Proposed Action have been adopted.

## Comments on Final EIS

Western received comments from the U.S. Environmental Protection Agency (EPA) in a letter dated July 27, 2009, and from the Minnesota Department of Natural Resources (MnDNR) in a letter dated July 29, 2009. Based on a review of these comments, Western has determined that it is clear the comments do not present any significant new circumstances or information relevant to environmental concerns and bearing on the proposed Project or its impacts, and thus a Supplemental EIS is not required. The basis for this determination is summarized below.

EPA's letter noted several improvements to the project including the avoidance of wetlands, installation of mercury control equipment, and a partial offset of carbon dioxide emissions.

EPA's letter noted an apparent discrepancy in the Final EIS regarding mercury emissions at the proposed plant. The EPA correctly noted that the mercury emission limit in the Title V Air Quality Permit is 189 pounds (lbs) per year for the combined existing and proposed plants. The EPA also noted a mercury emission goal of 81.5 lbs per year for the combined plants. Western does not view this as a discrepancy, since the 81.5 lbs represents the actual estimated annual emission level that may be achieved after implementation of pollution controls, which is less than the annual emission limit of 189 lbs allowed by the Title V permit. The estimated annual emission of 81.5 lbs is based on the voluntary Settlement Agreement between the Co-owners and the Minnesota Department of Commerce, in which the Co-owners agreed to install control equipment for the existing plant and the proposed plant that is expected to remove at least 90 percent of the mercury emitted from the existing plant and proposed Big Stone II plant combined. Based upon the expected content of mercury for Powder River Basin coal (containing about 0.0715 parts per million by weight mercury, the approximate value expected for the coal used by the proposed Project), a 90 percent removal would result in annual emissions of approximately 81.5 lbs of mercury. Additionally, the 81.5 lb estimate is less than the estimated 189.6 lb of mercury emissions reported from the existing Big Stone plant in 2004. Therefore, if the proposed Big Stone II plant is constructed (and after implementation of emissions controls), mercury emissions from both plants would be less than the emissions from the existing plant, a reduction of approximately 57 percent when compared to 2004 values. As part of the Settlement Agreement, the Co-owners agreed to act in good faith to install control equipment as expeditiously as possible. However, in accordance with the Settlement Agreement, the Co-owners have four years after the commercial operation date of Big Stone II to achieve compliance with this requirement.

                    EPA's letter notes that the U.S. Global Change Research Program (USGCRP) published the June 2009 report, “                    *Global Climate Change Impacts in the United States.*                    ” Drawing from a large body of scientific information and produced by a consortium of experts from government science agencies, universities, and research institutes, the report summarizes the science of climate change and the impacts of climate change on the United States, now and in the future. Concluding that global warming is unequivocal, the report states that the “global warming observed over the past 50 years is due primarily to human-induced emissions of heat-trapping gases,” primarily from the burning of fossil fuels. The report reviews the well-known global climate change topics and relates those same issues to the impacts forecasted to affect the U.S., particularly relating to predicted temperature and precipitation changes, extreme weather events, and sea level changes. Considerable discussion is devoted to impacts on water resources, agriculture, and ecosystems, as well as changes in the way the U.S. will generate and use energy (including future development of renewable energy resources), and potential impacts to air, rail, shipping, and road transportation. The report also discusses climate-related health impacts and the ways that climate change will affect society through impacts on the necessities and comforts of life. Many of these issues are discussed in greater detail in a consideration of climate change impacts to each of the regional geographic areas of the U.S. Predictions of climate change and future conditions come from analyses of computer models that simulate climate scenarios to which USGCRP relates, “there is always some level of uncertainty.” Nevertheless, USGCRP cites, “the science of making skillful projections at these scales has progressed considerably, allowing useful information to be drawn from regional climate studies.” Climate modeling in the report indicates there will be adverse impacts due to climate change affecting the three-state region (                    *i.e.*, South Dakota, North Dakota, and Minnesota) around the proposed Big Stone II plant. Examples of these effects, some positive and some negative, include increases in precipitation, including more frequent heavy downpours resulting in more flooding, rising temperatures and more frequent heat waves, longer growing seasons, and shifts in vegetation hardiness zones. Ecosystem disruptions causing changes in habitat, water, and food supply would cause some species to decline, cause shifts in the range of native species, or encourage invasions of non-native species. Some species would be better adapted to a warmer climate. A warmer climate would affect air quality, and would generally mean more ground-level ozone, causing more respiratory problems. Western notes the potential regional effects identified in the report are similar to the global effects discussed in the Final EIS, which EPA concluded “the analysis provided in the Final EIS regarding green house gas emissions from the proposed plant is robust and accurate.”                

