Document:

Exhibit 10.56

120 FERC
¶ 62,148

UNITED STATES OF AMERlCA 

FEDERAL ENERGY REGULATORY COMMISSION 

	
 

	
 

	
Chugach
  Electric Association

	
Project No. 2170-029 

ORDER ON OFFER OF SETTLEMENT AND ISSUING NEW
LICENSE

(Issued August 24, 2007)

1.          On
April 20, 2005, Chugach Electric Association (Chugach) filed an application for
a new license pursuant to sections 4(e) and 15 of the Federal Power Act (FPA),1
to continue operation and maintenance of the 19.38-megawatt (MW) Cooper Lake
Hydroelectric Project No. 2170 located on Cooper Lake, Cooper Creek, and Kenai
Lake, near the community of Cooper Landing in south-central Alaska. The project
occupies lands of the Chugach National Forest administered by the U.S. Forest
Service (Forest Service).2 Also, as explained below, the project occupies
lands that were federal lands before being transferred to the State of Alaska.
The United States, however, retained an interest in these lands.  

2.          On
August 31, 2005, Chugach filed a comprehensive settlement agreement (Agreement)
among Chugach, Forest Service, U.S. Fish and Wildlife Service (FWS), National
Marine Fisheries Service (NMFS), National Park Service (Park Service), Alaska
Department of Natural Resources (Alaska DNR), Alaska Department of Fish and
Game (Alaska DFG), Kenaitze Indian Tribe, Alaska Center for the Environment,
Fish For Cooper Creek Coalition, and Alaska Fly Fishers. 

3.          For
the reasons discussed below, I am issuing a new 50-year license for the
project. 

          1
16 U.S.C. §§ 797(e) and 808 (2000).  

          2
 The project is required to be licensed pursuant to section 23(b)(l) of
the FPA, 16 U.S.C. § 817(1) (2000), because the project
occupies lands of the United States.  

	
 

	
 

	
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2

BACKGROUND 

4.          The
Commission issued a license for the Cooper Lake Hydroelectric Project on May
27, 1957.3 The existing license expired on April 30, 2007. The project is
currently being operated pursuant to an annual license.  

5.          On
April 20, 2005, Chugach filed an application for a new license for the project
using the Commission’s traditional licensing procedures. On February 28, 2006, a
public notice accepting the license application was issued, setting May 1, 2006,
as the deadline to file comments, protests, and motions to intervene, as well as
terms, conditions, prescriptions, and recommendations. It also requested
comments on the Agreement. Interventions were timely filed by Alaska DFG, U.S.
Department of Agriculture, Alaska Center for the Environment, Fish for Cooper
Creek Coalition, Alaska Fly Fishers, NMFS, and American Rivers.4 

6.          Commission
staff issued an Environmental Assessment (EA) on November 17, 2006, that
evaluated continued operation of the project and continued operation with
proposed measures filed in the Agreement along with the conditions submitted by
the Forest Service under section 4(e) of the FPA and staff’s additional or
modified measures. Comments on the EA were filed by FWS, NMFS, Chugach, Forest
Service, and Alaska DFG. In general, the comments were editorial or meant to
clarify the intent of the settlement agreement or staff recommendations
regarding timing of actions to be taken after issuance of the new license. All
motions to intervene, comments, and recommendations have been fully considered
in determining whether, and under what conditions, to issue this license. 

PROJECT DESCRIPTION AND OPERATION 

             A          Project
Description 

7.          The
existing Cooper Lake Project consists of a 920-foot-long rock-and-fill dam that
raises the elevation of Cooper Lake (a natural lake) to a licensed maximum
operating level of 1,210 feet mean sea level (msl); Cooper Lake, with a surface
area of 2,910 acres; an intake structure on the southeast shore of Cooper Lake;
a 10,686-foot-long tunnel and penstock; a powerhouse located on the southwest
shore of Kenai Lake containing two 

             3
Chugach Electric Association, Inc., 17 FPC 759 (1957).  

             4
 The motions were timely and unopposed, and were therefore automatically
granted by operation of 18 C.F.R. § 385.214(c)(1)(2007).
None of the intervenors oppose the project.  

	
 

	
 

	
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turbine-generators,
each rated at 9.69 MW; a 6.3-mile-long, 69-kilovolt (kV) transmission line
extending from the powerhouse to the Quartz Creek substation; a step-up
transformer at the Quartz Creek substation; and a 90.4-mile-long, 115-kV
transmission line from the Quartz Creek substation to the Anchorage substation.

8.          As
explained below, the transmission line between the Quartz Creek and Anchorage
substations is not the project’s primary transmission line, and it is therefore
not required to be licensed. It will however remain in the license until
Chugach receives necessary authorization for the line’s occupation of state and
national forest lands. 

              B.          Project
Operation 

9.          The
project is operated to maximize its value in an integrated generation network.
In other words, it is used for peaking purposes and to meet base load or other
system needs as electrical constraints change. Project operation is not guided
by a rule curve, but by reservoir inflow, Chugach’s customer demands, and
project safety requirements. Chugach conservatively operates the project to
prevent spill and overtopping of the dam by generally limiting the maximum
reservoir level to 1,194 feet msl. The minimum reservoir level is generally
maintained above 1,170 feet. Typically, Cooper Lake is drawn down from late
fall until early spring, then rapidly refilled during the late spring and early
summer snow melt. On average, the reservoir fluctuates about 15 feet throughout
the year. Except for the seasonal drawdown, daily fluctuations in water
surface elevation do not exceed one inch over 24 hours due to power
withdrawals, and typically do not vary more than one to two feet within a
month. 

10.          Project
operations currently divert all flow from Cooper Lake through the
tunnel/penstock to the project powerhouse, where it is discharged into Kenai
Lake. The 4.8-mile-long Cooper Creek bypassed reach below the Cooper Lake dam
receives no flow from Cooper Lake; there is no existing minimum flow
requirement for Cooper Creek and no outlet structure to provide such flows. The
project has an average annual generation of about 48,500 megawatt-hours (MWh)
and an average outflow through the powerhouse of about 100 cubic feet per
second (cfs) which is equivalent to 73,000 acre-feet/year. Powerhouse discharge
ranges from 0 to 380 cfs into Kenai Lake, which is the source of the Kenai
River. 

11.          To
improve salmon and trout spawning habitat in Cooper Creek, Chugach proposes to
divert flow from Stetson Creek directly into Cooper Lake and release up to
10,256 acre-feet of warmer water from Cooper Lake into Cooper Creek. Stetson
Creek is the major tributary to Cooper Creek below the dam, providing on an
average basis about 65 percent of the flow in Cooper Creek. To provide these
flow releases, Chugach would construct a diversion structure with manual
controls on Stetson Creek about 7,000 feet upstream of its confluence with
Cooper Creek; construct an approximately 11,000-foot- long pipeline designed to
carry up to 110 cfs (approximately 18,255 acre-feet per year) 

	
 

	
 

	
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from the
Stetson Creek diversion structure to an outflow point in Cooper Lake; and
construct a water bypass structure (with the ability to maintain a variable
flow capacity of up to 30 cfs) through the existing project dam. The bypass
structure would allow for the release of water from Cooper Lake into Cooper
Creek from a manually controlled, screened diversion structure within Cooper
Lake (about 600 feet from the crest of the dam) to an outflow energy
dissipation structure downstream of the dam. 

12.          The
10,256 acre-feet of flow released to Cooper Creek would be released at a
year-round minimum rate from 10 to 30 cfs, peaking at up to 30 cfs from June
through October. To accommodate changes in water availability and environmental
and biological conditions in Cooper Creek, specific releases from Cooper Lake
would be defined annually by an Interagency committee5 and are
expected to range from 10 to 25 cfs depending on the month, as defined in the
default flow release schedule included in the Agreement. If any portion of the
10,256 acre-feet is not released within a water year, Chugach would “bank” that
volume for potential release in a future year at the direction of the
Interagency Committee. In addition, half of any inflow diverted from Stetson
Creek in excess of 18,255 acre-feet (defined as supplemental flow) would also
be available for release into Cooper Creek in a future year, after taking into
consideration any water-for-generation deficits. Water-for-generation deficits
occur if, for any given year, actual flow from Stetson Creek is less than
18,255 acre-feet. The deficit accumulates and carries forward each year and
deficits must be made up before any supplemental water (above 10,256 acre-feet)
is released into Cooper Creek.  

13.          Chugach
would continue to operate the project to maintain the Cooper Lake reservoir between
1,160 feet msl and the normal maximum operating level of 1,194 feet msl.
However, the additional inflow from Stetson Creek is expected to provide an
annual average of about 8,000 additional acre-feet of water to generate
electricity. While the capacity of the plant would not increase, the total
annual production would increase by an estimated 3,000 MWh. 

               C.          Project
Boundary 

14.          Under
the current license, the project boundary encloses Cooper Lake at the 1,220-foot contour line; the dam, spillway, intake structure, and tunnel headworks on
Cooper Lake; a 50-foot right-of-way (ROW) along the 10,686-foot-long tunnel and
penstock from the intake on the southeast shore of Cooper Lake to the
powerhouse on the southwest shore of Kenai Lake; the powerhouse and switchyard;
an approximately 100- foot-wide ROW along the 6.3-mile-long, 69-kV transmission
line; the Quartz Creek 

          5
 The Interagency Committee would consist of representatives from Forest Service,
FWS, NMFS, Alaska DNR, and Alaska DFG.  

	
 

	
 

	
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substation; and an approximately
100-foot-wide ROW along the 90.4-mile-long, 115-kV transmission line to the
Anchorage substation.

15.          Chugach
proposes and has filed revised exhibit G drawings to include the following additional facilities in the new
license: the Forest Service access road from the Forest Service Cooper
Creek campground to Cooper Lake dam; the spur road to the powerhouse; the spur
road to the project intake; the spur road to the tunnel headworks; and the spur
road to the surge tank. These existing spur roads extend to project features from
the Snug Harbor Road and are needed exclusively to maintain and operate the project, but are not currently in the project
boundary. Chugach proposes to further modify the project boundary to
include the Stetson Creek diversion, a pipeline to an outlet in Cooper Lake, and an access road that would parallel the
pipeline (a total area of about 19
acres). The Cooper Lake boundary may also need to be expanded to include a new
release structure at the existing dam, if final designs extend the structure
past the current dam face.

16.          The Forest
Service manages lands on which Cooper
Lake, Cooper Lake dam, the Stetson
Creek facilities, and portions of the 90.4-mile-long transmission line are
located.

SETTLEMENT AGREEMENT

17.          By its terms, the
Agreement resolves among the
settling parties all issues associated with the Cooper Lake Project
relicensing.

18.          The Agreement
consists of six sections and four
appendices. Section 1 lists the parties
to the Agreement, presents the purpose and effect of the Agreement, and
provides definitions. Section 2 describes the general provisions of the
Agreement, including its scope and structure, the licensees’ and other parties’
obligations under the Agreement, the term of
the Agreement, and dispute resolution procedures. Section 3 describes expected actions
of the licensee and the settling parties to support the Agreement and
procedures for modifying or terminating the Agreement. As discussed in further
detail below, Section 4 describes various operational and other environmental
measures covered by proposed license articles set forth in Appendix A to the
Agreement that the settling parties request be included in a new license
without material modification. Section 5 describes off-license provisions of
the Agreement.6 Section 6 describes limitations of  

              6 The
non-license provisions provide for the
establishment of an interagency committee to evaluate instream flow needs and
determine the desired instream release schedule of Cooper Creek and
Stetson Creek on an annual basis, including operating bylaws described in an Memorandum of Agreement among the Forest
Service, FWS, NMFS, Alaska DNR, and Alaska DFG that is found in Appendix C to
the Agreement. Other non-license provisions include an agreement between
Chugach and the Forest 

(continued)

	
 

	
 

	
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applicability
of the Agreement, binds the parties to the Agreement, describes the procedures
to be followed if performance is delayed or prevented by Force Majeure, describes notification
and communication procedures,7 describes responsibilities for costs incurred in implementing
the Agreement, and sets forth other miscellaneous items of responsibility. 

19.          Nine of the
proposed
articles in Appendix A to the Agreement deal with Forest Service approval for use of
national forest system lands8 and various administrative requirements of the Commission.9 These articles have been
included in this license, respectively,
as Forest Service conditions submitted under FPA section 4(e) (attached as
Appendix A to this order) and as license articles with minor modifications to
conform to Commission practice.  

	
 

	
20.          The remaining ten
proposed license articles are project-specific environmental measures.10
Proposed Agreement Article 401 provides for the construction of the Stetson

	

	
Service
  for shared maintenance of Snug Harbor Road, modifications to a culvert on
  Porcupine Creek to improve fish passage, the design and construction of a
  winter access parking area off Snug Harbor Road, and an annual
  contribution of $6,000 to the Kenaitze Indian Tribe for support of cultural and
  educational programs. The improvements to Porcupine Creek were completed in April 2007.

              7
 Contact information for the responsible parties is found in Appendix D to
the Agreement. 

              8
 The Forest Service included Settlement Agreement Article 306 as Condition 10 of its section 4(e)
conditions. Settlement Agreement Article 306 covers Forest Service approval of activities
on Forest Service lands. 

              9
 These include standard license articles that set administrative annual charges (Article
201), establish amortization reserves (Article 202), require filing of approved
exhibit drawings (Article 203), require filing of revised exhibit drawings
following completion of construction activities (Article 301), require
Commission review and approval of final construction plans and specifications (Article 302),
establish a quality control and inspection program for construction activities (Article
303), require Commission approval of cofferdam construction drawings and a temporary
emergency action plan (Article
304). These articles are consistent with the proposed standard articles. 

              10
 The settlement parties number their articles 401 to 410. These numbers do not reflect
those of this license. To distinguish between the requirements of this license
and those proposed by the Agreement, this order will refer to the Agreement
articles as proposed Agreement Articles and those of this license as Articles. 

	
 

	
 

	
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7

Creek diversion, the pipeline to Cooper Lake, and the
Cooper Lake bypass structure within six years after issuance of a new license,
at an estimated cost of $9.2 million in 2004 dollars. A detailed plan for the
construction of the facilities would be filed within 36 months of license issuance.

21.          Proposed
Agreement Article 402 provides a
mechanism by which Chugach would notify the Commission and the parties to the
Agreement if the facilities could not be built because of permitting problems,
legal prohibitions, or lack of necessary water rights or if the capital
cost to build the facilities would exceed $11 million in 2004 dollars. In such an
instance, Chugach would consult with the settlement parties and file with the Commission
a mutually acceptable alternative to the proposal, including as necessary, a license amendment.

22.          Proposed
Agreement Article 403 provides for the diversion of up to 110 cfs of flow from
Stetson Creek and the annual release of 10,256 acre-feet of water into Cooper Creek,
from either Cooper Lake or a combined flow from Cooper Lake and Stetson Creek. The proposed article also provides for flow
releases that, when combined with natural flows, will provide flushing
flows in Cooper Creek for up to 30 days in any rolling ten year period.11 
The flow release schedule would be developed with direction from an Interagency
Committee that would provide the release schedule by May 1 of each year, based
on an annual report from Chugach that describes the amount of water released in
the previous water year (May 1 to April 30) and the amount that is projected to be available during the water year beginning
May 1 of that year. In the absence of a release schedule, a default monthly flow and volume release schedule
would be followed. The proposed article also defines a complex water allocation
procedure that accounts for variability of water between years. 

23.          Proposed
Agreement Article 404 provides for monitoring of flows through the Stetson Creek diversion, outflows from the Cooper
Lake bypass structure, and flows and temperature
at a gage at the mouth of Cooper Creek. These are to be continuously recording
gages that comply with U.S. Geological Survey (USGS) standards. Once the flow releases have begun, Chugach would report
quarterly to the Interagency Committee the amount of flows released from
the Cooper Lake bypass structure and the amount diverted to Cooper Lake from Stetson Creek.

24.          Proposed
Agreement Article 405 provides that Chugach will develop, fund, and implement studies and monitoring programs for
water temperature, biological conditions, and geomorphological processes
to assist the Interagency Committee in developing

              11
 A flushing flow is defined as occurring when the average daily flow at the U.S.
Geological Survey gage at the mouth of Cooper Creek meets or exceeds 150 cfs. 

	
 

	
 

	
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instream and flushing flow
recommendations to optimize instream habitat in Cooper Creek and to monitor fish responses to instream
flows and diversions.12 

25.          Proposed
Agreement Article 406 provides that
Chugach would operate the project to maintain the Cooper Lake reservoir level
between 1,160 msl and the normal maximum operating level of 1,194 msl,
as it is currently operated. In addition, between January 1 and April 30,
Chugach would not shut down the powerhouse for more than three consecutive days
when the water level at the USGS gage at the Kenai River Bridge shows flows
less than 500 cfs in the Kenai River, unless an emergency occurs, in which case Chugach would release 60 cfs into Kenai
Lake.

26.          Proposed
Agreement Article 407 provides that Chugach would implement the Transmission
Line ROW Management Plan and Access Management and Maintenance Plan, which defines best management practices,
protocols, and consultation requirements for use and maintenance of the
transmission ROWs. It also requires that access points along the transmission
lines will be closed to the public. The proposed article further provides for
termination of Commission jurisdiction over the 90.4-mile-long, 115-kV transmission
line when all necessary permits and approvals are obtained from the Forest Service,
the State of Alaska, and other land owners, as applicable. Documentation that such permits have been obtained would be filed
within three years of the effective date of the license.

27.          Proposed
Agreement Article 408 provides that Chugach would maintain the road from the beginning of the Forest Service property
to the Cooper Lake Dam and proposed Stetson
Creek diversion structure. Chugach would also seek a special use permit from the
Forest Service within three years of license issuance that requires gating the
access road and allowing recreational access consistent with Forest Service
properties, so long as the recreational use does not interfere with project
maintenance and operation. The proposed article further provides that Chugach
would maintain four spur roads off of Snug Harbor Road and would comply with
applicable lease and permitting requirements for use of State of Alaska lands,
including working with Alaska DNR to resolve applicable
leasing and permitting requirements of state lands underlying project
facilities, complying with applicable requirements, and paying necessary
fees or assessments.

              12
 Agreement Article 405 initially contained funding limits for conducting studies and
broadly defined studies. On November 9, 2005, Chugach filed on behalf of the settling parties, a revision to proposed
Agreement Article 405 that provided greater detail regarding the
objectives of the studies and removed the funding limits, noting that the parties remain committed to the funding limits of
the original proposed article. Forest Service
section 4(e) condition 16 mirrors the revised proposed Agreement Article. 

	
 

	
 

	
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9

28.          Chugach would
report to the Commission upon
conclusion of these permitting issues.

29.          Proposed
Agreement Article 409 provides for
painting the powerhouse and intake structure to Forest Service specification to
reduce the visual contrast of facilities with the surrounding environment.

30.          Proposed
Agreement Article 410 provides that Chugach would implement the provisions of a Programmatic Agreement and a
Historic Properties Management Plan to protect historical properties.

