UNITED STATES OF AMERICA FEDERAL ENERGY REGULATORY COMMISSION Upper Peninsula Power Company ) Project No. 10856 ) Michigan NOTICE OF AVAILABILITY OF DRAFT ENVIRONMENTAL ASSESSMENT (May 24, 1996) In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission's) regulations, 18 CFR Part 380 (Order No. 486, 52 F.R. 47897), the Office of Hydropower Licensing has reviewed the application for an original license for the Au Train Hydroelectric Project, located near the towns of Au Train and Munising, Michigan in Alger County, and has prepared a Draft Environmental Assessment (DEA) for the project. In the DEA, the Commission's staff has analyzed the potential environmental impacts of the un-licensed, existing project and has concluded that approval of the project, with appropriate environmental protection or enhancement measures, would not constitute a major federal action significantly affecting the quality of the human environment. Copies of the DEA are available for review in the Public Reference Branch, Room 2A, of the Commission's offices at 888 First Street, N.E., Washington, D.C. 20426. Any comments should be filed within 45 days from the date of this notice and should be addressed to Lois D. Cashell, Secretary, Federal Energy Regulatory Commission, 888 First Street, N.E., Washington, D.C. 20426. Please affix "Au Train Hydroelectric Project No. 10856" to all comments. For further information, please contact John Blair at (202) 219-2845. Lois D. Cashell Secretary To the Agency/Party Addressed: In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's regulations, 18 CFR Part 380 (Order No. 486, 52 F.R. 47897), the Office of Hydropower Licensing staff reviewed the development application, and prepared the attached Draft Environmental Assessment (DEA). The DEA contains staff's analysis of the environmental impacts of the proposal and concludes that approval with appropriate environmental protection or enhancement measures, would not constitute a major federal action significantly affecting the quality of the human environment. Please submit any comments within 45 days of the date of this letter. Comments should be addressed to Lois D. Cashell, Secretary, Federal Energy Regulatory Commission, 888 First Street NE, Washington, DC, 20426. Please affix the project name and number to all comments. Sincerely, John H. Clements Director, Division of Project Review Enclosure: Draft Environmental Assessment DRAFT ENVIRONMENTAL ASSESSMENT FOR HYDROPOWER LICENSE Au Train Hydroelectric Project FERC Project No. 10856-Michigan Federal Energy Regulatory Commission Office of Hydropower Licensing Division of Project Review 888 First Street, NE Washington, DC 20426 May 1996 Contents Page SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . iv I. APPLICATION . . . . . . . . . . . . . . . . . . . . . . 1 II. PURPOSE AND NEED FOR ACTION . . . . . . . . . . . . . . 1 A. Purpose of Action . . . . . . . . . . . . . . . 1 B. Need for Power . . . . . . . . . . . . . . . . . 1 III. PROPOSED ACTION AND ALTERNATIVES . . . . . . . . . . . 3 A. Applicant's Proposal . . . . . . . . . . . . . . 3 1. Project Description . . . . . . . . . . . . . . 3 2. UPPCo-Proposed Environmental Measures . . . . . 6 B. Staff-Recommended Enhancement Measures . . . . . 7 C. No-Action Alternative . . . . . . . . . . . . . 8 D. Alternatives Considered but Eliminated from Detailed Study . . . . . . . . . . . . . . . . . 8 IV. CONSULTATION AND COMPLIANCE . . . . . . . . . . . . . . 9 A. Agency Consultation . . . . . . . . . . . . . . 9 B. Interventions . . . . . . . . . . . . . . . . . 9 C. Section 18 Fishway Prescription . . . . . . . 10 D. Water Quality Certification . . . . . . . . . 10 E. Coastal Zone Management Act . . . . . . . . . 10 F. Scoping . . . . . . . . . . . . . . . . . . . 10 V. ENVIRONMENTAL ANALYSIS . . . . . . . . . . . . . . . 11 A. General Description of the Locale . . . . . . 11 1. Au Train Basin . . . . . . . . . . . . . . . . 11 2. Existing and Proposed Hydropower Development . 11 B. Scope of Cumulative Impact Analysis . . . . . 11 C. Environmental Resources . . . . . . . . . . . 12 1. Geological Resources . . . . . . . . . . . . . 12 2. Water Resources . . . . . . . . . . . . . . . 13 3. Fisheries Resources . . . . . . . . . . . . . 32 4. Vegetation Resources . . . . . . . . . . . . . 40 5. Wildlife Resources . . . . . . . . . . . . . . 42 6. Aesthetic Resources . . . . . . . . . . . . . 47 7. Cultural Resources . . . . . . . . . . . . . . 50 8. Recreation Resources . . . . . . . . . . . . . 51 9. Land Use Resources . . . . . . . . . . . . . . 56 10. Socioeconomic Considerations . . . . . . . . . 60 11. Air Quality . . . . . . . . . . . . . . . . . 60 VI. DEVELOPMENTAL ANALYSIS . . . . . . . . . . . . . . . 61 A. Proposed Project . . . . . . . . . . . . . . . 62 B. Staff's Alternative . . . . . . . . . . . . . 63 C. No-Action Alternative . . . . . . . . . . . . 64 D. Economic Comparison of the Alternatives . . . 64 E. Pollution Abatement . . . . . . . . . . . . . 65 i Contents Page VII. COMPREHENSIVE DEVELOPMENT AND RECOMMENDED ALTERNATIVE 65 A. Installing a Bypass Structure . . . . . . . . 68 B. Compliance Gaging . . . . . . . . . . . . . . 68 C. Preparing an Erosion Control Plan . . . . . . 69 D. Preparing a Wildlife Management Plan . . . . . 69 E. Preparing a Final Bald Eagle Plan . . . . . . 70 F. Purple Loosestrife Monitoring . . . . . . . . 70 G. Recreation Plan and Enhancements . . . . . . . 71 H. Conclusions . . . . . . . . . . . . . . . . . 71 VIII. RECOMMENDATIONS OF FISH AND WILDLIFE AGENCIES . . . . 71 IX. COMPREHENSIVE PLANS . . . . . . . . . . . . . . . . . 83 X. FINDING OF NO SIGNIFICANT IMPACT . . . . . . . . . . 83 XI. LITERATURE CITED . . . . . . . . . . . . . . . . . . 84 XII. LIST OF PREPARERS . . . . . . . . . . . . . . . . . . 85 Tables Number Page 1 Estimated percent exceedance flows (cfs) for Au Train inflows . . . . . . . . . . . . . . . . . . . . . . . . 14 2 Recommended and proposed basin elevations . . . . . . . 20 3 Recommended and proposed minimum flows through the powerhouse . . . . . . . . . . . . . . . . . . . . . . . 23 4 Species composition from entrainment sampling . . . . . 35 5 Threatened and endangered species potentially occurring in the project area . . . . . . . . . . . . . . . . . . . . 44 6 Camping use at the Forest Lake State Forest Campground . 53 7 Recreation use at the project area . . . . . . . . . . . 53 8 Michigan demographic characteristics . . . . . . . . . . 60 9 National ambient air quality standards . . . . . . . . . 61 10 Staff's assumptions for economic analyses . . . . . . . 62 11 Summary of costs and current net annual benefits of applicant's proposed project . . . . . . . . . . . . . . 63 12 Summary of costs and current net annual benefits of the staff's alternative . . . . . . . . . . . . . . . . . . 63 13 Comparison of economic analyses . . . . . . . . . . . . 64 14 Summary of all fish and wildlife resource agency recommendations . . . . . . . . . . . . . . . . . . . . 73 ii Figures Number Page 1 Project Location . . . . . . . . . . . . . . . . . . . . . 2 2 Au Train Hydroelectric Project Area . . . . . . . . . . . 