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###### Department of Energy

# AGENCY:

Department of Energy.

# ACTION:

Notice of intent and notice of proposed floodplain and wetlands involvement.

# SUMMARY:

                        The U.S. Department of Energy (DOE) announces its intent to prepare an Environmental Impact Statement (EIS) pursuant to the National Environmental Policy Act (NEPA), the Council on Environmental Quality NEPA regulations (40 Code of Federal Regulations [CFR] parts 1500-1508), and the DOE NEPA regulations (10 CFR part 1021) to assess the potential environmental impacts of a project proposed by Excelsior Energy Inc. (Excelsior), to design, construct, and operate (potentially under an agreement with an operating company) a coal-based, Integrated Gasification Combined Cycle (IGCC) electric generating facility on the Iron Range of northern Minnesota (hereafter termed the “Mesaba Energy Project” or the “Project”). The proposed Project, selected for further consideration under DOE's Clean Coal Power Initiative competitive solicitation, would demonstrate advanced technologies to produce electricity via the IGCC process, including advanced gasification and air separation systems, feedstock flexibility, improved environmental performance, and improved thermal efficiency. The Project would represent the first phase of a proposed two-phase generating station, each phase of which would nominally generate 600 megawatts of electricity (MWe) for export to the electrical grid. The EIS will consider the impacts of both phases, even though DOE's potential funding would only be provided in support of phase one. The EIS will evaluate the proposed Project and reasonable alternatives. Because the proposed Project may affect floodplains and wetlands on the Iron Range of                               ( print page 58208)                            northern Minnesota, the EIS will include a floodplain and wetlands assessment, and DOE will prepare a statement of findings in accordance with DOE regulations for Compliance with Floodplain and Wetlands Environmental Review Requirements (10 CFR part 1022). Wetland permitting and mitigation would be conducted in accordance with the rules and policies of Section 404 of the Clean Water Act and under the Minnesota Wetland Conservation Act.                    

The EIS will help DOE decide whether to provide approximately $36 million in cost-shared funding (the estimated total Project cost is $1.97 billion). DOE may also provide a loan guarantee, pursuant to the Energy Policy Act of 2005, to guarantee a portion of the private sector financing for the Project.

The purpose of this Notice of Intent is to inform the public about the proposed Project; invite public participation in the EIS process; announce the plans for a public scoping meeting; explain the EIS scoping process; and solicit public comments for consideration in establishing the proposed scope of the EIS. Because the proposed facility is considered a Large Electric Power Generating Plant, the Project is subject to the Minnesota Power Plant Siting Act (Minnesota Statutes 116C.51-.69), which requires the preparation of a state-equivalent EIS. The EIS requirements under NEPA and the Minnesota Power Plant Siting Act are substantially similar, and it is DOE's intent to prepare, in cooperation with the Minnesota Department of Commerce and the Minnesota Public Utilities Commission, an EIS that will fulfill the requirements of both laws.

# DATES:

                        To ensure that all of the issues related to this proposal are addressed, DOE invites comments on the proposed scope of the EIS from all interested parties. Comments must be received by November 14, 2005, to ensure consideration. Late comments will be considered to the extent practicable. In addition to receiving comments in writing and by telephone (see                         **ADDRESSES**                         below), DOE will conduct two public scoping meetings in which agencies, organizations, and the general public are invited to present oral comments or suggestions with regard to the range of alternatives and environmental issues to be considered in the EIS. The scoping meetings will be held at the Taconite Community Center, 26 Haynes Street, Taconite, MN, on Tuesday, October 25, 2005, beginning at 7 p.m., and at Hoyt Lakes Arena, 106 Kennedy Memorial Drive, Hoyt Lakes, MN, on Wednesday, October 26, 2005, beginning at 7 p.m. (see “Public Scoping Process below.”) The public is invited to an informal session at each location beginning at 4 p.m. on the date of each meeting during which DOE personnel will be present to discuss the proposed Project and the EIS process. Displays and other forms of information about the proposed agency action and the demonstration plant will be made available to the public for review.                    