SECTION 4(e) FINDINGS AND CONDITIONS

31.          Section 4(e) of
the FPA,13 provides that the Commission can issue a license for a project located within any
reservation only if it finds that the license will not interfere or be
inconsistent with the purposes for which such reservation was created or
acquired. The project occupies lands of the
Chugach National Forest, which is a federal reservation under Forest Service
supervision. 

32.          I have reviewed
the Organic Administration Act of
1897,14 which established the purposes for forest
reservations, and the presidential proclamation that created the Chugach National Forest.15 There is no
evidence or allegation in this proceeding to indicate that relicensing of the
Cooper Lake Project would interfere with the purposes of the Chugach National Forest within which the
project is located. Therefore, I find that this license, as conditioned,
will not interfere or be inconsistent with the purposes for which the Chugach
National Forest was created.  

33.          FPA section 4(e)
further requires that Commission
licenses for projects located within federal reservations must include
all conditions that the Secretary of the

              13
 16 U.S.C. § 797(e) (2000). 

              14
 16 U.S.C. § 473 et seq. (2000). 

              15
 The Chugach National Forest was established by Presidential
Proclamation of July 23, 1907, 35 Stat. 2149
(1907). At the time, the Organic Administration Act of 1897, 16 U.S.C. §
475 (2000), stipulated that all national forest lands were established and administered only for watershed protection and
timber production. These are the only purposes that are relevant for a
Commission determination under section 4(e) as to whether a project will
interfere or be inconsistent with the purpose for which the reservation (national
forest) was created or acquired. See
Rainsong Company v. FERC, 106 F.3d 269 (9th Cir. 1997). 

	
   

  	
   

  
	
  Project No.
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department
under whose supervision the reservation falls shall deem necessary for the
adequate protection and utilization of such reservation. The Forest Service
filed its section 4(e) conditions on April 25, 2006. 

34.     The
Forest Service submitted 18 section 4(e) conditions for the project. Conditions
1-7 require Chugach to: (1) annually consult with the Forest Service; (2)
restore National Forest System Lands in the event of the surrender of license;
(3) implement a Hazardous Substance Plan; (4) take care in handling explosives;
(5) restrict pesticides use; (6) implement a Fire Prevention Plan; and (7)
implement a Noxious Weed Management Plan. Condition 8 reserves authority for
the Forest Service to modify its section 4(e) terms and conditions. Condition 9
requires Chugach to stop work and notify the Forest Service in the event that
any unidentified cultural resources are discovered during the term of the new
license. 

35.     Condition
10 mirrors proposed Agreement Article 306. Conditions 11-18
mirror proposed Agreement Articles 401- 408, with the exception of proposed
Agreement Article 408(b).16 The provisions of the proposed Agreement Articles
that are included in the conditions submitted under section 4(e) of the FPA are
thus required to be included in this license.  

36.     The
Forest Service’s section 4(e) conditions are attached to this license in
Appendix A, and made a part of this license by ordering paragraph (D). 

DISCUSSION OF SETTLEMENT TERMS 

37.     The
Commission looks with favor on settlements in licensing cases. When parties are
able to reach settlements, it can save time and money, avoid the need for
protracted litigation, promote the development of positive relationships among
entities who may be working together during the course of a license term, and
give the Commission, as it acts on license and exemption applications, a clear
sense as to the parties’ views on the issues presented in each settled case.17
At the same time, the Commission cannot automatically  

          16
Forest
Service Condition 18 does not include proposed Agreement
Article 408(b), which describes maintenance responsibilities of the four spur
roads off Snug Harbor Road and the efforts that would be followed to resolve
leasing and permitting requirements for project facilities. 

          17
See Settlements in Hydropower Licensing Proceedings
under Part I of the Federal Power Act, 116 FERC ¶ 61,270 at P 2-12 (2006). 

	
   

  	
   

  
	
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accept all
settlements, or all provisions of settlements. Section 10(a)(l) of the FPA18
requires that the Commission determine that any licensed project is:  

	
   

  	
   

  
	
   

  	
  best adapted
  to a comprehensive plan for improving or developing a waterway or waterways
  for the use or benefit of interstate or foreign commerce, for the improvement
  and utilization of waterpower development, for the adequate protection,
  mitigation, and enhancement of fish and wildlife (including related spawning
  grounds and habitat), and for other beneficial public uses, including
  irrigation, flood control, water supply, and recreational and other purposes
  referred to in section 4(e)....

  

38.    Consequently,
in reviewing settlements, the Commission looks not only to the wishes of the
settling parties, but also at the greater public interest, and whether
settlement proposals meet the comprehensive development/equal consideration
standard. 

          A.          Approval
of Plans and License Amendments 

39.     Forest
Service Conditions 3 (Hazardous Substance Plan), 6 (Fire Prevention Plan), and
7 (Noxious Weed Management Plan) require development of plans for approval by
the Forest Service. Article 401(a) requires that the plans be filed with the
Commission for approval before implementation. The plans shall include an
implementation schedule. 

40.     The
settling parties contemplated that development of the Stetson Creek diversion
and Cooper Lake releases might prove to be infeasible. If that is the case, the
parties have agreed to notification procedures to alert the parties and the
Commission and to consultation requirements and timeframes to identify
alternative mitigation proposals. The settling parties provided for Commission
approval of any modifications to the plan and an amendment to the license as
necessary. The Forest Service included these contingency procedures (Condition
12) as a section 4(e) condition. For the record, any measure that would not
result in the construction of the Stetson Creek diversion and pipeline, or the
Cooper Lake bypass structure would be a material change to the license that
requires a license amendment.19

          18
16 U.S.C. § 803(a) (1) (2000). 

          19
See Article 401(b). The
Commission’s regulations, as well as the terms of the license and basic due
process principles, govern what types of alterations require what sorts of
submittals or public notice. 

	
   

  	
   

  
	
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          B.          Instream
Flow Compliance and Gaging 

41.     The
settling parties established a complicated accounting system that allows the
Interagency Committee to consider within- and between-year water availability
to establish flow release schedules to best meet resource objectives of
improving water temperatures and habitat conditions for salmon and trout in
Cooper Creek. The Agreement also provides for modifying instream flow release
schedules up to twice a month between May and October (weather and access
permitting) upon request by the Interagency Committee (proposed Agreement
Article 403, and required by Forest Service Condition 13). However, it does not
provide for modifying instream flow releases based on emergency conditions. 

42.     To
ensure compliance with the instream flow releases and gather information for
recommending the annual flow release schedule, the licensee would monitor flows
through Stetson Creek, outflows from Cooper Lake, and flows and temperature at
a gage at the mouth of Cooper Creek (proposed Agreement Article 404, and
required by Forest Service Condition 14). The licensee would report to the
Interagency Committee quarterly the amount of flow diverted from Stetson Creek
to Cooper Lake and the outflow from the Cooper Creek bypass structure. The EA
recommends that a final gaging plan be filed for Commission approval. Article
403 requires the gaging plan to be filed at least one year prior to providing
the flow releases. 

43.     Staff
evaluated the proposed release schedule, including anticipated modifications,
and recommended that they be adopted in a new license.20 Staff also noted the
need to allow for temporary modifications to the flow release schedule in cases
of emergencies beyond the control of the licensee. They also recommended that
the licensee notify the Commission by May 31 of the flow release schedule
established for that water year so that the Commission could follow established
flow requirements and ensure compliance with the license. Therefore, Article
404 requires the licensee to file the flow release schedule by May 31 and to
notify the Commission of any alterations in flow due to emergencies. 

          C.          Transmission
Line Disposition and Right-of-Way Management 

44.     The
project currently includes two transmission lines: a 6.3-mile-long, 69-kV line
from the powerhouse switchyard to the Quartz Creek substation and a
90.4-mile-long, 115-kV line from the Quartz Creek substation to a substation in
Anchorage, Alaska. Chugach states in its application that the line connecting
the Quartz Creek and Anchorage substations likely no longer conforms to the
Commission’s definition of a primary 

          20
EA at 146-48.

	
   

  	
   

  
	
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transmission
line21 and thus is no longer subject to Commission jurisdiction. However, the
settling parties desire that the Commission retain jurisdiction until all
necessary permits and approvals are obtained from the Forest Service, State of
Alaska, and other land owners, as applicable. The settling parties also expect
that the licensee will apply for such permits and approvals within six months
of license issuance, and that such permits and approvals will be obtained
within three years of license issuance (proposed Agreement Article 407). Forest
Service Condition 17 requires these provisions to be included in the license. 

45.     The
information in the license application indicates that the 6.3-mile-long
transmission line from the powerhouse to Quartz Creek Substation in Cooper
Landing serves as the project’s primary transmission line. The 90.4-mile-long
transmission line from Quartz Creek substation to the Anchorage substation is
no longer used solely to transmit power from the project, but rather is an
integral part of the connection between the Anchorage/Alaska Railbelt grid and
the Kenai Peninsula grid and various distribution points. Thus, it is not
required to be licensed. 

46.     This
order approves the deletion from the license of the 115-kV transmission line.
However, the deletion and revised project description will not become effective
until Chugach receives special use authorization from the Forest Service and
any other approvals for use and occupancy of state and federal lands. Forest
Service Condition 17 (in Appendix A of this license), as required by Ordering
paragraph D of this license, requires Chugach to file with the Commission
documentation that Chugach has obtained all necessary permits and approvals.
Only after filing such documentation will annual charges be revised to reflect
the removal of these lands from the project (Article 201). 

47.     Forest
Service Condition 17 further requires the licensee to implement the Transmission
Line ROW Management Plan and Access Management and Maintenance Plan (proposed
Agreement Article 407) contained in appendix B to the Agreement. Staff reviewed
the management plan and generally recommends that the measures set forth in the
plan be made part of the license. However, staff noted that some information
was omitted in the plan, including procedures for avoiding or minimizing
impacts to nesting 

          21
Section
3(11) of the FPA, 16 U.S.C. § 796(11), defines a project as including
“the primary line or lines transmitting power therefrom to the point of
junction with the distribution system or with the interconnected transmission
system.” A line is generally considered to be a primary transmission line if it
is used solely to transmit power from a licensed project to a load center, and
if there would be no other way to market the full capacity of the project. See, e.g., Pacific Gas and Electric Co., 85
FERC ¶ 61,411
at 62,559 (1998). 

	
   

  	
   

  
	
  Project No.
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birds.22
Article 405 requires the licensee to file a final plan, including such
provisions, for Commission approval within one year of license issuance. 

          D.          Roads
within the Project Boundary 

48.     Chugach
proposes to include in the project boundary: (a) the existing access road to
Cooper Lake Dam beginning from the Forest Service property and extending to the
dam; (b) the proposed road to the proposed Stetson Creek diversion structure;
and (c) four existing spur roads off Snug Harbor Road that provide access to
the project powerhouse, surge tank, tunnel portal, and intake structure.
Project boundaries are used to designate the geographic extent of the lands,
waters, works, and facilities that the license identifies as constituting the
licensed project and for which the licensee must hold the rights necessary to
carry out project purposes. Staff found that these roads provide the only
access routes to specific project facilities, would be necessary to construct,
operate and maintain the Stetson Creek diversion, and are, or would be, used
almost exclusively to maintain and operate the project.23 Therefore the
above roads should be brought into the project boundary and the licensee made
responsible for their maintenance.24 Article 204 requires the licensee
to file revised Exhibit G (project boundary) drawings that, among other things,
include these roads. 

49.     Forest
Service Condition 18, which mirrors proposed Agreement Article 408(a), requires
the licensee to obtain a special use permit for the access roads to Cooper Lake
Dam and the proposed Stetson Creek diversion access road, gate these roads,
maintain them consistent with the terms of the special use permit and the
licensee’s needs, and provide recreational access consistent with Forest
Service land management practices so long as it does not interfere with the
licensee’s maintenance and operation needs. The Alaska DFG recommended that
Chugach restrict motorized access into the Cooper Creek watershed. Because of
the remoteness of the Cooper Creek watershed, the sensitive 

          22
In
its December 8, 2006 comments on the EA, FWS states that it has modified its
recommended timing guidelines for vegetation clearing in Alaska to reduce the
risk of take of migratory birds. The revised guideline is to avoid vegetation
clearing between May 1 and June 15 as opposed to the April 15 to July 15 period
noted in the EA. Article 405 reflects the revised time period. 

          23 
EA at 126-127. 

          24 
See,
e.g., Portland General Electric Company., 117 FERC ¶ 61,112
(2006). While the extent to which project roads may be found necessary for
project purposes may vary from case to case, as a general matter the concept of
roads being “necessary” for a project is restricted to roads used solely by a
project.  

	
   

  	
   

  
	
  Project No.
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species that
inhabit the watershed, and the increasing recreational demand in the area,
staff recommended that a public access control plan be developed that describes
procedures and schedules for maintaining the gates, monitoring the
effectiveness of the gates for controlling motorized access, and identifying
additional measures if gating proves ineffective at controlling motorized
access.25 Article 406 requires a public access control plan for the Cooper Lake
Dam access road and the proposed Stetson Creek diversion access road to be
filed for Commission approval within one year of license issuance. 

50.     Proposed
Agreement Article 408(b) further provides for the licensee to maintain the four
spur roads off Snug Harbor Road for operational purposes. However, it also
provides that the licensee will comply with applicable lease and permitting
requirements for use of State of Alaska lands; work with the Alaska DNR and
applicable federal agencies to resolve what leasing and permitting requirements
are applicable to the state lands underlying the spur roads, powerhouse, intake
structure, and any other state lands affected by the project; comply with such
applicable requirements and pay necessary fees or assessments; and report to
the Commission upon conclusion of these issues. 

51.     Article
407 of the license requires the licensee to maintain the four spur roads for
operational purposes as requested by the settlement parties; however, I have
not included the remaining provisions of proposed Article 408(b) which would
require the licensee to comply with unidentified and undefined lease and
permitting requirements. The Commission prefers that its licensees be good
citizens of the communities in which projects are located, and thus comply with
state and local requirements, where possible. However, I cannot state with
certainty what requirements may be included in, or precluded by, our future
orders. Thus, it would be inappropriate to condition this license with such
vague and unspecified terms.26 

          E.          Aesthetic
Enhancements 

52.     Proposed
Agreement Article 409 would require the licensee to paint the project
powerhouse and intake structure in accordance with Forest Service color
specifications within two years of license issuance. Painting the powerhouse
and intake structure would reduce the contrast of these facilities with the
surrounding environment and help meet 

          25
EA at 147.

          26
In
any event, standard Article 5 of the license requires the licensee to acquire
sufficient rights necessary to carry out its responsibilities under the
license. In the event Chugach cannot obtain such rights through negotiation, it
may exercise the eminent domain authority conferred by section 21 of the FPA,
16 U.S.C. § 814 (2000). 

	
   

  	
   

  
	
  Project No. 2170-029

  	
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Forest Service
visual management guidelines for power facilities.27 This license
includes a requirement to paint the powerhouse and intake as requested by the
settling parties (Article 409). 

WATER QUALITY CERTIFICATION 

53.     Under
section 40l(a)(l) of the Clean Water Act (CWA),28 the Commission may not issue
a license authorizing the construction or operation of a hydroelectric project
unless the state water quality certifying agency either has issued water
quality certification for the project or has waived certification by failing to
act on a request for certification within a reasonable period of time, not to
exceed one year. Section 401(d) of the CWA provides that the certification
shall become a condition of any federal license that authorizes construction or
operation of the project.29 

54.     By
letter dated May 3, 2005, to the Alaska Department of Environmental
Conservation (Alaska DEC), Division of Water, Chugach requested a waiver from
section 401 of the Clean Water Act. On June 2, 2005, Alaska DEC notified Chugach
that the agency waived its right to issue a 401 certification for the
relicensing of the Cooper Lake Project. 

COASTAL ZONE MANAGEMENT ACT 

55.     Under
section 307(c)(3)(A) of the Coastal Zone Management Act (CZMA),30
the Commission cannot issue a license for a project within or affecting a
state’s coastal zone unless the state CZMA agency concurs with the license
applicant’s certification of consistency with the state’s CZMA program, or the
agency’s concurrence is conclusively presumed by its failure to act within 180
days of its receipt of the applicant’s certification. By letter filed March
19, 2007, the Alaska DNR concurred with Chugach’s certification. 

SECTION 18 FISHWAY PRESCRIPTIONS 

56.     Section
18 of the FPA,31 provides that the Commission shall require the construction,
operation, and maintenance by a licensee of such fishways as may be 

          27 
EA at 132-35. 

          28 
33 U.S.C. § 1341(a)(l) (2000). 

          29 
33 U.S.C. § 1341(d) (2000). 

          30 
16 U.S.C. § 1456(3)(A) (2000). 

          31 
16 U.S.C. § 811 (2000). 

	
   

  	
   

  
	
  Project No.
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prescribed by
the Secretaries of Commerce or the Interior, as appropriate. Neither department
submitted section 18 prescriptions for the Cooper Lake Project nor reserved its
authority to prescribe fishways at a later date. 

ESSENTIAL FISH HABITAT 

57.     Section
305(b)(2) of the Magnuson-Stevens Fishery Conservation and Management Act (Act),32 requires federal agencies to consult with the Secretary of Commerce
regarding any action or proposed action authorized, funded, or undertaken by
the agency that may adversely affect Essential Fish Habitat (EFH) identified
under the Act. Under section 305(b)(4)(A) of the Act, NMFS is required to
provide EFH conservation recommendations for actions that would adversely
affect EFH.33 Under section 305(b)(4)(B) of the Act, an agency must, within 30
days after receiving recommended conservation measures from NMFS or a Regional
Fishery Management Council, describe the measures proposed by the agency for
avoiding, mitigating, or offsetting the effects of the agency’s activity on the
EFH.34  

58.     Staff
found that licensing the project in accordance with the Agreement and staff’s
recommended measures would not adversely affect EFH of Pacific salmon and that
consultation under section 305(b)(2) of the Act is not necessary.35 By letter
filed December 14, 2006, NMFS concurred with staff’s determination, provided that
the operational and enhancement measures recommended in the EA are included in
the license.  

THREATENED AND ENDANGERED SPECIES 

59.     Section
7(a)(2) of the Endangered Species Act of 1973 (ESA),36 requires federal
agencies to ensure that their actions are not likely to jeopardize the
continued existence of federally listed threatened and endangered species, or
result in the destruction or adverse modification of their designated critical
habitat. No ESA-listed species are known to occur in the project area.  

          32
16 U.S.C. § 1855(b)(2) (2000). 

          33 16 U.S.C. § 1855(b)(4)(A)
(2000). 

          34
16 U.S.C. § 1855(b)(4)(B) (2000). 

          35  EA at 20. 

          36
16 U.S.C. § 1536(a) (2000). 

	
  

 	
  

 
	
 Project No.
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NATIONAL HISTORIC PRESERVATION ACT 

60.     Under
section 106 of the National Historic Preservation Act (NHPA),37 and its
implementing regulations,38 federal agencies must take into account the effect
of any proposed undertaking on properties listed or eligible for listing in the
National Register (defined as historic properties) and to afford the Advisory
Council on Historic Preservation a reasonable opportunity to comment on the
undertaking. This generally requires the Commission to consult with the State
Historic Preservation Officer (SHPO) to determine whether and how a proposed
action may affect historic properties, and to seek ways to avoid or minimize
any adverse effects.  