5 3 Average Monthly Inflow, Historical Outflow, and Simulation Outflow at Au Train Basin . . . . . . . . . . . . . . . 15 4 Au Train Basin Inflow Duration Curve . . . . . . . . . . 16 5 Average Monthly Reservoir Elevations . . . . . . . . . . 19 6 Land Ownership in the Project Area . . . . . . . . . . . 57 iii SUMMARY The Upper Peninsula Power Company (UPPCo) filed an application for an original license for an unlicensed minor project at an existing dam. The project is located in the Upper Peninsula of Michigan on the Au Train River in Alger County. The project has a rated capacity of 0.9 megawatt and produces about 5.9 gigawatt-hours (GWh) of energy annually. This draft environmental assessment (EA) analyzes the effects of UPPCo's operation of the Au Train Project. The environmental and economic effects of three alternatives are evaluated: (1) licensing the project as proposed by UPPCo; (2) licensing the project as proposed with additional enhancement measures recommended by Federal Energy Regulatory Commission (Commission) staff; and (3) taking no action on the project. The no-action alternative would consist of the project operating without a federal license, with no change to the environmental setting or project operation. In the comprehensive development section of this draft EA (Section VI), we study both the environmental resource benefits and the power and economic benefits of the project. Based on that analysis, we recommend that a license for the project include the following measures: UPPCo-Proposed Environmental Measures: ù Maintain a 200-foot buffer adjacent to the reservoir and river down-stream of the powerhouse on UPPCo-owned lands to minimize soil erosion and maintain aesthetic quality ù Maintain a minimum continuous powerhouse discharge of 50 cfs to enhance fisheries resources in Au Train River ù Install and fund operation of a USGS gage on the Au Train River down-stream of the powerhouse to document compliance with continuous powerhouse discharge ù Install a level sensor on Au Train basin to document compliance with basin water level restrictions ù Develop and implement a bald eagle management plan to protect and preserve critical habitat ù Construct a barrier-free viewing area and provide directional signage to Upper Au Train Falls to enhance recreational resources at the project iv Additional Staff-Recommended Environmental Measures: ù Prepare an erosion control plan to minimize effects of future erosion on basin resources ù Maintain a year-round minimum water elevation of 772.0 feet local datum (773.7 feet mean sea level) to protect bald eagle habitat from predators and recreationists ù Install a bypass to maintain down-stream flows during emergency interruption of water flows to protect fisheries habitat down-stream ù Install a staff gage on the up-stream face of the dam to allow public observance of water level compliance ù Consult with the Michigan Department of Natural Resources (MDNR) and the Department of Interior (DOI) in advance of scheduled reservoir draw-downs to protect fish and wildlife resources ù Prepare an operational compliance plan, including annual reports to the Commission to document compliance with license conditions ù Prepare a wildlife management plan, including waterfowl structures and annual consultation with resource agencies ù Develop and adopt a plan to monitor purple loosestrife and Eurasian milfoil ù Install interpretive signage at Upper Au Train Falls to provide the public information about facilities and natural resources at the site ù Plant trees to screen gravel pit/storage area at Upper Au Train Falls to improve aesthetics ù Amend the 200-foot-wide buffer policy at existing development sites to allow limited vegetative management ù Consult with Michigan State Historic Preservation Officer prior to beginning construction activities to protect any cultural resources that may be discovered in the future ù Develop a recreation plan including our recommended recreation enhancements v ù Operate and maintain the recreation site on the east side of the basin Agency-Prescribed Environmental Measures ù Pursuant to Section 18 of the FPA, DOI reserves its authority to prescribe the construction, operation, and maintenance of fishways. Overall, these enhancement and protection measures would improve fish and wildlife resources, recreational resources, and cultural resources in the Au Train Project's impoundment and in the Au Train River. In addition, the electricity generated from the project would be beneficial because it would continue to reduce the use of fossil-fueled, electric generating plants, conserve nonrenewable energy resources, and reduce atmospheric pollution. Pursuant to Section 10(j) of the FPA, we made a preliminary determination that some of the recommendations of DOI and some of the recommendations of MDNR may be inconsistent with the purpose and requirements of the FPA and applicable law. Section 10(j) of the FPA requires the Commission to include license conditions, based on the recommendations of the federal and state fish and wildlife agencies, for the protection of, mitigation of adverse impacts to, and enhancement of fish and wildlife resources. Because implementing all the agency recommendations taken together would have substantial adverse effects on project purposes, including economics, we looked closely at each individual recommendation to determine whether benefits to the environment would be worth the cost of implementing the measure. For the reasons discussed in Section VII of this EA, we determined the following recommendations to be inconsistent with Sections 4(e) or 10(a) of the FPA and did not adopt them: (a) maintain specified basin target and minimum elevations; (b) restrict daily discharge fluctuation to 20 percent; (c) maintain state water quality standards for DO and temperature; (d) develop and implement water quality monitoring; (e) develop a fish exclusion plan; (f) include all UPPCo-owned lands in a project boundary; and (g) develop and implement a comprehensive land management plan for all UPPCo-owned lands. Based on our independent environmental analysis, issuance of a license order approving the proposed action, with our additional environmental recommendations, is not a major federal action significantly affecting the quality of the human environment. vi DRAFT ENVIRONMENTAL ASSESSMENT FEDERAL ENERGY REGULATORY COMMISSION OFFICE OF HYDROPOWER LICENSING DIVISION OF PROJECT REVIEW Au Train Hydroelectric Project FERC Project No. 10856-Michigan May 24, 1996 I. APPLICATION On April 30, 1993, the Upper Peninsula Power Company (UPPCo) filed an application for an original license for an unlicensed minor project at an existing dam. On November 9, 1993, and May 18, 1994, UPPCo supplemented its application by providing additional information. The project site is located on the Au Train River in Alger County on the Upper Peninsula of Michigan (Figure 1). II. PURPOSE AND NEED FOR ACTION A. Purpose of Action This environmental assessment (EA) assesses the environmental impacts associated with the operation of the project and the alternatives to the proposed project. We make recommendations to the Federal Energy Regulatory