# ADDRESSES:

                        Written comments on the proposed EIS scope and requests to participate in the public scoping meeting should be addressed to the NEPA Document Manager for the Project: Mr. Richard Hargis, M/S 922-342C, U.S. Department of Energy, National Energy Technology Laboratory, P.O. Box 10940, Pittsburgh, PA 15236-0940. Individuals who would like to otherwise participate in the public scoping process should contact Mr. Richard Hargis directly by telephone: 412-386-6065; toll free number: 888-322-7436 ext. 6065; fax: 412-386-4775; or electronic mail:                         *richard.hargis@netl.doe.gov.*

# FOR FURTHER INFORMATION CONTACT:

For information regarding the Mesaba Energy Project or to receive a copy of the draft EIS for review when it is issued, contact Mr. Richard Hargis as described above. Those seeking general information on the DOE NEPA process should contact: Ms. Carol M. Borgstrom, Director, Office of NEPA Policy and Compliance (EH-42), U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585-0119; Telephone: (202) 586-4600, Facsimile: (202) 586-7031 or leave a toll-free message at: 800-472-2756.

# SUPPLEMENTARY INFORMATION:

*Background and Need for Agency Action:*                     Since the early 1970's, DOE and its predecessor agencies have supported research and development programs that include long-term, high-risk activities for the development of a wide variety of innovative coal technologies through the proof-of-concept stage. However, the availability of a technology at the proof-of-concept stage is not sufficient to ensure continued development and subsequent commercialization. Before any technology can be considered seriously for commercialization, it must first be demonstrated. The financial risk associated with technology demonstration is, in general, too high for the private sector to assume in the absence of strong incentives. Congress established the Clean Coal Power Initiative (CCPI) in 2002 as a government/industry partnership to implement the President's National Energy Policy (NEP) recommendation to increase investment in clean coal technology and reduce the use of imported energy sources. That recommendation addresses a national challenge of ensuring the reliability of electric supply while simultaneously protecting the environment.                 

The goal of the CCPI program is to accelerate commercial deployment of advanced coal technologies that provide the United States with clean, reliable, and affordable energy. Through cooperative agreements established pursuant to the CCPI program, DOE would accelerate deployment of innovative technologies to: meet near-term energy and environmental goals; reduce technological risk to the business community to an acceptable level; and provide private sector incentives required for continued activity in innovative research and development directed at providing solutions to long-range energy supply problems.

*Proposed Action:*                     The proposed action is for DOE to provide, through a cooperative agreement with Excelsior, and possibly through a loan guarantee for up to 80% of the total Project cost, financial assistance for the proposed Project. The proposed IGCC demonstration plant would be designed for long-term commercial operation following completion of an anticipated 12-month minimum demonstration period under a cooperative agreement with DOE. The Project would cost a total of approximately $1.97 billion; DOE's share would be approximately $36 million. The Project would represent the first phase of a proposed two-phase generating station; each phase would nominally generate 600 MWe (net) for a nominal combined generating capacity of 1,200 MWe (net). DOE plans to complete the EIS within 15 months following publication of this Notice of Intent and, subsequently, to issue a Record of Decision. The EIS will consider the impacts of both phases, even though DOE s potential funding would only be provided in support of phase one.                

                    The Project would use ConocoPhillips' E-GasTM                     Technology for solid feedstock gasification. The starting point for the project design is the 262 MWe (net) Wabash River Coal Gasification Repowering Project (Wabash) in Terre Haute, Indiana, which was built under the DOE's Clean Coal Technology Program (predecessor to the CCPI) and has been in operation since 1995. Wabash has achieved an emissions profile that compares favorably to alternative technologies being proposed and permitted today for                           ( print page 58209)                        new coal-based power projects. Based on subsequent DOE-funded studies of potential performance and technological upgrades, and nearly 1,600 design and operational lessons learned from Wabash, the E-GasTM                     team identified five areas for continued research and development to improve and advance gasification technologies toward commercial acceptance. The areas address improvements in operational availability, capital costs and financing, operating costs, feedstock flexibility, and environmental performance.                