61.     To
satisfy these responsibilities, the Commission executed a Programmatic
Agreement (PA) with the Alaska SHPO and invited Chugach; the Forest Service;
Cook Inlet Region, Inc.; Kenaitze Indian Tribe; Salamatof Native Association,
Inc.; Ninilchik Traditional Council; Kenai Native Association, Inc.; Native
Village of Eklutna; and Alaska DNR to concur with the stipulations of the PA.
The Cook Inlet Region, Inc.; Kenaitze Indian Tribe; Salamatof Native
Association; and Chugach concurred. 

62.     The
Forest Service did not sign the PA, citing concerns that the wording in the PA
inappropriately delegates the Commission’s decisional authority to the
licensee. Additionally, because its role would be limited to a concurring party
to the PA, the Forest Service claims that it would not have sufficient
authority to protect resources on its lands. As explained in the April 19, 2007
Commission staff letter submitting a revised PA for signature, the Cooper Lake
PA contains standard provisions used in PAs for hydroelectric projects across
the country. The language has been developed with the Advisory Council on
Historic Preservation. Nonetheless, Forest Service concerns are addressed in
the existing PA. As staff notes in its April 19, 2007 letter, the Commission
remains legally responsible for all findings and determinations. Where any
disagreement arises among any parties to the PA, including concurring parties,
those disagreements may be brought before the Commission to resolve in
accordance with stipulation IV of the PA. 

63.     A
Historic Properties Management Plan (HPMP) for the Cooper Lake Project was
filed on September 27, 2005. During deliberations over the PA, it was agreed
that the HPMP should be modified to clarify a few procedural matters in
carrying out the tasks defined in the September 2005 HPMP. The PA stipulates
that the licensee shall prepare and implement a HPMP for the term of any new
license issued for this project. Execution of the PA demonstrates the
Commission’s compliance with section 106 of the 

          37
16 U.S.C. § 470 et seq. (2000). 

          38
36 C.F.R. Part 800 (2007). 

	
  

 	
  

 
	
 Project No.
 2170-029

 	
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NHPA. Article
410 requires the licensee to implement the PA and to file its final HPMP with
the Commission within six months of license issuance. 

RECREATION 

64.     Chugach
maintains a gravel parking area and informal boat launch on Cooper Lake. Public
access to the parking area and informal boat launch is provided by the spur
road to the intake structure. Article 407 requires Chugach to maintain the spur
road. Article 411 requires Chugach to maintain the gravel parking area and
informal boat launch. 

RECOMMENDATIONS OF STATE AND FEDERAL FISH AND
WILDLIFE AGENCIES 

          A.          Recommendations
Pursuant to Section 10(j) of the FPA 

65.     Section
10(j)(l) of the FPA39 requires the Commission, when issuing a license, to
include conditions based on recommendations by federal and state fish and
wildlife agencies submitted pursuant to the Fish and Wildlife Coordination Act40  to “adequately ‘ and equitably protect, mitigate damages to, and enhance fish
and wildlife (including related spawning grounds and habitat)” affected by the
project.  

66.     In
response to the February 28, 2006 public notice that the project was ready for
environmental analysis, Alaska DFG, FWS, and NMFS collectively filed fifteen
different recommendations.41
Seven recommendations are outside the scope of section 10(j) and are
discussed in section B, below. This license includes conditions consistent with
all eight of the remaining recommendations that are within the scope of section
10(j). These include recommendations to: (1) restrict motor vehicle access into
Cooper Creek watershed (Forest Service Condition 18 in Appendix A, as modified
by Article 406); (2) construct Stetson Creek diversion, pipeline, and Cooper
Lake bypass facilities (Forest Service Condition 11); (3) divert up to a
maximum of 110 cfs from Stetson Creek into Cooper Lake, and release 10,246
acre-feet annually to Cooper Creek to provide instream flows (Forest Service
Condition 13); (4) monitor flows at the Stetson Creek diversion, outflows at
Cooper Lake, and flows and water temperature at the mouth of Cooper Creek  

          39
16 U.S.C. § 803(j) (1) (2000).  

          40
16 U.S.C. §§ 661 et seq. (2000). 

          41
Alaska DFG filed recommendations on April 21, 2006, FWS filed
recommendations on April 25, 2005, and NMFS filed recommendations on April 28,
2006.  

	
  

 	
  

 
	
 Project No.
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(Forest
Service Condition 14); (5) implement a Cooper Creek and Stetson Creek water
temperature and aquatic biota study program (Forest Service Condition 15); (6)
implement Cooper Creek geomorphology and sediment studies (Forest Service
Condition 15); (7) maintain the reservoir elevation between 1,160 feet and
1,194 feet msl and restrict powerhouse shutdowns (Forest Service Condition 16);
and (8) maintain the transmission line ROW and implement an Access and
Maintenance Plan to protect wildlife habitats (Forest Service Condition 17 as
modified by Article 405). 

          B.          Recommendations
Pursuant to Section 10(a)(l) of the FPA 

67.     Alaska
DFG made four recommendations that are not specific measures to protect,
mitigate damages to, or enhance fish and wildlife and one for a study that
could have been completed prior to licensing. In addition, two recommendations
made by Alaska DFG, FWS, and NMFS are not specific measures to protect fish and
wildlife. Consequently, I do not consider these recommendations under section
10(j) of the FPA. Instead, I consider these recommendations under the broad
public-interest standard of FPA section 10(a)(l).42  

68.     I
am adopting all seven agency recommendations that were determined to be outside
of the scope of section 10(j). These require: (1) agency access to project
lands with appropriate notice (Article 408); (2) measures to prevent Chugach
employees from fishing and hunting during project construction and operation
(Article 402); (3) notifying the Commission and settlement parties that
constructing the Stetson Creek is infeasible (Forest Service Condition 12); (4)
conducting Cooper Creek biota monitoring prior to diverting Stetson Creek flows
(Forest Service Condition 15); (5) maintaining roads within the project
boundary (Forest Service Condition 18 and Article 407); (6) painting the
powerhouse and intake structure (Article 409), and (7) implementing an HPMP
(Article 410). 

ADMINISTRATIVE CONDITIONS 

          A.          Annual
Charges 

69.     The
Commission collects annual charges from licensees for administration of the 

          42
16 U.S.C. § 803(a)(l) (2000). Section l0(a)(l)
requires that any project for which the Commission issues a license shall be
best adapted to a comprehensive plan for improving or developing a waterway or
waterways for the use or benefit of interstate or foreign commerce; for the
improvement and utilization of waterpower development; for the adequate
protection, mitigation, and enhancement of fish and wildlife; and for other
beneficial public uses, including irrigation, flood control, water supply,
recreation, and other purposes  

	
  

 	
  

 
	
 Project No.
 2170-029

 	
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FPA and for
the use, occupancy and enjoyment of federal lands. Article 201 provides for the
collection of funds for administration of the FPA and for recompensing the
United States for the use of its lands. 

70.     On
July 11, 1966, the Commission approved Exhibit K drawings of the project
boundary and required annual charges for the occupancy of project works, other
than transmission lines, on 1,012.9 acres of lands of the United States within
the Chugach National Forest.43 On February 3, 1970, the Commission issued
an order establishing annual charges for 92.77 miles of 100-foot wide
transmission line rights-of-way (1,124.37 acres) on lands within the Chugach
National Forest and other lands of the United states.44 In the
relicense application, however, the licensee states that the amount of
non-transmission line federal lands within the project boundary is 3,043.23
acres, consisting of 3,012 acres for Cooper Lake and 31.23 acres access roads
and routes to the transmission line. The license application identifies the
total acreage for federal lands within the transmission line rights-of-way as
437.88 acres. The discrepancy in the acreage of occupied federal lands needs to
be resolved.  

71.     One
reason for the difference in acreages may be due to the conveyance of lands
from the federal government to the State of Alaska pursuant to the Alaska
Statehood Act of July 7, 1958 (Act)45 Section 6(a) of the Act46
authorized Alaska to select from federal lands a certain amount of acreage.
Upon the state’s selection of lands, a patent was issued to the state. However,
the lands occupied by the Cooper Lake Project were conveyed to the state
subject to the provisions of section 24 of the FPA,47 which deals
with the protection of the potential hydropower value of lands of the United
states.48 Since the Commission retains an interest in the land, it
has authority to collect annual charges for use of state land for power
purposes under the annual charges provision of section 10(e).49 Therefore,
Article 201 of the license requires that annual charges  

          43
Chugach Electric Association, Inc.,
36 FPC 47 (1966).  

          44
Chugach Electric Association, Inc.,
43 FPC 136 (1970).  

          45 Pub. L. 85-508, 72
Stat. 339 (1958).  

          46
72 Stat. 340.  

          47 16 U.S.C. §
 818 (2000).  

          48
See Petersburg Municipal Power & Light, 78
FERC ¶ 62,186 (1997), reh’g denied, 82 FERC ¶ 61,031 (1998); and Clark Gruening,
61 FERC ¶ 61,226 (1992).  

	
  

 	
  

 
	
 Project No.
 2170-029

 	
 22

 

continue to be
collected for the use of these lands. 

72.     Information
in Exhibit A (Section VIII tabulating federal lands) and on the Exhibit G drawings of the license application
do not permit a determination of which state lands enclosed within the project
boundary are subject to section 24 of the FPA. We, therefore, require in
Article 204 the filling of a revised Section VIII of Exhibit A and Exhibit G drawings. Such a determination shall
include the lands occupied by the transmission line that is no longer required
to be licensed. 

          B.          Amortization
Reserves 

73.     The
Commission requires that for new major licenses, licensees must set up and
maintain an amortization reserve account upon license issuance. Article 202
requires the establishment of the account. 

          C.          Exhibit
A and F Drawings 

74.     Exhibit
A descriptions (except Section VIII) and Exhibit F drawings filed with the
license application are approved and made part of the license (ordering
paragraph C). The Commission requires licensees to file sets of approved
project drawings on microfilm and in electronic file format. Article 203
requires the filing of these drawings. Article 204 requires the filing of
revised tabulation of federal lands to reflect lands subject to Section 24 of
the FPA. 

75.     Article
301 requires that the licensee shall file for Commission approval revised
Exhibits A, F, and G
within 90 days of completion of construction of any new facilities or
modification of project boundaries authorized by this license. 

          D.          Exhibit
G Drawings 

76.     The
Exhibit G drawings
are not approved. The Exhibit G drawings
need to be revised to reflect the acreage of lands subject to section 24 of the
FPA, discussed above, that are enclosed by the project boundary. Article 204
requires the filing of revised Exhibit G
drawings for Commission approval. 

          49 16 U.S.C. § 803(e)
(2000). Section l0(e) directs the Commission to fix annual charges to
compensate the United States for use of federal lands by licensees. Section 24
prohibits anyone who obtains federal lands subject to section 24 from
collecting from licensees for their use. See
Petersburg Municipal Power &
Light, 82 FERC ¶ at 61,123, n. 5 (1998).  

	
 

	
 

	
Project No.
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23

          E.          
Headwater Benefits 

77.     Some
projects directly benefit from headwater improvements that were constructed by
other licensees, by the United States, or by permittees. Article 204 requires
the licensee to reimburse such entities for these benefits if they were not
previously assessed and reimbursed. 

          F.          
Review
of Final Plans and Specifications 

78.     This
license authorizes several construction-related actions, including construction
of the Stetson Creek diversion, pipeline, and the Cooper Lake bypass structure.
Article 301 requires the licensee to file for Commission approval, within 90
days of completing construction, revised exhibits describing and showing the
facilities as built. Article 302 requires the licensee to provide the
Commission’s Division of Dam Safety and Inspection Portland Regional Office
(D2SI-PRO), for approval, final contract drawings and specifications, together
with a supporting design report consistent with the Commission’s regulations, a
Quality Control and Inspection Program, and a Soil Erosion and Sediment Control
Plan. Article 303 requires the licensee to provide D2SI-PRO with cofferdam
construction drawings and specifications at least 30 days prior to starting construction
of the cofferdams. Article 304 requires the licensee to provide the D2SI-PRO
with a temporary emergency action plan. 

          G.         
 Use
and Occupancy of Project Lands and Waters 

79.     Requiring
a licensee to obtain prior Commission approval for every use or occupancy of
the project would be unduly burdensome. Therefore, Article 412 allows the
licensee to grant permission, without prior Commission approval, for the use
and occupancy of project lands for such minor activities as landscape planting.
Such uses must be consistent with the purposes of protecting and enhancing the
scenic, recreational, and environmental values of the project. 

STATE AND FEDERAL COMPREHENSIVE PLANS

80.     Section
10(a)(2)(A) of the FPA,50 requires the Commission to consider the
extent to which a project is consistent with federal or state comprehensive
plans for improving, developing, or conserving a waterway or waterways affected
by the project.51 Under section 10(a)(2)(A), federal and state
agencies filed 27 comprehensive plans that address  

	
 

	

	
          50 16
U.S.C. § 803(a)(2)(A) (2000). 

	
 

	

          51 Comprehensive
plans for this purpose are defined at 18 C.F.R. § 2.19 (2007). 

	
 

	
 

	
Project No.
 2170-029

	
24 

various
resources in Alaska. Of these, staff identified and reviewed five comprehensive
plans that are relevant to this project.52 No conflicts were found.  

APPLICANT’S PLAN AND CAPABILITIES 

81.     In
accordance with sections 10(a)(2)(C) and 15(a) of the FPA,53
Commission staff evaluated Chugach’s record as a licensee for these areas: (A)
conservation efforts; (B) compliance history and ability to comply with the new
license; (C) safe management, operation, and maintenance of the project; (D)
ability to provide efficient and reliable electric service; (E) need for power;
(F) transmission services; (G) cost effectiveness of plans; and (H) actions affecting the
public. I accept staffs findings in each of the following areas.  

          A.          
Conservation
Efforts 

82.     Section
10(a)(2)(C) of the FPA54 requires the Commission to consider the
applicant’s electricity consumption improvement program, including its plans,
performance, and capabilities for encouraging or assisting its customers to
conserve electricity cost-effectively, taking into account the published
policies, restrictions, and requirements of state regulatory authorities.
Section 16.10 of the Commission’s regulations55 requires an
applicant for a new license to include in its application a discussion of its
record in encouraging energy conservation. Because Chugach primarily sells
project power to electric associations/cooperatives through wholesale and
economy energy sales contracts, its ability to influence end-users is limited.
However, Chugach promotes energy conservation and efficiency improvements
through various programs such as free commercial and residential energy audits,
and rating of energy efficiency of new and existing homes. Staff finds that
Chugach is making an effort to conserve electricity and has made a satisfactory
good faith effort to comply with section 10(a)(2)(C) of the FPA.  

	
 

	

	

          52  The
list of applicable plans can be found in section IX of the EA at 154-55. 

	
 

	
          53  16
U.S.C. § § 803(a)(2)(C)
and 808(a) (2000). 

	
 

	
          54  16
U.S.C. § 803(a)(2)(c)
(2000). 

	
 

	
          55  18
C.F.R. § 16.10
(2007). 

	
 

	
 

	
Project No.
 2170-029

	
25 

          B.          
Compliance
History and Ability to Comply with the New License 

83.     Chugach
has operated the project continuously for the past 50 years. Based on a review
of Chugach’s compliance with the terms and conditions of the existing license,
staff finds that Chugach’s overall record of making timely filings and
compliance with its license is satisfactory. Therefore, staff believes that
Chugach can satisfy the conditions of a new license. 

          C.          
Safe
Management, Operation, and Maintenance of the Project 

84.     Staff
reviewed Chugach’s management, operation, and maintenance of the Cooper Lake
Project pursuant to the requirements of 18 C.F.R. Part 12 and the Commission’s
Engineering Guidelines and periodic Independent Consultant’s Safety Inspection
Reports. Staff concludes that the dams and other project works are safe, and
that there is no reason to believe that Chugach cannot continue to safely
manage, operate, and maintain these facilities under a new license. 

          D.          
Ability
to Provide Efficient and Reliable Electric Service 

85.     Staff
reviewed Chugach’s plans and its ability to operate and maintain the project in
a manner most likely to provide efficient and reliable electric service.
Staff’s review indicates that Chugach has completed upgrades at the project
including rewinding the generators and replacing the turbine runners with modem
equipment. These upgrades have increased the installed capacity at the project.
Additional features of the project, such as spinning reserve, energy storage,
and voltage support, contribute to the interconnected utility system of
south-central Alaska, providing benefits shared by all utilities in the area.
All generation resources available to Chugach are operated on an economic
dispatch basis to minimize total generation cost. Staff concludes that Chugach
is capable of operating the project to provide efficient and reliable electric
service in the future. 

          E.          
Need
for Power 

86.     Chugach
is Alaska’s largest electric utility, supplying power to nearly 75 percent of
Alaska’s residents through wholesale and retail power sales. The direct retail
sales comprise about 63 percent of the total energy sales for Chugach, while
the wholesale sales are about 33 percent. The company serves more than 74,750
metered retail locations in a service territory extending from Anchorage to the
North Kenai Peninsula and from Whittier, on Prince William Sound, to Tyonek on
the west side of Cook Inlet. Wholesale and non-firm energy sales also are made
regularly to several other utilities in the region. 

87.     The
project provides about two percent of the annual energy required to meet
Chugach’s generation needs and represents approximately 15 percent of Chugach’s
total 

	
 

	
 

	
Project No.
 2170-029

	
26 

hydroelectric
capacity. Hydroelectric production accounts for 93.38 MW of Chugach’s total
generation supply of 531.1 MW. The mix of generation is made up of natural gas,
steam power, and hydropower. 

88.     If
the project were not licensed, replacement power for the Railbelt area would
likely come from the natural gas-fired Bernice Lake Power Plant. If licensed,
power from the project would continue to make an important contribution to
Chugach’s base supply for a portion of the local and regional economy. The
project helps displace fossil-fueled electric power generation that the region
now uses, thereby conserving non-renewable fossil fuels and reducing the
emission of noxious byproducts caused by fossil-fuel combustion. Assuming an
average annual generation of 48,500 MWh, replacing Cooper Lake’s hydroelectric
generation with a natural gas-fired facility would emit an estimated 136.3 tons
of pollutants each year. With the increase in average annual generation to
51,500 MWh, the estimated pollutants that would result from replacement power
increases to about 144.7 tons each year. 

          F.          
Transmission
Services 

89.     The
project consists of two transmission lines—a 6.3-mile-long 69-kV transmission
line extending to the Quartz Creek substation, and a 90.4-mile-long 115-kV
transmission line from the Quartz Creek substation to the Anchorage substation.
The transmission line between the Quartz Creek to Anchorage substations has
been determined by staff to no longer meet the Commission’s definition of a
primary transmission line (16 U.S.C. § 796(11)). Staff recommends that the line
be removed from the project boundary when all necessary permits and easements
are obtained by Chugach. 

90.     Chugach
is proposing no changes that would affect its own or other transmission
services in the region. The project and its primary transmission line are
important elements in providing power and voltage control to local communities
and the region. 