Commission (the Commission) whether to issue a license, and if so, recommend terms and conditions to become a part of any license issued. The Federal Power Act (FPA) provides the Commission with the authority to license nonfederal water power projects on navigable waterways and federal lands. In deciding whether to issue any license, the Commission must determine that the project adopted will be best adapted to a comprehensive plan for improving or developing a waterway. In addition to the power and developmental purposes for which licenses are issued, the Commission must give equal consideration to energy conservation; the protection, mitigation of damage to, and enhancement of fish and wildlife (including related spawning grounds and habitat); the protection of recreation opportunities; and the preservation of other aspects of environmental quality. B. Need for Power The Au Train Project was initially constructed by Cleveland- Cliffs Iron Company to serve the electric power needs of the 1 Figure 1 2 Munising Paper Company. It was put in service in 1910. Electric service to the paper company was discontinued in 1917, and the plant was modified to supply power to the Cleveland-Cliffs Iron Company's mining operations. The project has operated continuously in its current configuration since 1931. Cliffs Electrical Service Company, a subsidiary of Cleve- land-Cliffs Iron Company, owned and operated the project until it was purchased by UPPCo in 1988. Since the date of purchase, UPPCo has relied upon the project for the production of electric energy for use by residents and industries in UPPCo's service area. Since 1988, UPPCo has operated the project in a modified run-of-river mode, with a winter draw-down and a late summer/early fall draw-down to provide a continuous powerhouse discharge. The rated capacity of the Au Train Project, at a power factor of 0.8, is 0.896 megawatts (MW). The average annual net energy generation is 5.9 gigawatt-hours (GWh). The cost of producing electricity at the Au Train Project is more than the cost to produce electricity by different means. Currently, the Au Train Project annually produces $202,000 worth of power at a cost of $359,000. UPPCo's rate payers would not have to pay significantly more for power if the Au Train Project was not operating. The Au Train Project and UPPCo's service area are located in the Mid-America Interconnected Network (MAIN) Reliability Council Region. Each year, MAIN and the other nine Electric Reliability Councils compile and publish Regional Reliability Council Coordinated Bulk Power Supply Program Reports (known as OE-411 Reports). The 1994 MAIN OE-411 Report projects the 10-year average growth rate for the summer peak hour to be 2.24 percent; and the winter peak hour growth rate to be 0.94 percent for the MAIN Council region (MAIN, 1994). The average annual load for UPPCo is projected to grow, while capacity is not expected to grow. Even with the Au Train Project and other planned facilities in operation, demand will increase faster than capacity, and reserve margins will decrease. Therefore, we conclude that the power from the Au Train Project is needed. III. PROPOSED ACTION AND ALTERNATIVES A. Applicant's Proposal 1. Project Description The Au Train Project is located in the central portion of Michigan's Upper Peninsula about 7 miles south of the town of Au Train, Michigan, and about 15 miles southwest of Munising, Michigan. The Au Train River flows in a northerly direction from 3 the dam to Au Train Lake about 6 river miles down-stream. The powerhouse discharge bypasses 0.7 miles of the Au Train River. The bypassed reach contains two water falls; only dam leakage and groundwater seeps provide flow to this reach. Au Train Lake, which is not a part of the Au Train Project, is a natural lake providing a variety of recreational opportunities for the resort community along the lake shore. From the outlet at the north end of Au Train Lake, the Au Train River meanders about 8.5 miles north to Lake Superior. The Au Train Project includes the Au Train dam, its impoundment (known as Au Train basin), and accompanying penstock, powerhouse, discharge point, and down-stream bypassed reach (Figure 2). Specifically, the project consists of the following: ù A 1,500-foot-long earth embankment diversion dam having a maximum height of 38 feet at an average crest elevation of 788.7 feet local datum1 ù A 100-foot-long concrete overflow spillway section with a maximum height of 29 feet, located in the center of the earth embankment having a crest elevation of 778.0 feet local datum, topped with ten 10-foot-wide by 2- foot-high wooden flashboards ù An earth-filled dike located at the south end of the project basin (referred to as the south levee) that is designed as a non-overflow structure about 4,500 feet long and a maximum height of 15 feet, having an average crest elevation of 788.4 feet local datum ù A basin having a surface area of 1,557 acres at elevation 780.0 feet local datum, a gross storage capacity of about 12,342 acre-feet, and a usable storage capacity of 12,180 acre-feet above the 764.0 feet local datum elevation ù A 5.5-foot-diameter, 2,516-foot-long steel pipeline with stoplogs, trashrack, and butterfly valve connecting to a 10-foot-diameter exposed steel surge tank connected to the penstock up-stream of the powerhouse ù A 37.5-foot-long by 32-foot-wide by 22-foot-high powerhouse located on the east bank of the river equipped with two horizontal Francis-type turbines having a total of 1,600 horsepower, a capacity of 1,120 1 Local datum = mean sea level (msl) - 1.27 feet. All elevations in this document are referenced to local datum. 4 Figure 2 5 kVa, hydraulic capacity range of about 50-136.5 cubic feet per second (cfs), average net head of 124 feet, and a power factor of 80 percent ù A 500-foot-long unlined tailrace channel having a normal tailwater elevation of 648.19 feet local datum ù A 3-phase, 2.3-kilovolt (kV), 2,500-foot-long overhead transmission line ù Appurtenant facilities UPPCo proposes no major construction. UPPCo proposes to operate the project in a modified run-of-river2 mode (non- peaking), with a late winter draw-down and gradual summer drafting of the basin. The proposed mode of operation would have the effect of shifting higher stream flows from early spring to summer, and from late fall to winter. 2. UPPCo-Proposed Environmental Measures UPPCo proposes the following measures to enhance environ- mental resources: ù Maintain a 200-foot buffer adjacent to the reservoir and river down-stream of the powerhouse on UPPCo-owned lands ù Maintain a minimum continuous powerhouse discharge of 50 cfs ù Maintain a minimum winter water elevation of 769.0 feet local datum and a minimum summer water elevation of 772.0 feet local datum ù Install and fund operation of a USGS gage on the Au Train River down-stream of the powerhouse ù Install a level sensor on Au Train basin ù Develop and implement a bald eagle management plan ù Construct a barrier-free viewing area and provide directional signage to Upper Au Train Falls 2 In run-of-river mode, outflows from the reservoir approximate the sum of inflows to the reservoir. 