                    MnDNR's letter expressed concerns that the Final EIS does not appear to address its concerns, but “just reiterates claims made in the Draft EIS” and that use of water from Big Stone Lake by the proposed plant would have serious impacts to water levels in the lake and base flow in the Upper Minnesota River during extended periods of drought and low runoff. In their letter, the MnDNR also asserted that the operating plan for the Big Stone Lake Dam is outdated and does not adequately address the public's interest when considering the proposed plant's water appropriation. Western notes that the Project's Co-owners made significant changes in the proposed Project after the May 2006 Draft EIS, and these changes were fully disclosed in a Supplemental Draft EIS issued in October 2007. MnDNR provided comments on the Supplement Draft EIS and as a result additional information was added to the Final EIS, including detailed responses to groundwater and surface water comments as noted in Volume II of the Final EIS. In summary, the South Dakota Water Management Board (SDWMB) issued Water Permit No. 6678-3 on November 1, 2006, which authorizes an additional 10,000                           ( print page 42670)                        acre-feet of water annually from Big Stone Lake. The permit specifies the diversion rates allowed by the proposed plant, authorizes the construction of the water use system, and the placing of water to beneficial use subject to certain conditions. The permit includes the same withdrawal restrictions based on Big Stone Lake water levels and time of year as in the permit for the existing plant. The water appropriation permit was issued by the SDWMB in the interest of public policy, and thus water appropriations by the proposed Project are in conformance with South Dakota laws. The SDWMB, in issuing the permits for water withdrawal, have determined that the proposed water use would not be damaging for the intended purpose. Additionally, in accordance with the Settlement Agreement approved by the Minnesota Public Utilities Commission, the Project's Co-owners have agreed to provide all data used to evaluate the effects of water withdrawals from Big Stone Lake to the South Dakota Department of Environment and Natural Resources and MnDNR and to participate in meetings with State agencies to address the management of the Big Stone Lake water flow and level issues. Western notes MnDNR's desire to have the Minnesota/South Dakota Boundary Commission reconvened, however, that decision rests with the respective State governors.                

## Decision

                    Western's environmental record of decision (ROD) is to allow the Co-Owners' request for interconnection to Western's transmission system at Morris and Granite Falls substations in Minnesota and to complete modifications to these substations to support the interconnection.[2]                                          Western's environmental decision to grant this interconnection request satisfies the agency's statutory mission and the Co-owners' objectives while minimizing harm to the environment. Additionally, an interconnection agreement must be completed in accordance with Western's Tariff.                

The Co-owners have committed to minimize the propose Project's impact on the environment through the Project's design, the use of pollution control technology, the offset of carbon dioxide emissions, and the implementation of mitigation measures as summarized in Tables 2.2-7, 2.2-8, and 2.6-2 of the Final EIS. For its part, Western will adhere to mitigation measures for all modifications at its Morris and Granite Falls substations as noted in Table 2.2-9 of the Final EIS. Western conditions its environmental approval of the Co-owner's request to interconnect to Western's transmission system upon the adoption and implementation of the mitigation measures as described in the Final EIS.

This decision is based on the information contained in the Big Stone II Power Plant and Transmission Project Final EIS (DOE/EIS-0377). This ROD was prepared pursuant to the requirements of the Council on Environmental Quality Regulations for Implementing NEPA (40 CFR parts 1500-1508) and DOE's Procedures for Implementing NEPA (10 CFR part 1021).

Dated: August 14, 2009.

Timothy J. Meeks,

Administrator.

# Footnotes

1.                             The South Dakota Public Utilities Commission (SDPUC) has previously approved the construction and operation of the Big Stone II power plant. Likewise SDPUC and the Minnesota Public Utilities Commission have previously approved the transmission line route.                    
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2.                             Western's authority to issue a record of decision is pursuant to authority delegated on October 4, 1999, from the Assistant Secretary for Environment, Safety and Health to Western's Administrator.                    
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[FR Doc. E9-20300 Filed 8-21-09; 8:45 am]

BILLING CODE 6450-01-P