          G.          
Cost
Effectiveness of Plans 

91.     Chugach
plans to make a number of facility and operational modifications to both
improve and enhance environmental resources affected by the project. Based on
Chugach’s record as an existing licensee, staff concludes that these plans are
likely to be carried out in a cost-effective manner. 

          H.          
Actions
Affecting the Public 

92.     Chugach
maintains the gravel parking area and informal boat launch on the east shore of
Cooper Lake, which facilitates recreational boating and fishing on the
reservoir. Chugach uses the project to help meet local power needs and pays
taxes that contribute to the cost of public services provided by local
government. 

	
 

	
 

	
Project No.
 2170-029

	
27

PROJECT ECONOMICS 

93.     In
determining whether to issue a new license for an existing hydroelectric
project, the Commission considers a number of public interest factors,
including the economic benefits of project power. Under the Commission’s
approach to evaluating the economics
of hydropower projects, as articulated in Mead
Corp.,56 the Commission uses current costs to compare the costs of the
project and likely alternative power with no forecasts concerning potential
future inflation, escalation, or deflation beyond the license issuance date.
The basic purpose of the Commission’s economic analysis is to provide a general
estimate of the potential power benefits and the costs of a project, and of reasonable
alternatives to project power. The estimate helps to support an informed
decision concerning what is in the public interest with respect to a proposed
license.  

94.     In
applying this analysis to the Cooper Lake Project, we have considered two options:
Chugach’s proposal and the project as licensed herein. As proposed by Chugach,
the levelized annual cost of operating the Cooper Lake Project is $5,002,662,
or $97.14/megawatt-hour (MWh). The proposed project would generate an estimated
average of 51,500 MWh of energy annually. When we multiply our estimate of
average generation by the alternative power cost of $188.90/MWh,57
we get a total value of the project’s power of $9,728,350 in 2007 dollars. To
determine whether the proposed project is currently economically beneficial,
staff subtracts the project’s cost from the value of the project’s power.58
 Therefore, in the first year of operation, the project would cost $4,725,688 or
$91.76/MWh less than the likely alternative cost of power.  

95.     As
licensed herein with the mandatory conditions and staff measures, the levelized
annual cost of operating the project would be about $5,006,655 or $97.22/MWh.
Based on the same alternative power cost and annual generation, project power
would cost $4,721,695, or $91.68/MWh less than the likely cost of alternative
power. 

96.     In
considering public interest factors, the Commission takes into account that
hydroelectric projects, like the Cooper Lake Project, offer unique operational
benefits to 

	
 

	

	
          56 72
FERC ¶
61,027 (1995). 

          57 For
the Cooper Lake Project, Chugach estimated that the cost to provide the same
amount of power from existing combustion turbines in the region ranges from
$37.30/MWh to $340.50/MWh. In the EA, staff assumed a power value of
$188.90/MWh—the mid-point of this range, which includes energy, capacity, and
ancillary services (spinning reserve and voltage support).  

          58 Details
of staff’s economic analysis for the project as licensed herein and for various alternatives
are included in the EA issued November 17, 2006.  

	
 

	
 

	
Project No. 2170-029

	
28

the electric utility system
(ancillary service benefits). These benefits include their capability to provide an almost instantaneous
load-following response to dampen voltage and frequency instability on
the transmission system, system-power-factor-correction through condensing operations, and a source of power available to help
in quickly putting fossil-fuel based generating stations back on line
following a major utility system or regional
blackout.

COMPREHENSIVE DEVELOPMENT

97.
     Sections
4(e) and 10(a)(l) of the FPA59 require the Commission to give equal consideration
to the power development purposes and to the purposes of energy conservation,
the protection, mitigation of damage to, and enhancement of fish and wildlife, the protection of recreational
opportunities, and the preservation of other aspects of environmental
quality. Any license issued shall be such as in the Commission’s judgment will
be best adapted to a comprehensive plan for improving or developing a waterway or waterways for all beneficial public
uses. The decision to license this project, and the terms and conditions
included herein, reflect such consideration. 

98.     The
EA for the project contains background information, analysis of effects, and
support for related license articles. Staff concluded, based on the record of
this proceeding, including the EA and the comments thereon, that licensing the
Cooper Lake Project as described in this
order would not constitute a major federal action significantly affecting the quality of the human environment.
The project will be safe if operated and maintained in accordance with
the requirements of this license.

99.     Based
on our independent review and evaluation of the Cooper Lake Project,
recommendations from the resource agencies and other stakeholders, and the
No-Action Alternative, as documented in the
EA, I have selected the proposed Cooper Lake Project, with the
staff-recommended measures, and find that it is best adapted to a comprehensive
plan for improving or developing the Cooper Creek waterway.

100.   I
selected this alternative because: (1) issuance
of a new license will serve to maintain a beneficial, dependable, and
inexpensive source of electric energy; (2) the required environmental measures will protect and enhance fish and
wildlife resources, water quality, recreational resources and historic
properties; and (3) the 19.38 MW of electric energy generated from a renewable
resource will continue to offset the use of fossil-fueled,
steam-electric generating plants, thereby conserving non-renewable resources and reducing atmospheric pollution.

	
 

	

	
               59
16 U.S.C. §§ 797(e) and 803(a)(l) (2000). 

	
 

	
 

	
Project
  No. 2170-029

	
29

LICENSE TERM

101.     Section 15(e) of the
FPA,60 provides that any new license issued shall be for a term that the Commission
determines to be in the public interest, but not less than 30 years or more than 50 years. The Commission’s
general policy is to establish 30-year terms
for projects with little or no redevelopment, new construction, new capacity,
or environmental mitigation and
enhancement measures; 40-year terms for projects with a moderate amount of such activities; and 50-year
terms for projects with extensive measures.61  

102.     This license requires a substantial amount of
new construction: (1) a new diversion
structure on Stetson Creek; (2) an 11,000-foot-long pipeline; (3) outflow structure; (4) a screened water bypass structure
through the existing project dam; and (5) an outflow energy dissipation structure downstream of the dam. Because
of the substantial new construction, a 50-year license for the Cooper Lake
Project is appropriate. The settlement agreement also supports a 50-year
license.

The
Director orders:

            (A)
     This license is issued
to Chugach Electric Association (licensee) to operate and maintain the Cooper
Lake Project, for a period of 50 years, effective the first day of the month in
which this order is issued. The license is subject to the terms and conditions of the Federal Power Act
(FPA), which is incorporated by reference as part of this license, and subject to
the regulations the Commission issues under the provisions of the FPA.

            
(B)     The project consists of:

            
(1)     All lands, to the extent of the licensee’s interests in
these lands, described in the project description and the project boundary
discussion of this order.

            
(2)     Project works consisting of: (1) a 920-foot-long
rock-and-fill dam; (2) a 3-foot-high, 50-foot-wide spillway section adjacent to
the dam; (3) Cooper Lake, a 5.5-mile-long, 1-mile-wide impoundment with a
maximum useable storage capacity of

	
 

	

	
               60
16 U.S.C. § 808(e) (2000). 

	
 

	
               61 See
Consumers Power Company, 68 FERC ¶ 61,077 at 61,383-84 (1994). 

	
 

	
 

	
Project No. 2170-029

	
30

80,000 acre-feet at elevation
1,194 feet mean sea level (msl); (4) a power intake structure on the
shore of Cooper Lake with an invert of 1,151 feet msl; (5) a 10,686-foot-long
tunnel and penstock extending to Kenai Lake; (6) a 56-by-67-foot concrete powerhouse
containing two turbine-generators, each rated at 9.69 MW; (7) a transformer and
switchyard adjacent to the powerhouse; (8) a 6.3-mile-long 69-kV transmission
line extending to the Quartz Creek substation; and (9) a step-up transformer at
the Quartz Creek substation.

          The
90.4-mile-long 115-kV transmission line from the Quartz Creek substation to the
Anchorage substation is excluded from the project and the project boundary upon
the licensee’s compliance with Condition 17 submitted by the Forest
Service under section 4(e) of the Federal Power Act, as set forth in Appendix A
and required by Ordering Paragraph D of
this order.

          The
project works generally described above are more specifically shown and
described by those portions of exhibits A and F shown below:

          Exhibit
A: The following sections of Exhibit A filed on April 26, 2005:

          Section
IA through I.D, pages A-l through A-8, entitled “Introduction and Project Overview”; figure A-l, page A-5, entitled
“Location of the Cooper Lake Project”; section
II.A through II.J, pages A-8 through A-14, entitled “Primary Structures”; section
III, pages A-14 through A-15, entitled “Impoundment”; section IV, pages A-15
through A-16, entitled “Generating Equipment”; section V, pages A-16 through
A-17, entitled “Transmission Lines”; section VI, page A-17, entitled
“Transformers”; section VII, page A-17, entitled “Additional Mechanical,
Electrical and Transmission Equipment Appurtenant to the Development.”

          Exhibit
F: The following sections of Exhibit F filed on September 27, 2005:

	
 

	
 

	
 

	
Exhibit F Drawing

	
FERC
  No. 

  2170-

	
Description 

	

	

	

	
 

	
Sheet F-l

	
1001

	
Location Map 

	
 

	
 

	
 

	
Sheet F-2

	
1002

	
Dam and Spillway Plan 

	
 

	
 

	
 

	
Sheet F-3

	
1003

	
Dam and Spillway Section &
  Profile 

	
 

	
 

	
 

	
Sheet F-4

	
1004

	
Intake Plans and Sections 

	
 

	
 

	
 

	
Sheet F-5

	
1005

	
Tunnel Plan and Profile 

	
 

	
 

	
Project No. 2170-029

	
31

	
 

	
 

	
 

	
Sheet
  F-6

	
1006

	
Penstock
  Plan 

	
 

	
 

	
 

	
Sheet
  F-7

	
1007

	
Penstock
  Profile 

	
 

	
 

	
 

	
Sheet
  F-8

	
1008

	
Powerhouse
  Site Plan 

	
 

	
 

	
 

	
Sheet
  F-9

	
1009

	
Powerhouse
  Generator Floor Plan 

	
 

	
 

	
 

	
Sheet
  F-10

	
1010

	
Powerhouse
  Turbine Floor Plan 

	
 

	
 

	
 

	
Sheet
  F-11

	
1011

	
Powerhouse
  Transverse Section 

	
 

	
 

	
 

	
Sheet
  F-12

	
1012

	
Powerhouse
  Longitudinal Section 

	
 

	
 

	
 

	
Sheet
  F-13

	
1013

	
Transmission
  Line Structures 

	
 

	
 

	
 

	
Sheet
  F-14

	
1014

	
One-Line
  Diagram 

	
 

	
 

	
 

	
Sheet
  F-15

	
1015

	
Proposed
  Stetson Creek Diversion Site Plan 

	
 

	
 

	
 

	
Sheet
  F-16

	
1016

	
Proposed
  Stetson Creek Diversion and Outlet Structures 

          (C)     The sections of Exhibit
A and all of Exhibit F described above are approved and made part of this license. The
Exhibit G drawings do not comply with the Commission’s regulations and are not approved.

          (D)     The license is subject
to the conditions submitted by the Forest Service under section 4(e) of the
FPA, as those conditions are set forth in Appendix A to this order.

          (E)     This license is subject
to articles set forth in Form L-l (October 1975), entitled “Terms and
Conditions of License for Constructed Major Project Affecting Lands of the United
States (see 54 FPC 1799 et seq.),” and the following additional articles.

          Article
201. Administrative Annual Charges. The
licensee shall pay the United States annual charges, effective the first day of
the month in which this license is issued, and as determined in accordance with
the provisions of the Commission’s regulations in effect from time to time, for
the purposes of:

          (1)
     reimbursing the United States for the cost of
administration of Part I of the

	
 

	
 

	
Project No. 2170-029

	
32

Federal Power Act. The
authorized installed capacity for that purpose is 19.38 megawatts; and

          (2)          recompensing
the United States for the use,
occupancy and enjoyment of the amount of acres of its lands or its interest in
lands (other than for transmission line right-of-way) to be determined
pursuant to Article 204;

          (3)          recompensing
the United States for the use,
occupancy, and enjoyment of the amount of acres of its lands for
transmission line right-of-way to be determined pursuant to Article 204. Upon compliance with Ordering Paragraph B and D
of this order, the Commission will issue an order revising the amount of
federal lands for transmission line use to the correct acreage as it is
determined at that time.

          If
modifications are made to the project boundaries that involve federal lands
during the license term, the Commission will adjust the annual charges
accordingly.

          Article
202. Amortization Reserve. Pursuant
to section 10(d) of the Federal Power Act, a specified reasonable rate of
return upon the net investment in the project shall be used for determining
surplus earnings of the project for the establishment and maintenance of amortization reserves. The licensee
shall set aside in a project amortization
reserve account at the end of each fiscal year one half of the project surplus
earnings, if any, in excess of the specified rate of return per annum on the
net investment. To the extent that there is a deficiency of project
earnings below the specified rate of return per annum for any fiscal year, the
licensee shall deduct the amount of that deficiency from the amount of any
surplus earnings subsequently accumulated, until absorbed. The licensee shall
set aside one-half of the remaining surplus earnings, if any, cumulatively
computed, in the project amortization reserve account. The licensee shall maintain the amounts established in the project
amortization reserve account until further order of the Commission.

          The
specified reasonable rate of return used in computing amortization reserves shall be calculated annually based on current
capital ratios developed from an average of 13 monthly balances of amounts
properly included in the licensee’s long-term debt and proprietary
capital accounts as listed in the Commission’s Uniform System of Accounts. The
cost rate for such ratios shall be the weighted average cost of long-term debt
and preferred stock for the year, and the cost of common equity shall be the
interest rate on 10-year government bonds
(reported as the Treasury Department’s 10-year constant maturity series)
computed on the monthly average for the year in question plus four percentage points (400 basis points).

          Article
203. Exhibit F Drawings. Within
45 days of the date of issuance of the license, the licensee shall file the approved
exhibit drawings in aperture card and electronic
file formats.

	
 

	
 

	
Project No. 2170-029

	
33

          a)          Three
sets of the approved exhibit drawings shall
be reproduced on silver or gelatin 35mm microfilm. All microfilm shall
be mounted on type D (3-1/4” X 7-3/8”) aperture cards. Prior to microfilming,
the FERC Project-Drawing Number (i.e., P-2170- 1001 through P-2170-####) shall be shown in the margin below the title
block of the approved drawing. After
mounting, the FERC Drawing Number shall be typed on the upper right corner of
each aperture card. Additionally, the Project Number, FERC Exhibit (i.e., F-l, etc.), Drawing Title, and
date of this license shall be typed on the upper left corner of each aperture
card.

          Two
of the sets of aperture cards along with form FERC-587 shall be filed with the
Secretary of the Commission, ATTN: OEP/DHAC. The third set shall be filed with the
Commission’s Division of Dam Safety and Inspections Portland Regional Office.

          b)          The
licensee shall file two separate sets of exhibit drawings in electronic raster format with the Secretary of the
Commission, ATTN: OEP/DHAC. A third set shall be filed with the
Commission’s Division of Dam Safety and Inspections Portland Regional Office.
Exhibit F drawings must be identified as (CEII) material under 18 CFR §388.113(c).
Each drawing must be a separate electronic file, and the file name shall include:
FERC Project-Drawing Number, FERC Exhibit, Drawing Title, date of this license,
and file extension in the following format [P-2170-####, F-l, Project Description,
MM-DD-YYYY.TIF]. Electronic drawings shall meet the following format specification:

IMAGERY - black & white raster file

FILE TYPE – Tagged Image File Format, (TIFF) CCITT Group 4

RESOLUTION – 300 dpi desired, (200 dpi min)

DRAWING SIZE FORMAT – 24” X 36” (min), 28” X
40” (max)

FILE SIZE – less than 1 MB desired

          Article
204. Revised Section VIII of Exhibit A
and Exhibit G Drawings. Within 90 days of the date of
issuance of the license, the licensee shall file, for Commission approval, revised Section VIII of Exhibit A and
Exhibit G drawings enclosing within the project boundary all project
works necessary for operation and maintenance of the project. In addition, the drawings shall be revised to reflect the total
acreage of land subject to the power site reservation pursuant to
section 24 of the FPA. The Exhibit G drawings must comply with sections 4.39
and 4.41 of the Commission’s regulations.

          Article
205. Headwater Benefits. If
the licensee’s project was directly benefited by the construction work of
another licensee, a permittee, or the United States on a storage reservoir or other headwater improvement
during the term of the original license (including extensions of that
term by annual licenses), and if those headwater benefits were not previously
assessed and reimbursed to the owner of the headwater

	
 

	
 

	
Project No. 2170-029

	
34

improvement, the licensee shall reimburse the owner of
the headwater improvement for those benefits, at such time as they are
assessed, in the same manner as for benefits received during the term of this
new license. The benefits will be assessed in accordance with Part 11, Subpart
B, of the Commission’s regulations.

          Article
301. Revised Exhibits and As-built
Drawings. Within 90 days of the completion of any
construction of facilities, modifications of project boundaries, or any other
action required by this license that results in changes to Exhibits A, F, and
G, the licensee shall file for Commission approval revised Exhibits A, F, and
G, as appropriate, to show and describe those project facilities and lands as
built or modified. The exhibits shall have
sufficient detail to adequately delineate the relative location of project
features. The licensee shall submit six copies of the revised exhibits
to the Commission, one copy to the
Commission’s Division of Dam Safety and Inspections’ Portland Regional Engineer,
and one to the Director, Division of Hydropower Administration and Compliance.

          Article 302. Contract Plans and Specifications. At
least 60 days prior to the start of any construction, the licensee shall submit
one copy of its plans and specifications (and a supporting design document for
an unconstructed dam) to the Commission’s Regional Engineer, and two copies to
the Commission (one of which shall be a courtesy copy to the Director, Division
of Dam Safety and Inspections). The submittal to the Regional Engineer must
also include as part of preconstruction requirements: a Quality Control and
Inspection Program, Temporary Construction Emergency Action Plan, and Soil Erosion
and Sediment Control Plan. The licensee may not begin construction until the
Regional Engineer has approved in writing the plans and specifications and determined that all preconstruction requirements
have been satisfied.

          Article
303. Cofferdam Construction Drawings. Before
starting any construction, the licensee shall review and approve the
design of contractor-designed cofferdams and deep excavations and shall make
sure construction of cofferdams and deep
excavations is consistent with the approved design. At least 30 days before
starting construction of the cofferdam, the licensee shall submit one
copy to the Commission’s Regional Engineer and two copies to the Commission
(one of which shall be a courtesy copy to the Director, Division of Dam Safety and
Inspections), of the approved cofferdam construction drawings and
specifications and the letters of approval.

          Article
304. Temporary Emergency Action Plan. At
least 60 days before starting any construction, the licensee shall submit one
copy to the Division of Dam Safety and Inspections, Portland Regional Engineer
and two copies to the Commission (one of which
shall be a courtesy copy to the Director, Division of Dam Safety and
Inspections), of the Temporary Emergency Action Plan (TEAP) for the
Commission’s review and approval. The TEAP
shall describe emergency procedures in case failure of a cofferdam, large
sediment control structure, or any other water retaining structure could
endanger

	
 

	
 

	
Project No. 2170-029

	
35

construction workers or the
public. The TEAP shall include a notification list of emergency response agencies, a plan drawing of
the proposed cofferdam arrangement, the location of safety devices and
escape routes, and a brief description of testing procedures.