6 B. Staff-Recommended Enhancement Measures An alternative to licensing the project as proposed is to license the project with additional measures for resource protection and enhancement. In addition to UPPCo's environmental measures, we recommend the following measures: ù Prepare an erosion control plan to minimize effects of future erosion on basin resources ù Maintain a year-round minimum water elevation of 772.0 feet local datum (773.7 feet mean sea level) to protect bald eagle habitat from predators and recreationists ù Install a bypass to maintain down-stream flows during emergency interruption of water flows to protect fisheries habitat down-stream ù Install a staff gage on the up-stream face of the dam to allow public observance of water level compliance ù Consult with the Michigan Department of Natural Resources (MDNR) and the Department of Interior (DOI) in advance of scheduled reservoir draw-downs to protect fish and wildlife resources ù Prepare an operational compliance plan, including annual reports to the Commission to document compliance with license conditions ù Prepare a wildlife management plan, including waterfowl structures and annual consultation with resource agencies ù Develop and adopt a plan to monitor purple loosestrife and Eurasian milfoil ù Install interpretive signage at Upper Au Train Falls to provide the public information about facilities and natural resources at the site ù Plant trees to screen gravel pit/storage area at Upper Au Train Falls to improve aesthetics ù Amend the 200-foot-wide buffer policy at existing development sites to allow limited vegetative management ù Consult with Michigan State Historic Preservation Officer prior to beginning construction activities to protect any cultural resources that may be discovered in the future 7 ù Develop a recreation plan including our recommended recreation enhancements ù Operate and maintain the recreation site on the east side of the basin Our reasons for adopting these recommendations are explained in the individual resource sections of Section V Environmental Analysis. In addition, agency-recommended enhancement measures that we do not concur with and the reasons that we do not recommend them are also discussed in Section V as well as Section VII. C. No-Action Alternative If the no-action alternative is selected, the project would not be issued a license, but would continue to operate pursuant to its existing operating criteria, and no new environmental protection, mitigation, or enhancement measures would be required to be implemented. We use this alternative to establish baseline environmental conditions for comparison with other alternatives. D. Alternatives Considered but Eliminated from Detailed Study In a letter dated September 6, 1994, the MDNR requested consideration of alternatives for federal takeover and project removal if it is determined that the project cannot meet the costs of the necessary environmental mitigation. We do not consider federal takeover pursuant to Section 14 of the FPA to be an alternative. Federal takeover and operation of a project is applicable to a licensed project. Since the Au Train Project is not yet licensed, federal takeover is not applicable. Further, in its recommended terms and conditions MDNR recommended that, 10 years after licensing, UPPCo develop a plan for project removal in anticipation of the end of the license term or project retirement. It also recommended that UPPCo establish a trust fund for project retirement. However, MDNR does not advocate dam removal/retirement at this time. Project retirement could be accomplished in one of two ways: (1) project retirement with dam removal, and (2) project retirement without dam removal. Either method would involve denial of the license application, and would require UPPCo to secure a source of replacement power. The project would provide natural flows down-stream of the project and would allow for environmental and recreation enhancement measures. No participant has suggested that project retirement with dam removal would be appropriate at this time, and we have found no basis for recommending it. 8 Retaining the dam and disabling or removing equipment used to generate power is the second project retirement alternative. Project works would remain in place and could be developed as a historic site or for educational or other purposes. This would require us to identify another government agency willing and able to assume regulatory control and supervision of the remaining facilities. No agency or other participant has advocated project retirement with equipment removal at this time, nor have we found any basis for recommending it. Therefore, we eliminated project retirement from detailed study because it is unreasonable in light of the circumstances of this case. As discussed in Section VII of this EA, the Commission in its December 14, 1994 Policy Statement on project retirement (RM93-23-000), declined to impose a generic retirement requirement and instead decided to address the issue on a case- by-case basis. We conclude that, under the circumstances of this case, development of a plan for dam removal and establishment of a pre-retirement trust fund for the project is not warranted. IV. CONSULTATION AND COMPLIANCE A. Agency Consultation The Commission issued public notice on March 3, 1994, that the project was ready for environmental analysis. The comment deadline specified in our notice was 60 days from the date of the notice (May 2, 1994). The following entities provided comments and recommended license terms and conditions. All comments become a part of the record and are considered during our analysis of the project. Commenting Entity Date of Letter U.S. Forest Service, Hiawatha National April 28, 1994 Forest (USFS) Department of Interior April 29, 1994 Michigan Department of Natural Resources May 3, 1994 UPPCo prepared responses to the comments received from MDNR and the USFS, which were filed with the Commission on July 6 and 7, 1994, respectively. B. Interventions The USFS filed a timely motion to intervene in the proceeding on October 25, 1993. On October 27, 1993, DOI filed a motion to intervene. On November 1, 1993, MDNR filed a motion to intervene. UPPCo did not file answers in opposition to the 9 motions to intervene. The Commission granted intervenor status to the USFS, MDNR, and DOI. No other agency, organization, or individual filed a motion to intervene. C. Section 18 Fishway Prescription DOI reserves authority to prescribe the construction, operation, and maintenance of fishways at the Au Train Project pursuant to Section 18 of the FPA. D. Water Quality Certification Under Section 401 of the Clean Water Act (33 U.S.C. Section 1341), license applicants must obtain either: (1) state certification that any discharge from the project would comply with applicable provisions of the Clean Water Act; or (2) a waiver of certification by the appropriate state agency. The Commission requires that applicants apply for such certification or waiver before they file their application with the Commission. On January 27, 1993, UPPCo applied to MDNR for a Section 401(a)(1) water