Based in part on the achievements and lessons learned from Wabash, the Mesaba Energy Project directly addresses the principal barriers hindering IGCC penetration into the power market. The Project would integrate numerous design improvements that would substantially advance the original Wabash technology, design, and systems integration. The Project would demonstrate the following features and technologies to improve and advance IGCC processes toward commercial acceptance:
    - Increased Capacity—With more than double the generating capacity of Wabash, the Project would demonstrate the economies of scale attainable at larger commercial operations. When complete, the installed cost is expected to be 30% lower per kilowatt than a plant based on the original Wabash design.
    - Advanced Gasifier—The Project would demonstrate a significantly more advanced full-slurry quench, multiple-train gasifier system. Two gasifiers would be operated simultaneously to supply two combustion turbines and one steam turbine, each coupled directly to its own generator. One or more additional or redundant gasifiers would be included to help ensure an operational availability of about 90% or better.
    - Air Separation Unit (ASU)—The Project would be the first IGCC plant in the U.S. designed to demonstrate a configuration to extract bleed air from the combustion turbine to reduce the parasitic load of the main air compressor in the ASU, increasing net plant output and reducing capital cost. Nitrogen extracted from air entering the ASU would be recycled for injection into the combustion turbine to reduce formation of nitrogen oxides by reducing the flame temperature of the combustor and the time that combustion gases remain at elevated temperatures.
    - Feedstock Flexibility—The Project would demonstrate greater feedstock flexibility with the capability of gasifying bituminous coal (Illinois No. 6), sub-bituminous coal (Powder River Basin), blends of sub-bituminous coal and petroleum coke, and/or other combinations of these feedstocks.
    - Improved Environmental Performance—The Project is intended to improve upon Wabash by deploying processes and technologies that would make it among the cleanest coal-based power generating plant in the world. Emission levels for criteria pollutants (sulfur dioxide, nitrogen oxides, carbon monoxide, volatile organic compounds, and particulate matter) and mercury are expected to be equal to or below those of the lowest emission rates for utility-scale, coal-based generation fueled by similar feedstocks. In addition, carbon dioxide emissions are expected to be 15 to 20% lower than the current average for U.S. coal-based power plants fueled by similar feedstocks.
    - Thermal Efficiency—With a design heat rate of about 8,600 Btu/kilowatt-hour when using bituminous coal, Mesaba would demonstrate a significant heat rate improvement over Wabash.

                    From a broad perspective, the Project would demonstrate the commercial development, engineering, and design necessary to construct a large feedstock-flexible reference plant for IGCC and thus establish a standard replicable design configuration complete with installed cost information for future commercialization. Major components of the Project would include feedstock acceptance and storage; slurry preparation; oxygen preparation via the ASU; feedstock gasification and slag handling; synthesis gas preparation (                    *i.e.*, particulate matter removal, char re-injection, water scrubbing, acid gas removal, and mercury removal); sulfur recovery; synthesis gas combustion (using nitrogen dilution to reduce formation of nitrogen oxides) with concomitant electricity production (using combustion turbine generators); and electricity production via heat recovery (using steam turbine generators).                

                    The ConocoPhillips E-GasTM                     gasification technology utilizes a slurry-fed, two-stage gasifier to convert carbonaceous feedstock to a synthesis gas (syngas) and a vitrified, inert slag. The first stage is operated at an elevated temperature using oxygen and feedstock-water slurry to drive off volatile matter from the feedstock and facilitate the removal of its mineral content as a molten slag. The first stage also produces a raw, hot syngas that requires cooling and cleaning before being used as fuel gas to generate power in the gas turbines. The second stage provides the initial cooling of the hot syngas by quenching it with slurry, without using any additional oxygen. The thermal heat of the hot syngas from the first stage volatilizes the slurry fed to the second stage and converts that portion of the feedstock to additional syngas.                

                    The two-stage gasifier, coupled with E-GasTM                     unique application of a firetube syngas cooler design, minimizes the size and temperature level requirements for the high temperature heat recovery system, which is cost-effective and yields high conversion efficiencies. Raw synthesis gas exiting the gasifier contains entrained solids that are removed and recycled to the first stage of the gasifier. Recycling of these solids also enhances efficiency and consolidates the solid effluent from the process into one stream as slag leaving the gasifier. Sulfur in the initial feedstock is recovered in the process as a molten liquid and sold as a byproduct. The process yields a desulfurized syngas that can be used as a fuel gas for power generation in advanced combustion turbines.                

Excelsior plans to construct the Mesaba Generating Station in two phases, of which the Project would represent the first phase. Plant start-up, system and feedstock testing, and long-term performance and reliability demonstration for the Project would require approximately one year, after which the plant could continue in commercial operation. A minimum 12-month demonstration period is planned to begin in 2011.

*Alternatives:*                     NEPA requires that agencies evaluate reasonable alternatives to the proposed action in an EIS. The purpose for agency action determines the range of reasonable alternatives. Congress established the CCPI Program to help implement the President's NEP recommendation to increase investment in clean coal technology by addressing national challenges of ensuring the reliability of domestic electric and energy supplies while simultaneously protecting the environment. The Program was structured to achieve NEP goals by promoting private sector initiatives to invest in demonstrations of advanced technologies that could be widely deployed commercially to ensure that the United States has clean, reliable, and affordable energy.                