          Article
401. Scheduling and Reporting
Requirements and Amendment Applications.

          (a)          Requirement
to File Plans for Commission Approval and Requirement to Consult

          Various
conditions of this license required by ordering paragraph D and found in the Forest Service’s mandatory section 4(e) conditions
(Appendix A) require the licensee to prepare plans for approval by some
or all of the signatories to the Cooper Lake Settlement
Agreement. Each such plan shall also be submitted to the Commission for approval
and include an implementation schedule. These plans are listed below.

	
 

	
 

	
 

	
 

	
 

	
Condition

	
 

	
Plan

	
 

	
Due Date 

	

	

	

	

	

	
Appendix A, condition no. 3

	
 

	
Hazardous Substance Plan

	
 

	
60 days prior to any new construction 

	
 

	
 

	
 

	
 

	
 

	
Appendix A, condition no. 6

	
 

	
Fire Prevention Plan

	
 

	
60 days prior to any new construction 

	
 

	
 

	
 

	
 

	
 

	
Appendix A, condition no. 7

	
 

	
Noxious Weed Management Plan

	
 

	
60 days prior to any new construction 

          The
licensee shall submit to the Commission documentation of its consultation,
copies of comments and recommendations made in connection with the plan, and a
description of how the plan accommodates the comments and recommendations. The
licensee shall allow a minimum of 30 days for the consulted entities to comment
and to make recommendations before filing the plan with the Commission. If the
licensee does not adopt a recommendation, the filing shall include the
licensee’s reasons, based on project-specific information. The Commission
reserves the right to make changes to any plan
submitted. Upon Commission approval the plan becomes a requirement of the license,
and the licensee shall implement the plan or changes in project operations or facilities, including any changes required by the
Commission.

          (b)          Requirement
to File Amendment Applications

          Condition
no. 12 in Appendix A contemplates unspecified long-term changes to project
operations, requirements, or facilities if the construction of the Stetson
Creek diversion, pipeline, and Cooper Lake
bypass facility is not possible or too costly. These changes may not be
implemented without prior Commission authorization granted after the filing of
an application to amend the license.

	
 

	
 

	
Project No. 2170-029

	
36

          Article
402. Stetson Creek Diversion and
Pipeline and Cooper Lake Bypass Plan. Within three years of the issuance date of the
license, the licensee shall file for Commission approval a Stetson Creek
Diversion and Pipeline and Cooper Lake Bypass plan.
In addition to the measures set forth in condition no. 11 (included in Appendix
A), the plan shall include a detailed description of how the licensee
will enforce employee work standards and conduct to ensure that they are
consistent with the terms of the license and any permits and would prevent
potential exploitation of fish and wildlife where employees have improved
access to the Cooper Creek valley.

          The
Commission reserves the right to require changes to the plan. Upon Commission approval, the licensee shall implement
the plan, including any changes required by the Commission.

          Article
403. Gaging Plan. At least
one year prior to releasing instream flows through the new Cooper Lake
dam release structure and Stetson Creek diversion structure, the licensee shall file for Commission approval a Gaging
Plan that includes, at a minimum: (1)
the conceptual design for the new flow gaging stations at the Cooper Lake dam and Stetson Creek diversion; (2) plans
for maintenance, quality assurance, and control at the new Cooper Lake dam and
Stetson Creek diversion gaging stations; and (3) reporting schedules for
the new Cooper Lake dam and Stetson Creek diversion monitoring locations and
the existing U.S. Geological Survey gage at the mouth of Cooper Creek.

          The
Gaging Plan shall be developed in consultation with the U.S. Forest Service,
U.S. Fish and Wildlife Service, National Marine Fisheries Service, U.S.
National Park Service, Alaska Department of Natural Resources, and Alaska
Department of Fish and Game. The licensee shall include with the plan
documentation of consultation, copies of recommendations on the completed plan
after it has been prepared and provided to the consulted entities, and specific
descriptions of how the entities’ comments are accommodated by the plan. The licensee shall allow a minimum of 30 days
for the entities to comment and to make recommendations before filing
the plan with the Commission. If the
licensees do not adopt a recommendation, the filing shall include the licensees’
reasons, based on project-specific information.

          The
Commission reserves the right to require changes to the plan. Upon Commission approval, the licensee shall implement
the plan, including any changes required by the Commission.

          Article
404. Instream Flow Release Schedule and
Compliance. By May 31 of each year immediately following the
construction of the Stetson Creek diversion and release of instream flows, the
licensee shall file with the Commission a flow release schedule into Cooper
Creek for the upcoming May 1 to April 30 water year. The

	
 

	
 

	
Project No. 2170-029

	
37

licensee’s flow release schedule shall be based on the
input of the Interagency Committee’s
recommendations and projected available flows as provided in condition no. 13
(Appendix A). The flow release schedule may be temporarily modified if required
by operating emergencies beyond the control of the licensee, or for
short periods upon agreement between the licensee and the Interagency
Committee. If the flow is so modified, the licensee shall notify the Commission
as soon as possible, but no later than 10
days after each such incident.

          Article
405. Transmission Line ROW Management
Plan and Access Management and
Maintenance Plan. Within one year of the issuance date of the
license, the licensee shall file for
Commission approval a final Transmission Line Right-of-Way Management Plan and Access Management and Maintenance Plan.
The final plan shall complete all omitted sections of the draft plan
filed with the Cooper Lake Settlement Agreement on August 31, 2005, including,
but not limited to, procedures for avoiding or minimizing adverse impacts to
nesting birds. Bird protection measures shall include avoiding vegetation
clearing between May 1 and July 15 to the extent practicable.

          The
plan shall be developed in consultation with the U.S. Forest Service, U.S. Fish
and Wildlife Service, Alaska Department of Natural Resources, and Alaska
Department of Fish and Game. The licensee shall include with the plan
documentation of consultation, copies of
recommendations on the completed plan after it has been prepared and
provided to the consulted entities, and specific descriptions of how the
entities’ comments are accommodated by the plan. The licensee shall allow a
minimum of 30 days for the entities to comment and to make recommendations
before filing the plan with the Commission.
If the licensee does not adopt a recommendation, the filing shall include
the licensee’s reasons, based on project-specific information.

          The
Commission reserves the right to require changes to the plan. Upon Commission
approval, the licensee shall implement the plan in accordance with the provisions of condition no. 17 (included in
Appendix A), including any changes required by the Commission.

          Article
406. Public Access Control Plan for the
Cooper Creek Dam and Stetson Creek
Diversion Access Roads. Within one year of the issuance date of the
license, the licensee shall file for Commission approval a Public Access
Control Plan for Cooper Creek and Stetson
Creek access roads. In addition to the measures set forth in Condition no.
18 (included in Appendix A), the plan shall include detailed descriptions of procedures and schedules for maintaining the
gate(s), monitoring the effectiveness of the gate(s) at controlling motorized
access, and procedures for identifying additional measures that would be
implemented if gating measures prove ineffective at controlling motorized access.

	
 

	
 

	
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          The
Public Access Control Plan for Cooper Creek and Stetson Creek Access Roads
shall be developed in consultation with the U.S. Forest Service, U.S. Fish and
Wildlife Service, U.S. National Park Service, Alaska Department of Natural
Resources, and Alaska Department of Fish and
Game. The licensee shall include with the plan documentation of consultation, copies of recommendations on the
completed plan after it has been prepared and provided to the consulted
entities, and specific descriptions of how the entities’ comments are accommodated by the plan. The licensee shall
allow a minimum of 30 days for the entities to comment and to make
recommendations before filing the plan with the Commission. If the licensee
does not adopt a recommendation, the filing shall include the licensee’s
reasons, based on project-specific information.

          The
Commission reserves the right to require changes to the plan. Upon Commission approval, the licensee shall implement
the plan, including any changes required by the Commission.

          Article
407. Maintenance of Spur Roads. The
licensee shall maintain the following
access roads off Snug Harbor Road for operational purposes: the spur road accessing the project powerhouse, the spur road
accessing the project surge tank, the spur road accessing the penstock
tunnel portal, and the spur road to the intake structure.

          Article
408. Agency Access. The
licensee shall provide representatives of the Alaska Department of Fish
and Game, U.S. Fish and Wildlife Service, and U.S. Forest Service, who show proper credentials, free and
unrestricted access to, through, and across the project lands and waters and
project works, in the performance of their official duties, after appropriate
advance notification is made.

          Article
409. Aesthetics. Within two
years of the issuance date of the license, the licensee shall paint the powerhouse and intake structures in accordance
with U.S. Forest Service color specifications to reduce the visual impact of
project facilities. Within three years of the issuance date of the
license, the licensee shall file with the Commission documentation that the
requirements of this article have been completed and a painting maintenance schedule for the remainder of the
license.

          Article
410. Programmatic Agreement and Historic
Properties Management Plan. The licensee shall implement the “Programmatic
Agreement Among the Federal Energy Regulatory Commission and the Alaska
Historic Preservation Officer (Alaska SHPO) for Managing Historic Properties
that May be Affected by a License Issuing to Chugach Electric Association,
Inc., for the Cooper Lake Hydroelectric Project in Kenai Peninsula Borough,
Alaska (FERC No. 2170-029),” executed on June 22, 2007, and including but not
limited to the Historic Properties Management Plan (HPMP) for the project.
Pursuant to the requirements of this Programmatic Agreement (PA), the licensee
will file for the Commission’s approval a HPMP within six months of issuance of
this order. The Commission reserves the
authority to require changes to the HPMP at any

	
 

	
 

	
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time during the term of the
license. If the PA is terminated prior to Commission approval of the
HPMP, the licensee shall obtain approval from the Commission and the Alaska SHPO, before engaging in any ground-disturbing
activities or taking any other action that may affect any historic
properties within the project’s area of potential effects.

          Article
411. Maintenance of Boat Launch and Parking
Area. The licensee shall maintain
the gravel parking area and unimproved boat launch on the east shore of Cooper Lake
to provide vehicle access to, and hand launching of boats on, Cooper Lake.

          Article
412. Use and Occupancy. (a)
In accordance with the provisions of this article, the licensee shall
have the authority to grant permission for certain types of use and occupancy of project lands and waters and to
convey certain interests in project lands and waters for certain types
of use and occupancy, without prior Commission approval. The licensee may
exercise the authority only if the proposed use and occupancy is consistent
with the purposes of protecting and enhancing the scenic, recreational, and
other environmental values of the project. For those purposes, the licensee
shall also have continuing responsibility
to supervise and control the use and occupancies for which it grants
permission, and to monitor the use of, and ensure compliance with the covenants
of the instrument of conveyance for, any interests that it has conveyed,
under this article. If a permitted use and occupancy violates any condition of
this article or any other condition imposed
by the licensee for protection and enhancement of the project’s scenic,
recreational, or other environmental values, or if a covenant of a conveyance
made under the authority of this article is violated, the licensee shall take
any lawful action necessary to
correct the violation. For a permitted use or occupancy, that action includes,
if necessary, canceling the permission to use and occupy the project
lands and waters and requiring the removal of any non-complying structures and
facilities.

          (b)          The
type of use and occupancy of project lands and water for which the licensee may grant permission without prior
Commission approval are: (1) landscape plantings; (2) non-commercial
piers, landings, boat docks, or similar structures and facilities that can
accommodate no more than 10 water craft at a time and where said facility is
intended to serve single-family type dwellings; (3) embankments, bulkheads,
retaining walls, or similar structures for erosion control to protect the
existing shoreline; and (4) food plots and
other wildlife enhancement. To the extent feasible and desirable to protect and
enhance the project’s scenic, recreational, and other environmental values, the
licensee shall require multiple use and occupancy of facilities for
access to project lands or waters. The licensee shall also ensure, to the
satisfaction of the Commission’s authorized
representative, that the use and occupancies for which it grants permission are
maintained in good repair and comply with applicable state and local
health and safety requirements. Before
granting permission for construction of bulkheads or retaining walls, the
licensee shall: (1) inspect the site of the proposed construction, (2) consider
whether the planting of vegetation or the use of riprap would be
adequate to control erosion at the site, and (3) determine that the proposed
construction is needed and would

	
 

	
 

	
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not change the basic contour of
the reservoir shoreline. To implement this paragraph (b), the licensee
may, among other things, establish a program for issuing permits for the
specified types of use and occupancy of project lands and waters, which may be
subject to the payment of a reasonable fee to cover the licensee’s costs of
administering the permit program. The
Commission reserves the right to require the licensee to file a description
of its standards, guidelines, and procedures for implementing this paragraph (b) and to require modification of those
standards, guidelines, or procedures.

          (c)          
The licensee may convey easements or rights-of-way across, or leases of project
lands for: (1) replacement, expansion, realignment, or maintenance of bridges
or roads where all necessary state and federal approvals have been obtained;
(2) storm drains and water mains; (3) sewers that do not discharge into project
waters; (4) minor access roads; (5) telephone, gas, and electric utility
distribution lines; (6) non-project overhead electric transmission lines that
do not require erection of support structures within the project boundary; (7)
submarine, overhead, or underground major telephone distribution cables or
major electric distribution lines (69-kV or less); and (8) water intake or
pumping facilities that do not extract more than one million gallons per day
from a project reservoir. No later than January 31 of each year, the licensee
shall file three copies of a report briefly
describing for each conveyance made under this paragraph (c) during the prior calendar year, the type of
interest conveyed, the location of the lands subject to the conveyance, and the
nature of the use for which the interest was conveyed.

          (d)          The
licensee may convey fee title to, easements
or rights-of-way across, or leases of project lands for: (1)
construction of new bridges or roads for which all necessary state and federal approvals have been obtained; (2) sewer or
effluent lines that discharge into project waters, for which all
necessary federal and state water quality certification
or permits have been obtained; (3) other pipelines that cross project lands or waters
but do not discharge into project waters; (4) non-project overhead electric transmission lines that require erection of
support structures within the project boundary, for which all necessary
federal and state approvals have been obtained; (5) private or public marinas
that can accommodate no more than 10 water craft at a time and are located at
least one-half mile (measured over project waters) from any other private or
public marina; (6) recreational development consistent with an approved Exhibit
R or approved report on recreational resources of an Exhibit E; and (7) other
uses, if: (i) the amount of land conveyed for a particular use is five acres or
less; (ii) all of the land conveyed is
located at least 75 feet, measured horizontally, from project waters at normal surface
elevation; and (iii) no more than 50 total acres of project lands for each
project development are conveyed under this
clause (d)(7) in any calendar year. At least 60 days before conveying any
interest in project lands under this paragraph (d), the licensee must submit
a letter to the Director, Office of Energy Projects, stating its intent to
convey the interest and briefly describing the type of interest and location of
the lands to be conveyed (a marked Exhibit G map may be used), the nature of
the proposed use, the identity of any federal or state agency official
consulted, and any federal or state

	
 

	
 

	
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approvals required for the
proposed use. Unless the Director, within 45 days from the filing date, requires the licensee to file an
application for prior approval, the licensee may convey the intended interest
at the end of that period.

          (e)          The
following additional conditions apply to any
intended conveyance under paragraph (c) or (d) of this article:

          (1)          Before
conveying the interest, the licensee shall
consult with federal and state fish and wildlife or recreation agencies,
as appropriate, and the State Historic Preservation
Officer.

          (2)          Before
conveying the interest, the licensee shall determine that the proposed use of the lands to be conveyed is not
inconsistent with any approved Exhibit R or approved report on
recreational resources of an Exhibit E; or, if the project does not have an approved Exhibit R or approved report on
recreational resources, that the lands to be conveyed do not have recreational
value.

          (3)          The
instrument of conveyance must include the following covenants running with the land: (i) the use of the lands
conveyed shall not endanger health, create a nuisance, or otherwise be
incompatible with overall project recreational use; (ii) the grantee shall take
all reasonable precautions to ensure that the construction, operation, and
maintenance of structures or facilities on the conveyed lands will occur in a
manner that will protect the scenic,
recreational, and environmental values of the project; and (iii) the
grantee shall not unduly restrict public access to project waters.

          (4)          The
Commission reserves the right to require the licensee to take reasonable
remedial action to correct any violation of the terms and conditions of this article, for the protection and enhancement of
the project’s scenic, recreational, and other environmental values.

          (f)          The
conveyance of an interest in project lands
under this article does not in itself change the project boundaries. The
project boundaries may be changed to exclude land conveyed under this
article only upon approval of revised Exhibit G drawings (project boundary
maps) reflecting exclusion of that land. Lands conveyed under this article will be excluded from the project only
upon a determination that the lands are not necessary for project
purposes, such as operation and maintenance, flowage, recreation, public
access, protection of environmental resources, and shoreline control, including
shoreline aesthetic values. Absent extraordinary circumstances, proposals to
exclude lands conveyed under this article
from the project shall be consolidated for consideration when revised Exhibit
G drawings would be filed for approval for other purposes.

	
 

	
 

	
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          (g)          The
authority granted to the licensee under this
article shall not apply to any part of the public lands and reservations
of the United States included within the project
boundary.

          (F)          The
licensee shall serve copies of any Commission filing required by this order on any entity specified in the order to be
consulted on matters relating to that filing. Proof of service on these
entities must accompany the filing with the Commission.

          (G)          This
order is final unless a request for rehearing is filed within 30 days from the
date of its issuance, as provided in section 313(a) of the FPA. The filing of a
request for rehearing does not operate as a
stay of the effective date of this license or of any other date specified in
this order, except as specifically ordered by the Commission. The
licensee’s failure to file a request for rehearing shall constitute acceptance
of this order.

J. Mark Robinson, Director

Office of Energy Projects

	
 

	
 

	
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43

	
 

	
 

	
 

	
Form L-1

	
 

	
(October, 1975)

FEDERAL ENERGY REGULATORY COMMISSION

TERMS AND CONDITIONS OF LICENSE

FOR
CONSTRUCTED MAJOR PROJECT AFFECTING

LANDS OF THE UNITED STATES

          Article
1. The entire
project, as described in this order of the Commission, shall be subject to all of the provisions, terms, and
conditions of the license.

          Article
2. No substantial change shall be made in the maps,
plans, specifications, and
statements described and designated as exhibits and approved by the Commission
in its order as a part of the license
until such change shall have been approved by the Commission: Provided,
however, That if the Licensee or the Commission deems it necessary or desirable that said approved
exhibits, or any of them, be changed, there shall be submitted to the Commission for approval a
revised, or additional exhibit or exhibits covering the proposed changes which, upon approval by the Commission,
shall become a part of the license
and shall supersede, in whole or in part, such exhibit or exhibits theretofore
made a part of the license as may be specified by the Commission.