quality certification in a cover letter accompanying the draft license application. Because MDNR did not deny or grant certification by 1 year after the date of the request, the agency is deemed to have waived certification for this project pursuant to the Commission's regulations at 18 CFR Section 4.38(f)(7)(ii). E. Coastal Zone Management Act Michigan has a federally-approved coastal zone management program administered by the Land and Water Management Division of MDNR. The area of jurisdiction for the Michigan coastal zone management program generally extends 1,000 feet up-stream of the ordinary high-water mark where a river discharges into a lake (personal communication, Lynda Sanchez, MDNR). The Au Train Project is not within the Michigan coastal zone management program jurisdiction (Sanchez, 1995). F. Scoping We considered the various environmental issues raised during the license application process, and issued a Scoping Document on July 26, 1994. The Scoping Document described potentially significant environmental issues we felt should be analyzed in detail in this EA, as well as issues that should not be analyzed because they are immaterial to the licensing decision. We received letters from UPPCo, the USFS, and MDNR in response to the Scoping Document. Comments from these entities have been considered in this EA. 10 The Commission's staff and UPPCo and agency representatives toured the Au Train Project site on October 17, 1995. V. ENVIRONMENTAL ANALYSIS A. General Description of the Locale 1. Au Train Basin The project is located on the Au Train River in Alger County, Michigan. The Au Train Project impounds the up-stream limit of the Au Train River including its original source, Mud Lake. Three tributaries, Joe Creek, Johnson Creek, and Slapneck Creek, flow into Au Train Basin. The reservoir has over 15 miles of shoreline, a total drainage area of 80.5 square miles, and is about 6.5 miles long and 0.25 to 0.5 mile wide. The project is located approximately 15 river miles up-stream of the river's mouth at Lake Superior. The southern end of the Au Train basin is impounded by an earth-filled dike, which creates the divide between the Lake Superior and Lake Michigan drainages. The climate of the region is characterized by cold winters and moderate summers. Average minimum and maximum temperatures for July are 55øF and 80øF, respectively, and for January are 5øF and 25øF, respectively. Average annual precipitation ranges from 30 to 40 inches, and average annual snowfall varies from 54 to 240 inches. Snow cover occurs for an average of 140 days normally from mid-November through late April. Principal industries in the region are timber and mineral based, and include commercial forestry, timber harvesting, and extraction of minerals (iron-ore). 2. Existing and Proposed Hydropower Development No other existing or proposed hydroelectric projects are located in the project area or vicinity. B. Scope of Cumulative Impact Analysis In our Scoping Document, we identified fisheries and water quality as potentially being affected cumulatively due to fluctuating reservoir surface elevations and draw-downs. Comments received on the Scoping Document agreed with this assessment. Therefore, for fisheries and water resources, our analysis extends beyond site specifics and encompasses the mainstem Au Train River. 11 C. Environmental Resources 1. Geological Resources Affected Environment: The topography of the area is dominated by large glacial outwash plains and low rolling hills or ridges with numerous scattered wet depressions (UPPCo, 1993a). The project area is underlain by sandstone and limestone bedrock. The soils are relatively young, very complex, and intermingled. In the bypassed reach and in the 0.9-mile-segment down- stream of the powerhouse, shoreline bank conditions are very stable and non-erodible. Further down-stream for 1.1 miles, stream banks are highly erodible; however, banks along most of this reach are protected from erosion by vegetation. Through the license application process, UPPCo documented three areas experiencing erosion. The first location is along a roadway leading to the informal boat launch along the east shore- line of the reservoir. The second area that experiences some erosion is the unprotected banks of the river, more than one mile down-stream of the powerhouse (UPPCo, 1993b). The third location where erosion was identified was along the powerhouse access road, in which minor slumping was identified. UPPCo reconstructed the road and repaired the embankment in 1992 (UPPCo, 1993b). Further improvements in 1994, including widening the road and installing drainage improvements, have reduced the potential for erosion and sedimentation in that area. Environmental Impacts: MDNR states that past operations have resulted in erosion in the project area and recommends that UPPCo develop and implement a plan in consultation with MDNR to address both present and future erosion problems. UPPCo disagrees that an erosion plan is needed, stating that there are no significant areas of shoreline erosion within the basin, nor have erosion effects of historic peaking or current operations been identified (UPPCo, 1994b). UPPCo's proposal to operate the project in a modified run- of-river with a winter draw-down and continuous discharge of 50 cfs from the powerhouse should minimize potential down-stream erosion. UPPCo's proposed winter draw-down allows it to capture spring flood flows, thereby reducing the potential for flood-flow related erosion down-stream. Managing impoundment level fluctuations, draw-downs, and refills should minimize the impact of project operation on potential future streambank erosion. However, because UPPCo has documented several areas of erosion in the past, we conclude that future periodic inspections for erosion are warranted. We recommend that UPPCo prepare a plan to 12 inspect the shoreline annually for erosion and report its findings to the Commission every 3 years to ensure that erosion that develops in the future does not adversely affect project resources. If specific areas of active shoreline erosion are identified, we recommend that UPPCo include methods and a schedule to repair the site in a report to the Commission. To minimize erosion effects during any future construction activities, we further recommend that UPPCo file with the Commission a plan to control erosion, slope instability, and sedimentation at least 90 days before the start of any land- disturbing or land-clearing activities. The erosion control plans should incorporate applicable best management practices. Unavoidable Adverse Impacts: There may be some minor, short-term increases in erosion and sedimentation associated with the construction of recreation facilities. However, this is not expected to appreciably affect water quality in the reservoir or tailrace. Other minor, natural erosion would continue along the banks of the Au Train River. 