                    Private sector investments and deployment of energy systems in the United States place DOE in a more limited role than if the Federal Government were the owner and operator of the energy systems. In the latter situation, DOE would be responsible for a comprehensive review of reasonable alternatives for siting the                           ( print page 58210)                        system. However, in dealing with applicants under the CCPI solicitation, the scope of alternatives is necessarily more restrictive, because DOE must focus on alternative ways to accomplish its purpose and need, which reflects both the application before it and the functions that DOE plays in the decision process. Moreover, under the CCPI Program, DOE's role is limited to approving or disapproving the project as proposed by the applicant. Therefore, the only alternative to the proposed action, other than the alternative site discussed below, is the no-action alternative.                

Alternatives considered by Excelsior in developing the Project will be presented in the EIS. Legislation enacted by the State of Minnesota in 2003 provides the Project an exemption from obtaining a Certificate of Need (see Minn. Stat. 216B.1694 Subd. 2 (a)(1)), but also requires the Project to be located in the Taconite Tax Relief Area (in northeastern Minnesota) [(at Minnesota Statutes 216B.1694 Sub. 1(3))]. Therefore, the range of sites considered by Excelsior will necessarily be limited to a plant located within the Taconite Tax Relief Area of Minnesota.

Excelsior is proposing a preferred and alternative site for the proposed Project. The preferred site is the West Range site, which is located just north of the city of Taconite in Itasca County, Minnesota. The East Range site is the alternative site, and is located about one mile north of the city of Hoyt Lakes in St. Louis County, Minnesota. In the case of the West Range site, the Project's generating facilities would connect to the power grid via new and existing high voltage transmission line (HVTL) corridors to a substation near the unincorporated community of Blackberry; in the case of the East Range site, the generating facilities would connect to the grid via existing HVTL corridors that lead to a substation near the unincorporated community of Forbes. Excelsior would reconstruct and/or reinforce the HVTL infrastructure within the final corridors selected. In conjunction with both phases of the Project, Excelsior anticipates that network reinforcements would be required within other existing HVTL corridors leading to load centers and/or at substations down-network of the existing substations identified. In addition to these siting and transmission alternatives, the EIS also would analyze alternatives for feedstocks and feedstock blends; access to the facility and means of transport (road and rail) for feedstocks, byproducts, and wastes; water sources; wastewater disposal; and connection to existing natural gas pipelines.

Both sites are fairly remote wooded areas, with access to water supplies, rail and highway transportation, natural gas pipelines and high-voltage transmission lines. At either site, construction of the proposed facilities would require approximately 85 acres for the IGCC complex associated with the Project; an identical amount of land would be required for the Phase II facilities. Since both sites are “greenfield” sites, development of infrastructure at either site would include railroad spurs, plant road construction, water pipelines, natural gas pipelines and upgrades to high voltage transmission lines. A major difference between the sites is that the West Range site lies outside the Lake Superior Basin Watershed.

Construction of the proposed Project potentially would affect jurisdictional wetlands located within the West Range or East Range sites and their associated transportation/utility corridors. Approximately 300 acres of wetlands are located within the boundary of the 1,260 acres of property currently optioned for the West Range Site. Additional wetlands exist within transportation and utility corridors located outside the optioned property and through which project-related infrastructure must traverse on route to this site. Construction and operation of the proposed Project at the West Range site potentially would result in long-term impacts to wetlands within the optioned property and these transportation/utility corridors; construction of buried and overhead utilities could result in temporary construction impacts to additional wetlands therein. Approximately 300 acres of wetlands are located within the boundary of the approximately 825 acres of property currently identified for the East Range Site. The potential for wetland impacts from facility construction and operation on the East Range Site is similar to those identified for the West Range Site. No floodplain areas are located on the West Range or East Range sites, but construction of surface, buried, and overhead utilities will traverse the floodplain areas of several rivers and streams. Wetland impact avoidance, minimization and other mitigation will be described in accordance with Section 404 of the Clean Water Act and the Minnesota Wetland Conservation Act. The final EIS will include a floodplain and wetlands assessment and a statement of findings in accordance with DOE regulations for Compliance with Floodplain and Wetlands Environmental Review Requirements (10 CFR part 1022).

Under the no-action alternative, DOE would not provide partial funding for the final engineering, construction, and operation of the plant. In the absence of DOE funding, the sponsor may still construct the Project, but it might not demonstrate all features as proposed for CCPI Program support.

*Preliminary Identification of Environmental Issues:*                     The following environmental issues have been tentatively identified for analysis in the EIS. This list, which was developed from reviews of the proposed technology and of the scope of the Project and similar projects, and which is presented to facilitate public comment on the planned scope of the EIS, is neither intended to be all inclusive nor a pre-determined set of potential impacts. Additions to or deletions from this list may occur as a result of the public scoping process. The environmental issues include:                

1. Atmospheric resources: Potential air quality impacts resulting from emissions during construction and operation of the Project, including potential impacts on Class I areas in the vicinity (Voyageurs National Park and Boundary Waters Canoe Area Wilderness) and local odor impacts.