          Article
3. The project area
and project works shall be in substantial conformity with the approved exhibits
referred to in Article 2 herein or as changed in accordance with the provisions
of said article. Except when emergency shall require for the protection of
navigation, life, health, or property, there shall not be made without prior approval of the Commission any substantial
alteration or addition not in conformity with the approved plans to any dam or
other project works under the license or any substantial use of project lands and waters not authorized
herein; and any emergency alteration, addition, or use so made shall thereafter
be subject to such modification and change as the Commission may direct. Minor
changes in project works, or in uses of project lands and waters, or divergence from such approved
exhibits may be made if such changes will not result in a decrease in efficiency, in a material increase in cost,
in an adverse environmental impact, or in impairment of the general scheme of
development; but any of such minor changes made without the prior approval of
the Commission, which in its judgment have produced or will produce any of such
results, shall be subject to such alteration
as the Commission may direct.

          Article
4. The project,
including its operation and maintenance and any work incidental to additions or alterations authorized
by the Commission, whether or not conducted upon lands of the United States,
shall be subject to the inspection and

	
 

	
 

	
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supervision of the Regional
Engineer, Federal Energy Regulatory Commission, in the region wherein the
project is located, or of such other officer or agent as the Commission may
designate, who shall be the authorized representative of the Commission for such
purposes. The Licensee shall cooperate fully with said representative and shall furnish him such information as he may require
concerning the operation and maintenance of the project, and any such
alterations thereto, and shall notify him of the date upon which work with
respect to any alteration will begin, as far in advance thereof as said
representative may reasonably specify, and shall notify him promptly in writing of any suspension of work for
a period of more than one week, and of its resumption and completion.
The Licensee shall submit to said representative a detailed program of
inspection by the Licensee that will provide for an adequate and qualified
inspection force for construction of any such alterations to the project.
Construction of said alterations or any feature thereof shall not be initiated
until the program of inspection for the alterations or any feature thereof has
been approved by said representative. The Licensee shall allow said
representative and other officers or employees
of the United States, showing proper credentials, free and unrestricted access to,
through, and across the project lands and project works in the performance of
their official duties. The Licensee shall comply with such rules and
regulations of general or special applicability as the Commission may prescribe
from time to time for the protection of
life, health, or property.

          Article
5. The Licensee, within five years from the date of issuance of the
license, shall acquire title in
fee or the right to use in perpetuity all lands, other than lands of the United
States, necessary or appropriate for the construction maintenance, and
operation of the project. The Licensee or its successors and assigns shall,
during the period of the license, retain
the possession of all project property covered by the license as issued or as later
amended, including the project area, the project works, and all franchises,
easements, water rights, and rights or occupancy and use; and none of such
properties shall be voluntarily sold,
leased, transferred, abandoned, or otherwise disposed of without the
prior written approval of the Commission, except that the Licensee may lease or
otherwise dispose of interests in project lands or property without specific
written approval of the Commission pursuant to the then current regulations of
the Commission. The provisions of this article are not intended to prevent the
abandonment or the retirement from service of structures, equipment, or other
project works in connection with replacements thereof when they become
obsolete, inadequate, or inefficient for further service due to wear and tear;
and mortgage or trust deeds or judicial sales made thereunder, or tax sales,
shall not be deemed voluntary transfers within the meaning of this article.

          Article
6. In the event
the project is taken over by the United States upon the termination of the
license as provided in Section 14 of the Federal Power Act, or is transferred to a new licensee or to a nonpower
licensee under the provisions of Section 15

	
 

	
 

	
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of said Act, the Licensee,
its successors and assigns shall be responsible for, and shall make good any
defect of title to, or of right of occupancy and use in, any of such project
property that is necessary or appropriate or valuable and serviceable in the
maintenance and operation of the project, and shall pay and discharge, or shall
assume responsibility for payment and discharge of, all liens or encumbrances
upon the project or project property created by the Licensee or created or
incurred after the issuance of the license: Provided, That the
provisions of this article are not intended to require the Licensee, for the purpose of transferring the project to the
United States or to a new licensee, to acquire any different title to,
or right of occupancy and use in, any of such project property than was
necessary to acquire for its own purposes as the Licensee.

          Article
7. The actual legitimate original cost of the project, and of any
addition thereto or betterment
thereof, shall be determined by the Commission in accordance with the Federal Power Act and the Commission’s
Rules and Regulations thereunder.

          Article
8. The Licensee
shall install and thereafter maintain gages and stream-gaging stations for the purpose of determining the stage and flow of
the stream or streams on which the project is located, the amount of water held
in and withdrawn from storage, and the effective head on the turbines;
shall provide for the required reading of such gages and for the adequate rating of such stations; and shall install
and maintain standard meters adequate for the determination of the
amount of electric energy generated by the project works. The number,
character, and location of gages, meters, or other measuring devices, and the
method of operation thereof, shall at all times be satisfactory to the
Commission or its authorized representative. The Commission reserves the right,
after notice and opportunity for hearing, to require such alterations in the
number, character, and location of gages, meters, or other measuring devices,
and the method of operation thereof, as are
necessary to secure adequate determinations. The installation of gages, the
rating of said stream or streams, and the determination of the flow thereof,
shall be under the supervision of, or in cooperation with, the District
Engineer of the United States Geological
Survey having charge of stream-gaging operations in the region of the project, and
the Licensee shall advance to the United States Geological Survey the amount of
funds estimated to be necessary for such supervision, or cooperation for such
periods as may mutually agreed upon. The
Licensee shall keep accurate and sufficient records of the foregoing
determinations to the satisfaction of the Commission, and shall make return of
such records annually at such time and in such form as the Commission may
prescribe.

          Article
9. The Licensee
shall, after notice and opportunity for hearing, install additional capacity or make other changes in the
project as directed by the Commission, to the extent that it is
economically sound and in the public interest to do so.

          Article
10. The Licensee
shall, after notice and opportunity for hearing, coordinate the operation of the project, electrically and
hydraulically, with such other

	
 

	
 

	
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projects
or power systems and in such manner as the Commission any direct in the interest of power and other beneficial public
uses of water resources, and on such conditions concerning the equitable
sharing of benefits by the Licensee as the Commission
may order.

          Article
11. Whenever the Licensee is directly benefited by the construction work of another licensee, a permittee, or the
United States on a storage reservoir or other headwater improvement, the
Licensee shall reimburse the owner of the headwater improvement for such part
of the annual charges for interest, maintenance, and depreciation thereof as
the Commission shall determine to be equitable, and shall pay to the United States the cost of making such
determination as fixed by the Commission. For benefits provided by a
storage reservoir or other headwater improvement of the United States, the
Licensee shall pay to the Commission the amounts for which it is billed from
time to time for such headwater benefits and for the cost of making the determinations
pursuant to the then current regulations of
the Commission under the Federal Power Act.

          Article
12. The
operations of the Licensee, so far as they affect the use, storage and
discharge from storage of waters affected by the license, shall at all times be
controlled by such reasonable rules and
regulations as the Commission may prescribe for the protection of life,
health, and property, and in the interest of the fullest practicable
conservation and utilization of such waters for power purposes and for other
beneficial public uses, including recreational purposes, and the Licensee shall
release water from the project reservoir at
such rate in cubic feet per second, or such volume in acre-feet per specified
period of time, as the Commission may prescribe for the purposes hereinbefore mentioned.

          Article
13. On the
application of any person, association, corporation, Federal agency, State or
municipality, the Licensee shall permit such reasonable use of its reservoir or
other project properties, including works, lands and water rights, or parts thereof, as may be ordered by the Commission,
after notice and opportunity for hearing, in the interests of
comprehensive development of the waterway or waterways involved and the conservation and utilization of the water
resources of the region for water supply or for the purposes of steam-electric,
irrigation, industrial, municipal or similar uses. The Licensee shall
receive reasonable compensation for use of its reservoir or other project
properties or parts thereof for such purposes, to include at least full
reimbursement for any damages or expenses which the joint use causes the
Licensee to incur. Any such compensation shall be fixed by the Commission
either by approval of an agreement between the Licensee and the party or
parties benefiting or after notice and opportunity for hearing. Applications
shall contain information in sufficient detail to afford a full understanding
of the proposed use, including satisfactory evidence that the applicant possesses necessary water rights pursuant to
applicable State law, or a showing of cause why such evidence cannot
concurrently be submitted, and a statement as to the

	
 

	
 

	
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relationship
of the proposed use to any State or municipal plans or orders which may have been adopted with respect to the use of
such waters.

          Article
14. In the
construction or maintenance of the project works, the Licensee shall place and maintain suitable structures and
devices to reduce to a reasonable degree the liability of contact
between its transmission lines and telegraph, telephone and other signal wires
or power transmission lines constructed prior to its transmission lines and not
owned by the Licensee, and shall also place and maintain suitable structures
and devices to reduce to a reasonable
degree the liability of any structures or wires falling or obstructing traffic
or endangering life. None of the provisions of this article are intended to
relieve the Licensee from any responsibility or requirement which may be
imposed by any other lawful authority for avoiding or eliminating
inductive interference.

          Article
15. The Licensee shall, for the
conservation and development of fish and wildlife resources, construct,
maintain, and operate, or arrange for the construction, maintenance, and
operation of such reasonable facilities, and comply with such reasonable modifications of the project
structures and operation, as may be ordered by the Commission upon its
own motion or upon the recommendation of the Secretary of the Interior or the
fish and wildlife agency or agencies of any State in which the project or a
part thereof is located, after notice and opportunity for hearing.

          Article
16. Whenever the United States
shall desire, in connection with the project,
to construct fish and wildlife facilities or to improve the existing fish and
wildlife facilities at its own expense, the Licensee shall permit the
United States or its designated agency to use, free of cost, such of the
Licensee’s lands and interests in lands, reservoirs, waterways and project works as may be reasonably required to complete
such facilities or such improvements thereof. In addition, after notice
and opportunity for hearing, the Licensee shall modify the project operation as
may be reasonably prescribed by the Commission in order to permit the
maintenance and operation of the fish and wildlife facilities constructed or improved by the United States under the
provisions of this article. This article shall not be interpreted to
place any obligation on the United States to construct or improve fish and
wildlife facilities or to relieve the Licensee of any obligation under this license.

          Article
17. The Licensee shall construct, maintain, and operate,
or shall arrange for the construction,
maintenance, and operation of such reasonable recreational facilities, including
modifications thereto, such as access roads, wharves, launching ramps, beaches,
picnic and camping areas, sanitary facilities, and utilities, giving
consideration to the needs of the physically handicapped, and shall comply with
such reasonable modifications of the project, as may be prescribed hereafter by
the Commission during the term of this
license upon its own motion or upon the recommendation of the Secretary of
the Interior or other interested Federal or State agencies, after notice and
opportunity

	
 

	
 

	
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for hearing.

          Article
18. So far as is consistent with proper operation of the
project, the Licensee shall allow the
public free access, to a reasonable extent, to project waters and adjacent
project lands owned by the Licensee for the purpose of full public utilization of such lands and waters for navigation and for
outdoor recreational purposes, including fishing and hunting: Provided,
That the Licensee may reserve from public access such portions of the project waters, adjacent lands, and project facilities
as may be necessary for the protection of life, health, and property.

          Article
19. In the construction, maintenance, or operation of the
project, the Licensee shall be responsible for, and shall take reasonable
measures to prevent, soil erosion on lands
adjacent to streams or other waters, stream sedimentation, and any form of
water or air pollution. The Commission, upon request or upon its own motion,
may order the Licensee to take such measures as the Commission finds to be
necessary for these purposes, after notice
and opportunity for hearing.

          Article
20. The Licensee shall clear and keep clear to an
adequate width lands along open conduits and shall dispose of all temporary
structures, unused timber, brush, refuse, or other material unnecessary for the
purposes of the project which results from the clearing of lands or from the
maintenance or alteration of the project works. In addition, all trees along
the periphery of project reservoirs which may die during operations of the project
shall be removed. All clearing of the lands and disposal of the unnecessary
material shall be done with due diligence and to the satisfaction of the authorized representative of the Commission and
in accordance with appropriate Federal, State, and local statutes and
regulations.

          Article
21. Timber on lands of the United State cut, used, or
destroyed in the construction and
maintenance of the project works, or in the clearing of said lands, shall be
paid for, and the resulting slash and debris disposed of, in accordance with
the requirements of the agency of the United States having jurisdiction over
said lands. Payment for merchantable timber shall be at current stumpage rates,
and payment for young growth timber below merchantable size shall be at current
damage appraisal values. However, the agency of the United States having
jurisdiction may sell or dispose of the merchantable timber to others than the
Licensee: Provided, That timber so
sold or disposed of shall be cut and removed from the area prior to, or without
undue interference with, clearing operations of the Licensee and in
coordination with the Licensee’s project construction schedules. Such sale or
disposal to others shall not relieve the Licensee of responsibility for the
clearing and disposal of all slash and debris
from project lands.

          Article 22. The Licensee shall do everything reasonably within its
power, and  

	
 

	
 

	
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shall require its employees, contractors, and
employees of contractors to do everything reasonably within their power, both
independently and upon the request of officers of the agency concerned, to prevent, to make advance preparations for
suppression of, and to suppress fires on the lands to be occupied or
used under the license. The Licensee shall be liable for and shall pay the
costs incurred by the United States in suppressing fires caused from the construction, operation, or maintenance of the
project works or of the works appurtenant or accessory thereto under the
license.

          Article
23. The Licensee shall interpose no objection to, and
shall in no way prevent, the use by the agency of the United States having
jurisdiction over the lands of the United States affected, or by persons or
corporations occupying lands of the United
States under permit, of water for fire suppression from any stream, conduit, or
body of water, natural or artificial, used by the Licensee in the operation of
the project works covered by the license, or the use by said parties of
water for sanitary and domestic purposes from any stream, conduit, or body of
water, natural or artificial, used by the Licensee in the operation of the
project works covered by the license.

          Article
24. The Licensee shall be liable for injury to, or
destruction of, any buildings, bridges, roads, trails, lands, or other property
of the United States, occasioned by the construction, maintenance, or operation
of the project works or of the works appurtenant or accessory thereto under the
license. Arrangements to meet such liability, either by compensation for such
injury or destruction, or by reconstruction or repair of damaged property, or otherwise, shall be made
with the appropriate department or agency of the United States.

          Article
25. The Licensee shall allow any agency of the United
States, without charge, to construct or permit to be constructed on, through,
and across those project lands which are
lands of the United States such conduits, chutes, ditches, railroads, roads, trails,
telephone and power lines, and other routes or means of transportation and communication
as are not inconsistent with the enjoyment of said lands by the Licensee for the purposes of the license. This license
shall not be construed as conferring upon the Licensee any right of use,
occupancy, or enjoyment of the lands of the United States other than for the construction, operation, and
maintenance of the project as stated in the license.

          Article
26. In the construction and maintenance of the project,
the location and standards of roads and trails on lands of the United States
and other uses of lands of the United States, including the location and
condition of quarries, borrow pits, and spoil disposal
areas, shall be subject to the approval of the department or agency of the
United States having supervision over the lands involved.

          Article
27. The Licensee shall make provision, or shall bear the
reasonable cost,

	
 

	
 

	
Project No. 2170-029

	
50

as determined by the agency of the United States
affected, of making provision for avoiding inductive interference between any
project transmission line or other project facility
constructed, operated, or maintained under the license, and any radio
installation, telephone line, or other communication facility installed
or constructed before or after construction of such project transmission line
or other project facility and owned, operated,
or used by such agency of the United States in administering the lands under
its jurisdiction.

          Article
28. The Licensee
shall make use of the Commission’s guidelines and other recognized
guidelines for treatment of transmission line rights-of-way, and shall clear
such portions of transmission line rights-of-way across lands of the United
States as are designated by the officer of the United States in charge of the
lands; shall keep the areas so designated
clear of new growth, all refuse, and inflammable material to the satisfaction of
such officer; shall trim all branches of trees in contact with or liable to
contact the transmission lines; shall cut and remove all dead or leaning trees
which might fall in contact with the transmission lines; and shall take such
other precautions against fire as may be required by such officer. No fires for
the burning of waste material shall be set except with the prior written
consent of the officer of the United States in charge of the lands as to time and place.

          Article
29. The Licensee
shall cooperate with the United States in the disposal by the United States,
under the Act of July 31, 1947, 61 Stat. 681, as amended (30 U.S.C. sec.
601, et seq.), of mineral and vegetative materials from lands of the United
States occupied by the project or any part thereof: Provided, That such
disposal has been authorized by the Commission and that it does not
unreasonably interfere with the occupancy
of such lands by the Licensee for the purposes of the license: Provided
further, That in the event of disagreement, any question of
unreasonable interference shall be determined by the Commission after notice ad
opportunity for hearing. 

          Article
30. If the Licensee shall cause or suffer essential
project property to be removed or destroyed or to become unfit for use, without
adequate replacement, or shall abandon or discontinue good faith operation of
the project or refuse or neglect to comply
with the terms of the license and the lawful orders of the Commission mailed to
the record address of the Licensee or its agent, the Commission will
deem it to be the intent of the Licensee to surrender the license. The
Commission, after notice and opportunity for hearing, may require the Licensee
to remove any or all structures, equipment and power lines within the project
boundary and to take any such other action necessary to restore the project
waters, lands, and facilities remaining within the project boundary to a
condition satisfactory to the United States agency having jurisdiction over its
lands or the Commission’s authorized representative, as appropriate, or to
provide for the continued operation and maintenance of nonpower facilities and
fulfill such other obligations under the license as the Commission may

	
 

	
 

	
Project No. 2170-029

	
51

prescribe. In addition, the
Commission in its discretion, after notice and opportunity for hearing,
may also agree to the surrender of the license when the Commission, for the reasons recited herein, deems it to be the intent
of the Licensee to surrender the license.

          Article
31. The right of the Licensee and of its successors and
assigns to use or occupy waters over which
the United States has jurisdiction, or lands of the United States under
the license, for the purpose of maintaining the project works or otherwise,
shall absolutely cease at the end of the license period, unless the Licensee
has obtained a new license pursuant to the then existing laws and regulations,
or an annual license under the terms and
conditions of this license.

          Article
32. The terms and conditions expressly set forth
in the license shall not be construed as impairing any terms and conditions of
the Federal Power Act which are not expressly set forth herein.

	
 

	
 

	
Project No.
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Appendix A

Cooper Lake Hydroelectric Project 

Project No. P-2170-029

USDA Forest Service 

Alaska Region 

Chugach National Forest

4(e) Terms and Conditions

General 

License
articles contained in the Federal Energy Regulatory Commission’s (Commission)
Standard Form L-2 issued by Order No. 540, dated October 31, 1975, cover those
general requirements that the Secretary of Agriculture, acting by and through
the Forest Service, considers necessary for adequate protection and utilization
of the land and related resources of the Chugach National Forest. Under
authority of section 4(e) of the Federal Power Act (16 U.S.C. 797(e)), the
following terms and conditions are deemed necessary for adequate protection and
utilization of Chugach National Forest System lands and resources. These terms
and conditions are based on those resources and management requirements
enumerated in the Organic Administration Act of 1897 (30 State. 1I), the
Multiple-Use Sustained Yield Act of 1960 (74 Stat. 215), the National Forest
Management act of 1976 (90 Stat. 2949), and any other law specifically
establishing a unit of the National Forest System or prescribing the management
thereof (such as the Wilderness Act or the Wild and Scenic Rivers Act), as such
laws may be amended from time to time, and as implemented by regulations and
approved Land and Resource Management Plans prepared in accordance with the
National Forest Management Act. Therefore, pursuant to section 4(e) of the
Federal Power Act, the following conditions covering specific requirements for
protection and utilization of National Forest System lands shall also be
included in any license amendment issued. Conditions 1 through 9 are not
intended to supercede or contradict the negotiated Settlement Agreement and
Suggested License Articles. Conditions 10 through 14 and 16 through 18 are
identical to the specific Suggested License Articles attached to the Settlement
Agreement, filed in August 2005. Condition 15 (Settlement Agreement Article
405) is identical to the Revised Article 405 that was drafted by the Settlement
Working Group and submitted to FERC in late October 2005. Revisions to this
Article were made based on the concerns expressed by FERC representatives at a
public meeting held in Anchorage in September 2005. 