2. Water Resources Affected Environment: a. Water quantity The Au Train basin is located in the middle region of Michigan's Upper Peninsula in a relatively small, low-relief watershed that drains to Lake Superior (Figure 1). The contributing watershed has an area of 80.5 square miles. Local springs and three tributary streams (Joe Creek, Johnson Creek, and Slapneck Creek) contribute flow to the Au Train basin. The Au Train basin is approximately 6.5 miles long and varies from 0.25 to 0.5 mile wide. At full pool (elevation 780 feet local datum), the basin has an average depth of 8 feet, maximum depth of 28 feet, a surface area of 1,557 acres, and a volume of approximately 12,342 acre-feet. The active storage capacity above the current minimum draw-down elevation of 764 feet local datum is approximately 12,180 acre-feet (UPPCo, 1993a). The Au Train River originates just below the dam and flows 17 miles north through Au Train Lake to its discharge into Lake Superior. Water from the Au Train basin is discharged to the Au Train River about 0.7 miles down-stream of the dam. The bypassed reach of the Au Train River, between the dam and the powerhouse, has no direct flow discharges. However, dam leakage and accretion account for a 5 to 12 cfs flow in this reach. According to UPPCo, its primary flow considerations in the Au Train River down-stream of the basin discharge are protection of 13 the stream fishery (primarily trout and steelhead) and maintenance of the Au Train Lake water level. Although historic stream gaging data for the Au Train River is lacking, UPPCo calculated basin inflow data for the period 1980 to 1990 based on turbine performance characteristics, daily power production, and reservoir elevations during that period. Table 1 presents calculated inflow data by month. The 1980 to 1990 period Table 1. Estimated percent includes dry, average, and wet exceedance flows (cfs) for Au Train periods and thus is inflows for calendar years 1980 representative of the natural through 1990 (Source: UPPCo, hydrologic regime. The 1993). calculated flows reveal a typical Estimated Percent Exceedance seasonal pattern for an upper Flows (cfs) Midwest streamÄwith an inflow pattern of low winter flows, a Month 10% 30% 50% 70% 90% spring snowmelt peak, decreasing Jan 90 64 56 48 36 flows during the summer, and a Feb 82 57 45 35 28 fall peak associated with Mar 220 80 50 35 25 rainstorms (Figure 3). UPPCo Apr 600 350 240 170 120 estimates that from 1980 to 1990, May 225 125 90 65 40 average monthly inflows ranged from 35 to 310 cfs, with a mean Jun 150 70 60 35 20 annual basin inflow of 91 cfs. Jul 70 45 35 30 25 Figure 4 presents the calculated Aug 57 37 28 23 16 mean annual inflow duration curve Sep 100 47 36 30 21 for the Au Train basin. Oct 130 70 60 40 30 Nov 210 115 85 55 40 The minimum powerhouse discharge is 50 cfs (1 unit at 60 percent gate) and the maximum powerhouse capacity is 136.5 cfs (2 Dec 138 95 70 50 37 units at full gate). UPPCo states that under normal conditions, all flow is discharged through the powerhouse (UPPCo, 1993a). Spill events occur when inflow exceeds 136 cfs and the basin is full (primarily springtime). Based on UPPCo estimates, approximately 20 spills at an average rate of 104 cfs occurred per year under historical operations. b. Water Quality The Au Train basin is designated a warmwater fishery. Michigan's monthly maximum temperature standards for a warmwater fishery range from 38øF in January to 83øF in July. The minimum dissolved oxygen (DO) standard for warmwater fisheries is 5.0 mg/l (Michigan Administrative Code, 1986). Water temperature data collected by UPPCo at one station near the Au Train dam from April 1991 to January 1992 indicate that the basin meets warmwater temperature standards. The highest basin water temperature sampled in July 1991 was 79øF. Temperature and DO monitoring data in the basin showed that the 14 Figure 3 15 Figure 4 16 Au Train basin is weakly stratified. Dissolved oxygen concentration in the basin was above 6.0 mg/l over most of the water column, but below the 5.0 mg/l standard between 4 to 5 meters (13 to 16 feet) depth during the July 1991 sampling. The minimum reliable DO value reported by UPPCo was 3.0 mg/l at the reservoir bottom. Quarterly data that UPPCo collected in 1991-92 show that DO in the basin is generally above 7.0 mg/l in fall, winter, and spring. The Au Train River, from the Au Train dam to just up-stream of Au Train Lake, is a state-designated trout (coldwater) stream. Michigan's monthly maximum temperature standards for coldwater streams vary from 38øF in January to 68øF in June through August. The Michigan DO standard for coldwater trout streams is 7.0 mg/l (Michigan Administrative Code, 1986). UPPCo's 1991 water quality data for the Au Train River at two locations down-stream of the dam show that river temperatures exceeded maximum coldwater temperature standards in June, July, and August. The highest daily average temperature during continuous monitoring in the summer of 1991 was 75øF in July; the average of all daily maximum temperatures in July 1991 was 71øF. Similarly, measured DO in the river fell below the minimum coldwater DO standard. The lowest daily minimum DO measured in the summer of 1991 was 5.25 mg/l. Over half of the daily minimum DO values and 27 percent of the daily average DO values from June through September 1991 were below 7.0 mg/l. UPPCo's temperature and DO data indicate that management of the river for a coldwater fishery may be marginal in the river immediately down-stream of the powerhouse. River and basin heavy metal water quality data collected by UPPCo in 1991-92 were within background levels for Upper Peninsula lakes, according to MDNR. Samples from both the basin and the river met Michigan water quality standards and were at levels appropriate for its designated use for conventional parameters during the 1991-92 sampling period (UPPCo, 1993a). Environmental Impacts: a. Basin water levels Since UPPCo purchased the Au Train project in 1988, it has been operated in a modified run-of-river mode with a winter draw- down and late summer/early fall draw-downs as necessary to maintain a continuous minimum discharge from the powerhouse. UPPCo proposes to continue this type of operation with slight modifications to allow for a more gradual winter draw-down, less allowable draw-down year-round, and higher basin water levels in spring and early summer. UPPCo modeled its proposed operations based on hydrologic conditions for the 1980-1990 period. The modeling results show that, under average hydrologic conditions, 17 the basin would fill to elevation 780 feet by May 1 and then gradually be drawn down to elevation 776 feet by October 1. After a slight refill of about 1 foot by the end of December, UPPCo would draw down the reservoir to about 773 feet by the end of March (Figure 5). UPPCo's model predicted that in the driest year of the 1980-1990 period, the basin would be drawn down to an elevation of 771 feet at the end of March and refill to 776 feet by May 1 (Table 2). UPPCo proposes an absolute minimum elevation of 769.0 feet in winter and 772.0 feet in summer, with consultation occurring with MDNR, USFS, and DOI when the basin is drafted below 774.0 feet and hydrologic conditions make it likely to reach 772.0 feet. MDNR and USFS recommend that UPPCo operate the project in a modified run-of-river