2. Water resources: Potential impacts on surface and groundwater resources and water quality, including effects of water usage, wastewater management, storm water management, and soil erosion and sedimentation in the Mississippi River and Great Lakes Basins.

3. Cultural resources: Including potential effects on historic and archaeological resources and Native American tribal resources.

4. Ecological resources: Potential onsite and offsite impacts to vegetation, wildlife, protected species, and ecologically sensitive habitats.

5. Floodplains and Wetlands: Including potential impacts on wetlands located within the East Range and West Range sites and their associated transportation/utility corridors, and potential impacts on floodplains within the transportation/utility corridors for both sites. In accordance with DOE regulations (10 CFR part 1022), the final EIS will include a floodplain and/or wetlands assessment and a statement of findings.

6. Terrestrial resources: Land requirements and compatibility of plant facilities and operations, access roads, rail alignments, and potential new corridors for HVTL and natural gas lines with adjacent and surrounding land uses.

                    7. Utility and transportation infrastructure requirements for delivery                           ( print page 58211)                        of feedstocks and process chemicals to the facility.                

8. Health and safety impacts, including construction-related safety and process-related safety associated with handling and management of process chemicals.

9. Noise: Potential impacts resulting from construction and operation of the proposed plant and from transportation of feedstocks, process materials, and plant byproducts.

10. Community resources: Potential impacts on local traffic patterns, socioeconomic impacts of plant construction and operation, including effects on public services and infrastructure resulting from the influx of construction personnel and plant operating staff, and environmental justice issues.

11. Aesthetic and scenic resources: Potential visual effects associated with plant structures and operations.

12. Cumulative effects that result from the incremental impacts of the proposed plant when added to the other past, present, and reasonably foreseeable future activities in the Iron Range area.

13. Connected actions, including the effects of construction and operation of the second phase of the Mesaba Generating Station resulting in a combined, nominal 1,200 MWe (net) power generating facility on the selected site.

*Public Scoping Process:*                     To ensure that all issues related to this proposal are addressed, DOE will conduct an open process to define the scope of the EIS. The public scoping period will end on November 14, 2005. Interested agencies, organizations, and the general public are encouraged to submit comments or suggestions concerning the content of the EIS, issues and potential impacts to be addressed in the EIS, and alternatives that should be considered. Scoping comments should identify specific issues or topics that the EIS should address in order to assist DOE in identifying significant issues for analysis. Written, e-mailed, faxed, or recorded comments should be communicated by November 14, 2005 (See                     **ADDRESSES**                    ).                

DOE will conduct public scoping meetings at the Taconite Community Center, 26 Haynes Street, Taconite, MN, on Tuesday, October 25, 2005, beginning at 7 p.m., and at Hoyt Lakes Arena, 106 Kennedy Memorial Drive, Hoyt Lakes, MN on Wednesday, October 26, 2005, and beginning at 7 p.m. In addition, the public is invited to an informal session at each location beginning at 4 p.m. on the date of each meeting to learn more about the proposed action. Displays and other information about the proposed agency action and the demonstration plant will be available, and DOE personnel will be present to discuss the proposed action and the NEPA process.

                    DOE requests those who wish to speak at either public scoping meeting to contact Mr. Richard Hargis, either by phone, fax, e-mail, or in writing (See                     **ADDRESSES**                     above). Attendees wishing to speak, but who have not requested to do so in advance, may register at the meeting and will be provided opportunities to speak following previously scheduled speakers. Speakers who may need more than five minutes should indicate the length of time desired in their request. Depending on the number of speakers, DOE may need to limit speakers to five minutes initially but will provide additional opportunity as time permits. Speakers may also provide written materials to supplement their presentations. Oral and written comments will be given equal consideration.                

DOE will begin each meeting with an overview of the proposed Project. The meeting will not be conducted as an evidentiary hearing, and speakers will not be cross-examined. However, speakers may be asked questions to help ensure that DOE fully understands their comments or suggestions. A presiding officer will establish the order of speakers and provide any additional procedures necessary to conduct the meeting.

Issued in Washington, DC, on this 29th day of September, 2005.

John Spitaleri Shaw,

Assistant Secretary for Environment, Safety and Health.

[FR Doc. 05-19972 Filed 10-4-05; 8:45 am]

BILLING CODE 6450-01-P