	
 

	
 

	
 

	
 

	
Project No. 2170-029

	
53 

                  
Condition No. 1 – Consultation 

Each year
during the 60 days preceding the anniversary of this license, or as arranged
with the Forest Service, the Licensee shall consult with the Forest Service
with regard to measures needed to ensure protection and utilization of the
National Forest System lands and resources affected by the Project. Within 60
days following such consultation, the Licensee shall file with the Commission
evidence of the consultation with any recommendations made by the Forest
Service. The Forest Service reserves the right, after notice and opportunity
for comment and administrative review, to require changes in the project and
its operation through revision of the 4(e) conditions that require measures
necessary to accomplish protection and utilization of National Forest System
lands and resources. 

                  Condition
No. 2 - Surrender of License or Transfer of Ownership 

Prior to any
surrender of this license, the Licensee shall restore National Forest System
lands to a condition satisfactory to the Forest Service. At least 1 year in
advance of the proposed application for license surrender, the Licensee shall
file with the Commission a restoration plan approved by the Forest Service. The
restoration plan shall identify improvements to be removed, restoration
measures, and time frames for implementation and estimated restoration costs.
In addition, the Licensee shall pay for an independent audit to assist the
Forest Service in determining whether the Licensee has the financial ability to
fund the surrender and restoration work specified in the plan. 

As a condition
of any transfer of the license or sale of the project, the Licensee shall
guarantee or assure, in a manner satisfactory to the Forest Service, that the
Licensee or transferee will provide for the costs of surrender and restoration.

                  Condition
No. 3- Hazardous Substances Plan 

During
planning for and at least 60 days prior to any new construction or maintenance,
the Licensee shall file with the Commission, a Hazardous Substances Plan
approved by the Forest Service for oil and hazardous substances storage and
spill prevention and cleanup. 

At a minimum,
the Licensee shall: 

	
 

	
 

	
o

	
Outline the
  Licensee’s procedures for reporting and responding to releases of hazardous
  substances, including names and phone numbers of all emergency response
  personnel and their assigned responsibilities, 

	
 

	
 

	
o

	
Maintain in
  the project area, a cache of spill cleanup equipment suitable to contain any
  spill from the project, 

	
 

	
 

	
o

	
Inform the
  Forest Service of the location of the spill cleanup equipment on NFS lands
  and of the location, type, and quantity of oil and hazardous substances
  stored 

	
 

	
 

	
Project No.
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54 

	
 

	
 

	
 

	
in the
  project area, and 

	
 

	
 

	
o

	
Inform the
  Forest Service quarterly of the nature, time, date, location, and action
  taken for any spill. 

	
 

	
 

	
 

	
Condition
No. 4 - Use of Explosives 

In the use of
explosives, the Licensee shall exercise the utmost care not to endanger life or
property and shall comply with Federal, State and local laws and ordinances.
The Licensee shall contact the Forest Service prior to blasting to obtain the
requirements of the Forest Service. The Licensee shall be responsible for any
and all damages resulting from the use of explosives and shall adopt
precautions to prevent damage to surrounding objects. The Licensee shall
furnish and erect special signs to warn the public of the Licensee’s blasting
operations. 

The Licensee
shall place and maintain such signs so they are clearly evident to the public
during all critical periods of the blasting operations. 

The Licensee
shall store all explosives on National Forest System lands and Licensee
adjoining fee title property in compliance with all applicable Federal, State
and local laws and ordinances. 

When using
explosives on National Forest System lands and Licensee adjoining fee title
property, the Licensee shall adopt precautions to prevent damage to landscape
features and other surrounding objects. When directed by the Forest Service,
the Licensee shall leave trees within an area designated to be cleared as a
protective screen for surrounding vegetation during blasting operations. The
Licensee shall remove and dispose of trees so left when blasting is complete.
When necessary, and at any point of special danger, the Licensee shall use
suitable mats or some other approved method to smother blasts. 

                  Condition
No. 5 - Pesticide Use Restrictions 

Pesticides may
not be used to control undesirable woody and herbaceous vegetation, aquatic
plants, insects, and rodents on National Forest System lands without the prior
written approval of the Forest Service. The Licensee shall submit a request for
approval of planned uses of pesticides. The request must cover annual planned
use and be updated as required by the Forest Service. The Licensee shall
provide information essential for review in the form specified. Exceptions to
this schedule may be allowed only when unexpected outbreaks of pests require
control measures that were not anticipated at the time the request was
submitted. In such an instance, an emergency request and approval may be made. 

The Licensee
shall use on National Forest System lands only those materials registered 

	
 

	
 

	
Project No.
  2170-029

	
55
  

by the U. S.
Environmental Protection Agency for the specific purpose planned. The Licensee
must strictly follow label instructions in the preparation and application of
pesticides and disposal of excess materials and containers. 

                  Condition
No. 6 - Fire Prevention Plan 

The Licensee
is responsible for fire prevention measures and for fire suppression costs,
directly and indirectly resulting from or caused by any high-risk use and
occupancy within the project area. The Licensee is not liable when injury, loss
or damage results wholly or in part from a negligent act of United States or
from an act of a third party not involving the Licensee’s facilities or operations.

Within 60 days prior to any
ground-disturbing activity, the Licensee shall file with Commission a Fire
Prevention Plan that is approved by the USDA Forest Service in consultation
with appropriate State and local fire agencies. At a minimum, the Licensee
shall: 

	
 

	
 

	
 

	
 

	
o

	
Analyze fire
  prevention needs to ensure that prevention equipment and personnel are
  available, 

	
 

	
 

	
 

	
 

	
o

	
Identify
  fire hazard reduction measure (e.g., eliminating ladder fuels, reducing fuel
  loading), and 

	
 

	
 

	
 

	
 

	
o

	
Provide the
  USDA Forest Service a list of the location of available fire-prevention
  equipment and the location and availability of fire-prevention personnel. 

                  Condition
No. 7 - Noxious Weed Management Plan 

Within 60 days prior to any
ground-disturbing activity, the Licensee shall file with the Commission a
Vegetation Management Plan that is approved by the USDA Forest Service. At a
minimum the Plan shall: 

	
 

	
 

	
 

	
 

	
o

	
Identify and
  prioritize (into high, moderate and low priority sites) all inadequately
  vegetated areas to be re-vegetated or rehabilitated along with an
  implementation schedule, 

	
 

	
 

	
 

	
 

	
o

	
List the
  species to be used along with planting locations, methods, and densities
  (native species must be used), 

	
 

	
 

	
 

	
 

	
o

	
Identify
  methods for prevention and control of noxious weeds. Treatment of existing
  infestations of highest priority weeds shall be initiated immediately upon
  approval of the Noxious Weed Management Plan by the Commission, 

	
 

	
 

	
 

	
 

	
o

	
Develop a
  monitoring program to evaluate the effectiveness of noxious weed control
  measures, and 

	
 

	
 

	
 

	
 

	
o

	
Develop
  procedures for identification of additional measures that the licensee shall
  implement if monitoring reveals that noxious weed control is not successful
  or does not meet intended objectives. 

	
 

	
 

	
Project No. 2170-029

	
56

                  Condition
No. 8 – Implementation and Modification of Forest Service Conditions

The USDA Forest Service reserves
the authority to modify USDA Forest Service 4(e) terms and conditions if upon completion of the USDA Forest Service
administrative appeals process at 36
Code of Federal Regulations (CFR) Part 251, Subpart C-Appeal of Decisions
Relating to Occupancy and Use of National Forest System Lands, the Chief, USDA
Forest Service, or Secretary of Agriculture directs that substantial changes to
the terms and conditions submitted herein be made.

                  Condition
No. 9 – Heritage
Resources

If the Licensee discovers any
previously unidentified cultural resources during the course of the construction or project work, the Forest
Service archaeologist will be notified immediately. The Licensee shall
immediately stop all land clearing, land disturbing or spoil producing activities in the vicinity of the
cultural sites. Construction or work activities
may not resume until receiving Forest Service approval.

                  Condition
No. 10 – Activities on Forest Service Lands

 (Settlement Agreement Article 306)

(a)              Additional lands of the US
Forest Service (USFS)
that are authorized for use by Licensee shall be subject to laws, rules, and
regulations applicable to the USFS, as appropriate.
Within six months of a license or license amendment, Licensee shall seek a special use authorization from the USFS, as
applicable, for occupancy and use of any lands added to the project boundary by
the license amendment and file it with the Commission. The special use authorization also shall be subject to
applicable enforcement procedures of
the Commission at the request of the USFS.

(b)              Licensee shall not make
changes in the location
of any constructed Project features or
facilities located on National Forest System (NFS) lands, or make any departure
from the requirements of any approved exhibits authorizing use or occupancy of
NFS lands filed with the Commission
(such as the Transmission Line ROW Management Plan and Access Management and Maintenance Plan specified
under Article 408), and authorized by
the new license as issued and amended before receiving comments from the USFS
and approval from the Commission.
Following receipt of such comments from the agency, and at least 60 days prior to initiating any such
changes or departure, Licensee shall file a report with the Commission and with USFS as appropriate, describing the
changes, the reasons for the changes, and showing the comments of the agency
for such changes.

(c)
             After consultation with the USFS and before starting any activity on
NFS land that

	
 

	
 

	
Project
  No. 2170-029

	
57

USFS
or BLM, as appropriate, determines that the activity may affect another
federally authorized activity on those lands, Licensee shall consult with USFS
or BLM to resolve any
potential conflicts with representatives of those permitted uses.

(d)              Licensee shall comply with the
Transmission
Line ROW Management Plan and Access Management and Maintenance Plan under
Article 407 for any habitat-disturbing and
ground-disturbing activities on NFS lands required by the license, including
activities contained within resource management plans required by the
license that shall be prepared subsequent
to license issuance.

                  Condition
No. 11 – Construction of the Stetson Creek Diversion, Pipeline and Cooper Lake
Diversion Structures

  (Settlement
Agreement Article 401)

(a)              For purposes of
establishing an instream flow regime in Cooper Creek below the Project dam,
Licensee shall within six years after issuance of the New License take the following actions:

	
 

	
 

	
 

	
 

	
(1)

	
Construct a diversion
  structure with manual controls on Stetson Creek approximately 7,000 feet from Stetson Creek’s confluence with Cooper
  Creek to divert water from Stetson Creek to Cooper Lake. Such
  diversion structure will allow for instream flow releases and flushing flow
  releases below the Stetson Creek
  diversion structures as described in Article 403.

	
 

	
 

	
 

	
 

	
(2)

	
Construct
  a pipeline (approximately 11,000 feet in length) from the Stetson Creek diversion structure to an outflow point in
  Cooper Lake, approximately 1,000 feet from
  the Project dam.

	
 

	
 

	
 

	
 

	
(3)

	
Construct
  a water bypass structure to allow for the release of water from Cooper Lake into Cooper Creek through the existing
  Project Dam structure from a manually
  controlled, screened diversion structure within Cooper Lake (about 600 feet
  from the crest of the dam) to an outflow energy dissipation structure
  downstream of the Project dam, with the ability to maintain a variable flow capacity of up to 30 cfs.

	
 

	
 

	
 

	
 

	
(4)

	
Engineer, permit, procure,
  construct, and operate the Stetson Creek diversion structure, pipeline, and the Cooper Lake bypass structures, the total
  capital cost of which is estimated to be $9.2 million in 2004 dollars,
  which represents a 75% increase in total
  plant investment.

(b)              Within 36 months of license issuance, the
Licensee shall file with the Commission,
for approval, a Stetson Creek Diversion and Pipeline and Cooper Lake Bypass
Plan that describes how the Licensee will construct the facilities set forth in
section (a) of this Article. The plan shall include, but not be limited
to:

         1.       detailed
drawings and specifications for the new facilities;

	
 

	
 

	
Project
  No. 2170-029

	
58

	
 

	
 

	
 

	
 

	
2.

	
a
  construction schedule;

	
 

	
 

	
 

	
 

	
3.

	
all
  necessary state and federal permits and water rights;

	
 

	
 

	
 

	
 

	
4.

	
an
  erosion and sediment control and monitoring plan;

	
 

	
 

	
 

	
 

	
5.

	
an
  environmental compliance monitoring plan;

	
 

	
 

	
 

	
 

	
6.

	
a
  fuel and hazardous substance spill plan;

	
 

	
 

	
 

	
 

	
7.

	
bird nesting and bear
  denning avoidance procedures; and

	
 

	
 

	
 

	
 

	
8.

	
a
  management plan regarding public access during construction.

Licensee shall consult with
the Parties to the Settlement Agreement and shall allow a minimum of 30 days
for the Parties to comment and to make recommendations before filing the plan
with the Commission. In addition, Licensee shall seek all necessary state and federal permits and water rights prior to
filing the plan with the Commission. At the time of filing, Licensee
shall include with the plan, an implementation schedule, documentation of
consultation, copies of comments and recommendations on the completed plan
after it has been prepared and provided to the Parties, and specific descriptions of how the comments of Parties are
accommodated by the plan.

The
Commission reserves the right to require changes to the plan. Implementation of
the plan
shall not begin until the plan is approved by the Commission. Upon Commission approval, the licensees shall implement the
plan, including any changes required by the Commission.

                  Condition
No. 12 – Impracticability of Construction of the Stetson Creek Diversion,
Pipeline and Cooper Lake Diversion Structures

(Settlement Agreement Article 402)

Within
20 days of discovery, Licensee shall notify FERC and the Parties to the
Settlement Agreement in writing in the event that:

	
 

	
 

	
(1)

	
the
  Stetson Creek diversion structure, pipeline, and Cooper Lake bypass
  structures cannot be
  built due to permitting, legal prohibitions, or lack of necessary water rights; or

	
 

	
 

	
(2)

	
the total capital cost of
  engineering, permitting, procuring and constructing the Stetson Creek diversion structure and pipeline
  and Cooper Lake bypass structures exceeds $11.04 million in 2004
  dollars (20% more than the current estimate). Upon such written notice, the Licensee shall initiate consultation
  with the Parties to the Settlement Agreement filed with the Commission
  on August 12, 2005, pursuant to that Settlement Agreement, within 30 days,
  and conduct such consultation so that the Licensee can report to the
  Commission within 90 days from the date of Licensee’s report the outcome, and
  file a mutually acceptable request for time extension, alternative mitigation
  proposals, modifications to the proposed diversion, pipeline, and release
  structures, or license amendment (if

	
 

	
 

	
Project
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59

	
 

	
 

	
 

	
required).
  The Licensee shall allow a minimum of 30 days for the Parties to comment and to make
  recommendation before filing an implementation schedule, documentation of
  consultation, copies of comments and recommendations on the proposed plans and specific descriptions of
  how the Parties comments are accommodated
  by the plans.

The Commission reserves the
right the require changes to the plans. Implementation of the plans shall not begin until the plans are
approved by the Commission. Upon Commission approval, the Licensee shall
implement the plans, including any changes required
by the Commission.

                  Condition No. 13 – Cooper Creek
Instream Flows

(Settlement Agreement Article 403)

(a)              After
the facilities contemplated in Article 401 are completed and through the remainder of the term of the New License,
Licensee shall take the following actions to establish an instream flow regime
in Cooper Creek below the Project dam:

	
 

	
 

	
(1)

	
divert
  flow from Stetson Creek (through the diversion structure and pipeline) up to
  maximum flow of 110 cfs.

	
 

	
 

	
(2)

	
release up to an annual total volume of 10,256
  acre-feet of water (i) from Cooper Lake into Cooper Creek at instantaneous
  flows in the range of 1 to 30 cfs, or (ii) from combined releases from Cooper
  Lake and Stetson Creek (bypassing the Stetson Creek diversion structure), as
  directed by the Interagency Committee within the parameters defined below and
  pursuant to the water allocation procedures set forth below.

	
  

 	
  

 
	
 Project No.
 2170-029

 	
 60 

 

(3)              in
the event of no direction from the Interagency Committee, provide a default
regime of target instantaneous flow releases and associated target monthly
volumes into Cooper Creek as follows: 

	
  

 	
  

 	
  

 
	
 Month

 	
 cfs

 	
 approx. monthly flows (ac.-ft.)

 
	
 

 	
 

 	
 

 
	
 January

 	
 10

 	
   610

 
	
 February

 	
 10

 	
   550

 
	
 March

 	
 10

 	
   610

 
	
 April

 	
 10

 	
   590

 
	
 May

 	
 10

 	
   610

 
	
 June

 	
 20

 	
 1190

 
	
 July

 	
 25

 	
 1540

 
	
 August

 	
 20

 	
 1230

 
	
 September

 	
 20

 	
 1190

 
	
 October

 	
 15

 	
   920

 
	
 November

 	
 10

 	
   590

 
	
 December

 	
 10

 	
   610

 

	
  

 	
  

 
	
  

 	
 For purposes
 of determining compliance with these provisions, the target instantaneous
 flow releases shall be deemed to have been met if the actual measured flow is
 within 2 cfs of the specified target flow. 

 

	
  

 	
  

 
	
 (4)

 	
 notify the
 Interagency Committee and the Commission in writing by April 1 of each year
 regarding the amount of water that was released in the previous water year
 and the amount that is projected to be available for release during the water
 year beginning on May 1 of that year pursuant to the water allocation
 procedures set forth below. 

 
	
  

 	
  

 
	
 (5)

 	
 provide
 instream flow releases that, when combined with natural flows, will provide
 flushing flows (as defined below) in Cooper Creek for up to 30 days in any
 rolling ten (10) year period for the term of the license. 

 
	
  

 	
  

 
	
 (6)

 	
 provide
 quarterly reports to the Interagency Committee and Commission of the amount
 of water released during the first five years of provision of instream flow
 releases. 

 

(b)             For
the purpose of establishing and manipulating flows in this Article, Licensee shall
consult with and take direction from the Interagency Committee consisting of
USFS, USFWS, NMFS, ADNR, ADF&G to the extent of their interest in
participating pursuant to bylaws attached to the Settlement Agreement filed
with the Commission on August 31, 2005. Pursuant to the Settlement Agreement,
Licensee shall take direction from the Interagency Committee as communicated in
the following manner: 

	
  

 	
  

 
	
 (1)

 	
 the
 Interagency Committee’s evaluation of the instream flow needs and
 determination of the desired instream release regime of Cooper Creek and
 Stetson 

 

	
  

 	
  

 
	
 Project No.
 2170-029

 	
 61

 

	
  

 	
  

 
	
  

 	
Creek
on an annual basis; 

 
	
  

 	
  

 
	
 (2)

 	
 the
 Interagency Committee’s written instream release schedule submitted to
 Licensee by May 1 of each year, provided that such schedule for both Cooper
 Creek and Stetson Creek instream flow releases combined shall not exceed the
 total annual release of 10,256 acre-feet, except for any Banked Water (part
 (c)(3)(iv) of this license article) from previous water years and any Supplemental
 Water defined in part (c)(5) of this license article, that is available for
 release. 