mode, providing a continuous powerhouse discharge and allowing a modest winter draw-down to capture spring runoff. To achieve this, MDNR and USFS recommend that UPPCo maintain target operating levels that vary by month, ranging from 780.0 feet for May-July (no allowable draw-down) to 775.0 feet in March and April (5-foot draw-down). For situations when UPPCo cannot maintain the recommended target operating levels, MDNR and USFS recommend absolute minimum elevations ranging from 779.0 feet for May-July to 774.0 feet for March and April (Table 2). MDNR recommends that UPPCo initiate consultation with MDNR, USFS, and DOI when it falls below or anticipates falling below MDNR's recommended target elevation within 7 days of the event to review the need for falling below the target and to consider alternative operating scenarios to protect and enhance the Au Train basin. DOI recommends that UPPCo operate the project as UPPCo proposes, with the additional constraint of no winter draw-down. DOI recommends that UPPCo maintain basin water elevations during March and April at 776.5 feet. DOI states that a winter draw- down and the associated rising water levels in the spring would adversely affect nesting waterfowl if water levels are not stable by April 1. Further, DOI states that the unnaturally high river flows associated with the winter draw-down could adversely affect riverine habitat. DOI also recommends that UPPCo not lower the basin water level below 772.0 feet at any time to prevent access by recreational vehicles and predators to the bald eagle nest tree island. The Au Train project area offers important nesting and foraging areas for the bald eagle. The area has supported nesting eagles since the 1940s. Maintaining a minimum elevation of 772.0 feet would protect the bald eagle nest tree island from recreation vehicles and predators. Based on our review of UPPCo's modeling, we conclude that UPPCo could maintain an absolute minimum water level of 772.0 feet year-round and still provide a continuous minimum powerhouse discharge of 50 cfs. 18 Figure 5 19 Under UPPCo's modeling of its proposed operating plan, the lowest basin water level in March and April would be 771.0 feet. This low water level is associated with the winter draw-down, which is conducted to maximize capture of spring runoff. Limiting draw-down to an elevation of 772.0 feet would not affect maintenance of the continuous minimum powerhouse discharge but it would reduce UPPCo's generation and increase the frequency of spills slightly in some years. We conclude that protecting important bald eagle habitat can be effectively achieved with minimum loss of power and minor increase in spill frequency. Therefore, we recommend that UPPCo maintain an absolute minimum water level of 772.0 feet year-round, rather than a minimum winter elevation of 769.0 feet. Table 2. Recommended and proposed Au Train basin elevations, all in feet local datum (sources: MDNR, 1994; USFS, 1994; DOI, 1994; UPPCo, 1993a). MDNR and USFS UPPCo Proposal Month Target Minimum Lowest Absolute Elevatio Elevatio DOI Modeled 1 Minimum 2 n n January 777.0 776.0 772.0 774.1 769.0 February 776.5 775.5 772.0 773.0 769.0 March 775.0 774.0 776.5 771.0 769.0 April 775.0 774.0 776.5 771.3 769.0 May 780.0 779.0 772.0 776.2 772.0 June 780.0 779.0 772.0 775.4 772.0 July 780.0 779.0 772.0 774.9 772.0 August 778.5 778.0 772.0 775.5 772.0 September 777.0 776.0 772.0 774.4 772.0 October 776.5 776.0 772.0 774.4 772.0 November 776.5 776.0 772.0 775.0 772.0 December 777.5 777.0 772.0 775.0 772.0 20 1UPPCo modeled its proposed conditions on 1980-1990 hydrologic conditions. These are the lowest monthly elevations predicted by the model and represent the lowest elevation that would be expected if future conditions are similar to conditions during 1980-1990. 2UPPCo proposed an absolute minimum elevation of 769 feet for winter and 772.0 for summer, without specifying the definition of winter or summer. Staff assumed, based on UPPCo's proposed operating scenario, that January-April would define winter. We recognize DOI's concern for nesting waterfowl during UPPCo's proposed reservoir refill (hence, DOI's recommendation for higher reservoir levels in March and April). However, there is no evidence that the winter draw-down adversely affects nesting waterfowl in early spring. According to DOI, the Au Train basin produces at least 200 young ducks and geese annually (DOI, 1994). However, UPPCo recorded no waterfowl nests or broods during field studies from late April to September 1991. UPPCo states that this may be because the Au Train basin lies outside of the major flyways for geese and dabbling ducks (UPPCo, 1993a). The Au Train basin has historically been drawn down in winter with no apparent adverse effect on waterfowl populations or on riverine habitat down-stream. Historically, the basin water level rose an average of 8 feet during the April refill. UPPCo's proposed operation would result in an earlier refill so that water levels would rise an average of only 2 feet during the month of April, as shown in Figure 5. Waterfowl breeding, if it does occur in the basin, would be enhanced under UPPCo's proposed operations compared to historical conditions. Therefore, we conclude that DOI's recommended higher water level in March and April is not warranted in light of UPPCo's proposed operation, which would provide higher and more stable water levels compared to historic levels. MDNR and USFS state that their proposed winter draw-down levels would protect overwintering fish and other wildlife. MDNR and USFS note that at an elevation of 771.0 feet, the mean depth in the basin is only 2.2 feet and with average ice thickness of 2 feet in the winter, leaving very little water under the ice to protect fish habitat. MDNR and USFS recommend an absolute minimum water level of 774.0 feet in the winter, which would provide a mean water depth of 4.6 feet. UPPCo's proposed operating regime follows the general agency recommendation for decreased winter draw-down over historic conditions. The agencies present no evidence that the current winter draw-down has negatively affected fish or wildlife 21 resources in the basin. Further, although the mean depth in the basin at elevation 772.0 is 2.8 feet, the maximum depth at the basin's deepest point would be 20 feet. We conclude that the basin fish that overwinter probably seek the deepest portion of the basin and survive even though the mean depth in the reservoir appears very small. There has been no record of winter fish kills occurring at the basin even with historical draw-downs much greater than UPPCo proposes. MDNR and USFS state that their recommended summer water levels would protect fish recruitment, bald eagle foraging areas, recreational use, and waterfowl nesting habitat. UPPCo's proposed controlled summer basin draw-down normally begins in late July or August and thus would not negatively affect fish spawning and rearing, which occur in the late spring and early to mid-summer. It also would not affect waterfowl nesting, which occurs in the late spring. The summer draw-down would reduce the area of aquatic vegetation in the basin. However, the