 
	
  

 	
  

 
	
 (3)

 	
 the
 Interagency Committee’s written schedule for seasonal or year-round instream
 flow releases in Stetson Creek (if any) from the total amount of water available
 for release to Cooper Creek. 

 
	
  

 	
  

 
	
 (4)

 	
 the
 Interagency Committee’s requests to adjust flow releases from Cooper Lake Dam
 and the Stetson Creek diversion structure up to two times per month, weather
 and access permitting, during the period from May through October. 

 
	
  

 	
  

 
	
 (5)

 	
 the
 Interagency Committee’s consideration of whether the total number of days of
 flushing flows needed in Cooper Creek (as defined below) should be less than
 30 days in a rolling ten (10) year period; provided that any necessary instream
 releases for such flushing flows count as water-for-generation deficit
 amounts as remedied in subpart (c)(4) below. 

 

(c)             Water
Allocation Procedures 

	
  

 	
  

 
	
 (1)

 	
 For purposes
 of these rules and procedures, a water year will begin on May 1 and run through
 April 30 of the following calendar year. 

 
	
  

 	
  

 
	
 (2)

 	
 Water
 Available for Release. The amount of water that will
 be available for release during each water year shall consist of:

 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 10,256
 acre-feet, 

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 any “Banked
 Water” from previous water years (as defined below), and

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 any
 “Supplemental Water” that is available for release (as defined below).

 

	
  

 	
  

 
	
 (3)

 	
 Release
Options. Under the direction of the Interagency Committee, Licensee shall
implement any combination of the following uses for the water available for
release:  

 

	
  

 	
  

 	
  

 
	
  

 	
 (i)

 	
 release
 water into Cooper Creek, through the Cooper Lake dam bypass structure;

 
	
  

 	
  

 	
  

 
	
  

 	
 (ii)

 	
 release
 water into Stetson Creek, through the diversion bypass structure (“Stetson
 Creek Instream Flows”);

 
	
  

 	
  

 	
  

 
	
  

 	
 (iii)

 	
 release
 water into Stetson Creek, through the (a) Stetson Creek Instream Flows,
 and/or (b) mechanical closure of the Stetson Creek diversion to provide
 instream releases that, when combined with natural flows, will provide
 flushing flows down Stetson Creek into Cooper Creek for up to 30 days in a

 

	
  

 	
  

 
	
 Project No.
 2170-029

 	
 62

 

	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 ten (10)
 year period (“Flushing Flows”); provided that:

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (A)

 	
 a
 flushing flow shall be defined as occurring when the average daily flow at
 the USGS gage at the mouth of Cooper Creek meets or exceeds 150 cfs; and

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
  

 	
 (B)

 	
 any
 necessary instream releases for such flushing flows count as water-for-generation deficit amounts as remedied in subpart (4) below;

 
	
  

 	
  

 	
  

 	
  

 
	
  

 	
 (iv)

 	
  retain in
 Cooper Lake for use in future years some portion of the total annual amount
 of water that is available for release into Cooper Creek. This “Banked Water”
 may accumulate up to a cumulative amount of 10,256 acre-feet and carry
 forward as available for instream flow releases to be met in future years.

 

	
  

 	
  

 
	
 (4)

 	
 Water-for-generation
 deficits. Water-for-generation deficits occur when
 the actual amount of water diverted from Stetson Creek to Cooper Lake in a
 given year does not meet or exceed 18,285 acre-feet. Such deficits will
 accumulate and carry forward to be met by diversion of water from Stetson
 Creek in future years. Water-for-generation deficits must be fully
 compensated on a unit for unit basis from any inflows from Stetson Creek into
 Cooper Lake in excess of 18,285 acre-feet before any supplemental water can
 be allocated. 

 
	
  

 	
  

 
	
 (5)

 	
 Supplemental
 Water. Licensee will make available for release into
 Cooper Creek one-half (50%) of any inflow diverted during the prior year from
 Stetson Creek into Cooper Lake in excess of 18,285 acre-feet, less any water
 needed to offset outstanding water-for-generation deficits. Supplemental
 Water not used in the following year may be “banked” for used in future
 years. 

 
	
  

 	
  

 
	
 (6)

 	
 In the event
 that the Cooper Lake diversion structure is not operable, Licensee shall
 notify the Interagency Committee as soon as possible and release the
 scheduled flows from the Stetson diversion unless otherwise directed by the
 Interagency Committee. 

 
	
  

 	
  

 
	
 (7)

 	
 In the first
 partial year of operation of the diversion and bypass structures, the
 following principles will apply: (i) no water will be diverted from Stetson
 Creek until flows are released from Cooper Lake; (ii) Licensee will consult
 with the Interagency Committee to plan the first partial year’s flow
 releases. 

 

(d)             While
Licensee will use best efforts to make all mechanical flow adjustments
described above in accordance with the recommendations by the Interagency
Committee, such efforts will be subject to prevailing weather conditions, and
access constraints so as to not endanger human safety or risk property or
environmental damage, as determined by the Licensee in its sole discretion.
Licensee shall notify the Interagency Committee if it is unable to make
adjustments within three days of the scheduled date. 

	
  

 	
  

 
	
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                  Condition No. 14 – Flow
Monitoring

(Settlement Agreement Article 404)

For purposes
of ensuring compliance with Article 402 and for scientific purposes, Licensee
shall provide monitoring of: (1) flows through the Stetson Creek diversion; (2)
outflows from the Cooper Lake bypass structure, and (3) flows and temperature
at a gage at the mouth of Cooper Creek. Continuously recording devices must
comply with standards established by USGS and must record flows at least once every
15 minutes. Pursuant to Article 403(a)(6), Licensee shall report to the
Interagency Committee quarterly the amount of outflows from the Cooper Lake
bypass structure to ensure compliance with its commitment and the amount of
flows diverted to Cooper Lake through the Stetson Creek diversion. 

                  Condition No. 15  – Study
Commitments - Biotic Conditions

(Settlement Agreement Article 405)

Licensee shall
provide funding for, and implement, certain studies of water temperature,
biological conditions, and geomorphological processes with respect to the
environment affected by the Project as set forth in this Article. The objective
of these studies is to provide the Interagency Committee with scientific
information to make its determinations regarding the instream and flushing
flows to optimize instream habitat for affected resources pursuant to Article
403(b). 

With respect
to each of the study, monitoring, and surveying programs listed below, Licensee
shall develop a study plan in consultation with the Interagency Committee and
with approval of appropriate agencies pursuant to their respective statutory
authorities to the extent necessary. The study plan will include the
objectives, tasks, implementation schedule, and evaluation criteria consistent
with this Article. Licensee will implement the program with continued
involvement of the Interagency Committee through the annual work planning and
reporting process. 

Following
approval by the appropriate agencies, the Licensee shall file the program plan
with the Commission within six months after the issuance of the License. The
Commission reserves the right to require changes to the program plan.
Implementation of the program plan shall not begin until the Commission
approves the plan. Upon Commission approval, the Licensee shall implement the
program plan, including any changes required by the Commission. 

Licensee will
prepare an annual report describing the results of all studies, surveys, and
monitoring conducted the preceding year and making recommendations for changes
to the study plan for the following year. Licensee shall provide a draft of the
report to the Interagency Committee at least 30 days in advance of its annual
meeting in April of each year. Licensee shall allow a minimum of 30 days for
the Interagency Committee to comment on a draft of the annual report and to
make recommendations before filing the 

	
  

 	
  

 
	
 Project No.
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final annual
report with the Commission no later than June 1 of each year.

Licensee shall
conduct the following studies: 

	
  

 	
  

 	
  

 
	
  

 	
 (a)

 	
 Stream
 Temperature: In addition to the stream gage that will continue to be operated
 at the mouth of Cooper Creek as required in Article 404, Licensee shall
 record stream temperatures at the outlet of Cooper Lake (post-Stetson
 diversion) and in Cooper Creek below the confluence with Stetson Creek.
 Stream temperature data will be recorded no less than every two hours and
 collected during every year prior to operation of the Stetson diversion
 (except at the outlet of Cooper Lake) and during a total of ten years (which
 need not be consecutive) after instream flow releases begin from Cooper Lake.
 

 
	
  

 	
  

 	
  

 
	
  

 	
 (b)

 	
 Geomorphological/Sediment
 Transport: Following completion of the Stetson Creek diversion, Licensee
 shall conduct studies to: (1) inform the Interagency Committee on the
 effectiveness of flushing flows combined with natural flooding events in
 maintaining channel character and fish habitat; and (2) allow the Interagency
 Committee to make recommendations regarding flushing flows pursuant to
 Article 403(b). The studies will be conducted in the fifth, tenth, fifteenth,
 and twentieth years after instream flow releases begin from Cooper Lake. The
 studies will consist of a combination of a stream walk narrative, channel
 geometry and substrate measurements, and photo points. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (c)

 	
 Stream
 productivity: To assess basic stream productivity, nitrogen, phosphorus, pH,
 and biomass will be measured at the mouth of Cooper Creek three times in a
 year before the Stetson diversion is completed and then three times in the
 first full water year after instream flow releases begin from Cooper Lake. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (d)

 	
 Adult
 anadromous/fluvial fish assessment: Licensee shall develop a population
 estimate and distribution survey of adult fish migrating into Cooper Creek
 between 1 May and 15 October of each year for rainbow trout, Dolly Varden
 char, coho, sockeye, and chinook salmon to allow the Interagency Committee to
 identify trends and spawning distribution of fish populations. These
 population estimates and distribution surveys shall be conducted in each year
 prior to operation of the Stetson diversion and during a total of ten years
 (which need not be consecutive) after instream flow releases begin from
 Cooper Lake. 

 
	
  

 	
  

 	
  

 
	
  

 	
 (e)

 	
 Resident
 adult fish assessment and juvenile production: Licensee shall conduct surveys
 to investigate habitat use and relative abundance of resident adult and
 juvenile rainbow trout and Dolly Varden char, and juvenile coho and chinook
 salmon and outmigration of such juveniles. These studies will be conducted 

 

	
  

 	
  

 
	
 Project No.
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 during a
 total of ten years (which need not be consecutive) after instream flow
 releases begin from Cooper Lake. 

 
	
  

 	
  

 
	
  

 	
 (f)

 	
 Assessment
 of Cooper Lake Arctic char population status: Licensee shall conduct Cooper
 Lake Arctic char studies to obtain periodic post-diversion estimates of
 Arctic char abundance and overall condition such that the status of Arctic
 char populations can be compared to pre-diversion conditions. These Arctic
 char studies will be conducted twice during the License period at times
 suggested by the Interagency Committee after instream flow releases begin
 from Cooper Lake. 

 

                  Condition
No. 16 – Cooper Lake Reservoir and Powerhouse Operations

(Settlement Agreement Article 406)

(a)             Licensee
shall operate the Project and maintain the Cooper Lake reservoir within the
existing license reservoir limitations (between 1160 feet m.s.1. and the normal
maximum operating level of 1194 feet m.s.l.), with a spillway level of 1210
feet m.s.1. as modified by any applicable probable maximum flood studies
pursuant to FERC policies and procedures. Annual reservoir fluctuation may
increase from existing conditions as needed to accommodate the additional
inflow from Stetson Creek and the storage of water contemplated in Article 402.

(b)             No
new operational restrictions on the reservoir or powerhouse operations are
required, except that between January 1 and April 30, Licensee shall not shut
down the powerhouse for more than three consecutive days when the water at the USGS
gage at the Kenai River Bridge shows flows less than 500 cfs in Kenai River,
unless an emergency occurs, in which case Licensee will release 60 cfs into
Kenai Lake. 

                  Condition
No. 17 – Transmission Line ROW Maintenance

(Settlement Agreement Article 407)

(a)             Licensee
shall maintain the right-of-way for the Project transmission line to be able to
access, maintain, and repair the transmission line. 

(b)             Licensee
shall implement the Transmission Line ROW Management Plan and Access Management
and Maintenance Plan (“ROW Management and Maintenance Plan”, referenced in the
Settlement Agreement), which describes the methods, timing, access points, and
other guidelines for use and maintenance of the transmission line
rights-of-way, including requirements for consultation with resource agencies,
as conditions affecting access change over time. The ROW Management and
Maintenance Plan includes agreed-to protocols for best management practices,
emergency access (especially across wetlands and streams), and access control. 

	
  

 	
  

 
	
 Project No.
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(c)             Licensee
will, at its expense, maintain access points as “closed to public use” in
accordance with the provisions of the ROW Management and Maintenance Plan.
Method of traffic control can be by gates, vegetation and other methods agreed
to and outlined in the ROW Management and Maintenance Plan. 

(d)             Commission
jurisdiction pursuant to Part 1 of the Federal Power Act over the transmission
line from Quartz Creek Substation to the Anchorage Substation, is terminated,
effective on the date the Licensee receives all necessary permits and approvals
from the U.S. Forest Service, the State of Alaska, and other land owners, as
applicable, for the continued use of lands within the Transmission Line ROW.
The Licensee shall file copies of all permits and approvals with the Commission
within 30 days of receiving the permits or approvals. Within six months after
issuance of the license, Licensee shall apply for a long-term special use
permit from the USFS and all other necessary permits for maintenance of the
transmission line right-of-way across such lands consistent with the ROW
Management and Maintenance Plan. 

(e)             Within
60 days of the termination of Commission jurisdiction over the transmission line
as specified in ordering paragraph (d), Licensee shall file for Commission
approval, revised exhibits A, F, and G drawings showing and describing the
project features, boundaries, and facilities, as well as a statement indicating
the revised amount of federal lands occupied by the project so the Commission
can amend Article 201 of the license regarding the Licensee’s payment for the
use of federal lands. 

(f)             Licensee
shall file with the Commission documentation that the requirements of this
Article have been completed within three years from the effective date of the
License. 

                  Condition
No. 18 – Roads Within Project Boundary

(Settlement Agreement Article 408)

Access Road to the Cooper Lake Dam and Stetson Creek Diversion 

The Licensee
will maintain the road from the beginning of the Forest Service property (which
begins approximately one mile from the Sterling Highway) to the Cooper Lake Dam
and the proposed Stetson diversion structure for operational purposes. 

Consistent
with applicable laws and procedural requirements, Licensee shall within three
years of issuance of a New License seek a special use permit from the USFS for
Licensee’s use of the road across USFS lands, which requires Licensee to: (1)
gate access to this road and maintain the road to meet Licensee’s needs and the
terms of the special use permit; and (2) allow recreational access consistent
with the USFS land management plans and policies, so long as such recreational
use does not interfere with Licensee’s 

	
  

 	
  

 
	
 Project No.
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maintenance and operation
activities related to the Project, the proposed Project modifications, and the
road.Exhibit 10.57

MEMORANDUM OF AGREEMENT

(Interim Chief Executive Officer)

          THIS
MEMORANDUM OF AGREEMENT is entered into by and between Bradley Evans (“Evans”)
and Chugach Electric Association, Inc., an Alaska electrical cooperative
association headquartered in Anchorage, Alaska (“Chugach”), to be effective on
and as of December 6, 2007. 

          WITNESSETH:

          WHEREAS,
Chugach is engaged in the business of production, transmission and distribution
of electricity in Alaska; 

          WHEREAS,
the position of Chugach’s Chief Executive Officer is vacant. 

          WHEREAS
Chugach’s Board of Directors desires that Evans serve as its interim CEO, and
Evans is willing to accept that responsibility and; 

          WHEREAS
the parties intend that Evans will revert to his present position of Senior
Vice President of Power Supply if he does not fill the vacant position on a
regular basis. 

          NOW,
THEREFORE, in consideration of the premises and the mutual covenants herein set
forth, the parties hereto agree as follows: 

	
 

	
 

	
 

	
 

	
1.

	
Interim CEO
Duties  

	
 

	
 

	
 

	
            
        a.          Evans
  shall serve as Chugach’s Interim CEO and shall perform his services as such
  within the framework of Chugach’s Bylaws, policies, procedures and goals as
  Chugach’s Board of Directors shall from time to time determine, including but
  not limited to the following: 

	
 

	
 

	
 

	
 

	
 

	
 

	
(i)

	
Board Policy
  No. 106,
  Delegations of Authority from the Board of Directors to the General Manager,
  Appendix A hereto; 

	
 

	
 

	
 

	
 

	
 

	
 

	
(ii)

	
Board Policy
  No. 107, Board of Directors – General Manager Relationship, Appendix B hereto; 

	
 

	
 

	
 

	
 

	
 

	
 

	
(iii)

	
Board Policy
  No. 118, Delegation of Certain of the Secretary’s and Treasurer’s Duties to
  the General Manager, Appendix C hereto; and

	
 

	
 

	
 

	
 

	
 

	
 

	
(iv)

	
General
  Manager Position Description, Appendix D hereto.

In such
capacity, Evans (i) shall exercise general supervisory responsibility and
management authority over Chugach and all of its controlled affiliates and (ii)
shall

1

perform such other duties
commensurate with his position as may be assigned to him from time to time by
the Chugach Board of Directors. 

        
            b.          While
serving as Chugach’s interim CEO, Evans’ present compensation shall be
increased by an amount to make his total salary equivalent to $190,000/annum
and shall be made effective from the initial date of accepting the interim CEO
responsibilities, December 6th, 2007.  

                    c.
          Further Evans will be given a $10,000 net bonus to be paid on or before
January 11, 2008. 

   

          2.       Reversion
to Former Position. In the event that Evans does not ultimately fill Chugach’s
CEO position on a regular basis, for whatever reason, Evans shall give up his
duties as Chugach’s Interim CEO and
shall continue in Chugach’s employment as its Senior Vice President of Power
Supply with the duties, compensation and other benefits presently associated
with that position, subject to all policies applicable to that position.  

   

          3.       Term.   
This Agreement shall remain in effect indefinitely until the earlier of: (a)
the date of commencement of employment of a new CEO; or (b) either party may
give thirty (30) days’ notice of termination of this Agreement, with or without
cause, and the Agreement shall terminate as of the notice date. In either case,
Evans shall revert to his position of Senior Vice President of Power Supply at
that time. 

          IN
WITNESS WHEREOF, the parties have executed this Memorandum of Agreement to be
effective on and as of December 6, 2007. 

	
 

	
 

	
 

	
 

	
CHUGACH
  ELECTRIC ASSOCIATION, INC.

	
 

	
 

	
By:

	

	
 

	

	
 

	
Name:

	
ELizabeth VAZQUEZ

	
 

	
 

	
 

	
Title:

	
Chair, Board of Directors

	
 

	
 

	
 

	
 

	
 

	
 

	
Bradley
  Evans

	
 

	
 

	
 

	
 

	

	
 

	

2

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