need for vegetated areas as nursery sites for young-of-year fish diminishes throughout the summer. Also, the basin has abundant physical habitat other than aquatic vegetation such as stumps, logs, and woody debris, which provide adequate habitat for the basin fishery. Based on our analysis, we recommend that UPPCo operate the Au Train project as it proposes (modified run-of-river with a winter draw-down), with the exception of maintaining an absolute minimum elevation of 772.0 feet year-round. We do not recommend the agency-proposed minimum water levels and thus do not concur with the need for consultation when the basin water level reaches the MDNR and USFS recommended target elevations. We recommend that UPPCo conduct a steady draw-down of the reservoir in the winter and draw the reservoir down at other times of the year only to provide a continuous minimum powerhouse discharge as recommended in the following section. We further recommend that UPPCo not use the allowable draw-down for peaking purposes. Our recommended operating plan represents an enhancement over historical conditions, in that the reservoir would be held an average of one foot higher, bald eagle habitat would be protected, and down-stream aquatic and recreational resources would benefit from a continuous reliable flow in the Au Train River. b. Minimum Flows USFS and DOI recommend that UPPCo maintain a minimum discharge of 50 cfs to protect and enhance aquatic resources in the Au Train River. MDNR recommends the UPPCo maintain a target minimum discharge ranging from 50 to 100 cfs, with absolute 22 minimum discharges ranging from 50 to 70 cfs (see Table 3). MDNR's recommended minimum flows are designed to optimize habitat for as many species and life stages of fish as possible in the Au Train River. MDNR also recommends that UPPCo not operate the project in a peaking mode and provide a stable daily flow such that the flow does not differ from the previous day's flow by more than 20 percent, except in emergency conditions. MDNR further recommends that UPPCo initiate consultation with MDNR, USFS, and DOI within 7 days of falling below the target flows. MDNR states that the purpose of consultation would be to consider alternative operating scenarios to protect and enhance the Au Train basin. UPPCo proposes to provide a continuous powerhouse discharge of 50 cfs or more (up to the maximum capacity of 136 cfs). UPPCo proposes to give priority to maintaining a 50-cfs minimum powerhouse discharge over minimum basin water levels. Although there is no existing or proposed continuous discharge to the bypassed reach of the Au Train River (between the dam and powerhouse), we do not foresee any impacts on fish in the bypassed reach due to proposed operations. Because of its high gradient, the bypassed reach has numerous fish migration barriers and extremely limited potential for fish rearing. Dam leakage provides a constant flow of 5 to 12 cfs in the bypassed reach, which maintains a wetted environment for any aquatic life that reside there. Table 3. Recommended and proposed minimum flows through the powerhouse (sources: USFS, 1994; DOI, 1994; MDNR, 1994; UPPCo, 1993a). MDNR Recommendation Month USFS, DOI Target Minimum UPPCo Recommendation Discharge Discharge Proposal (cfs) (cfs) (cfs) (cfs) January 50 70 50 50 February 50 70 50 50 March 50 70 50 50 April 50 70 50 50 May 50 70 50 50 June 50 70 50 50 July 50 50 50 50 August 50 50 50 50 September 50 50 50 50 23 October 50 100 70 50 November 50 70 50 50 December 50 100 70 50 Flows can be released through the powerhouse at a rate of approximately 50 to 69 cfs (one turbine) or at 100 to 136 cfs (two turbines). Therefore, consistent minimum flows of 70 cfs, as MDNR recommends, are not possible with existing equipment. With UPPCo's limited ability to regulate flows between one and two turbine operation, continuous minimum flows must be either 50 or 100 cfs. Based on our review of the habitat-discharge relationships that UPPCo developed in its instream flow study, we conclude that a 50 cfs minimum discharge, supplemented with leakage and accretion, would significantly enhance rearing conditions for the various salmonid species that inhabit the Au Train River compared to historic operation where powerhouse discharge was occasionally terminated. The agencies provided no evidence that holding the reservoir higher in the summer and fall would allow UPPCo to maintain a continuous flow through the powerhouse of at least 50 cfs. Our review of UPPCo's modeling suggests that MDNR and USFS' recommendations for higher basin levels and higher minimum powerhouse discharges are infeasible. For example, the MDNR and USFS recommendation for a target elevation of 780.0 feet for May- July would permit no allowable draw-down. UPPCo's estimated inflow data show that in July average inflow is only 44 cfs; all three months (May-July) have occurrences of daily average flows less than 50 cfs. Therefore, some draw-down would be necessary to maintain either UPPCo's or the agencies' recommended continuous minimum flow through the powerhouse. We conclude that MDNR's recommended minimum flows are not operationally possible or compatible with our recommended minimum basin levels. Therefore, we conclude that a continuous minimum flow of 50 cfs is reasonable, feasible, and protective of the down-stream resources. Because we do not concur with MDNR's recommended minimum target discharges, we also do not concur with the need for consultation for discharges below those targets. MDNR's recommendation that powerhouse discharge cannot change more than 20 percent on a day-to-day basis is inconsistent with its water level and minimum flow recommendations. Daily inflow variances commonly exceed 20 percent. Switching from one turbine generation to two turbine generation would also exceed a 20-percent change. In its justification for this recommendation, MDNR states that compliance with a strict run-of-river operation is critical to protect down-stream resources. MDNR has not recommended a strict run-of-river operation but rather a modified run-of-river operation based on allowable water levels and 24 minimum powerhouse discharges. The 20 percent limit recommendation is in direct conflict with all proposed and recommended operating plans for this project. Therefore, we do not concur with this recommendation. MDNR, USFS, and DOI's recommendations for maintaining absolute minimum elevations and providing continuous minimum flows are in conflict. UPPCo proposes to give priority to maintaining minimum flows below the powerhouse and allowing draw- downs as necessary to maintain them. The agencies did not specify which operating constraint should have priority. However, it is clear from a review of UPPCo's operations modeling that both sets of recommendations cannot be achieved at all times. Historically, the emphasis of Au Train project operation from both UPPCo's and agencies' perspectives has been on augmenting down-stream flows. We agree that this should continue to be the priority at the project. Salmonid fish populations in the Au Train River would be more responsive to changes in streamflow than the reservoir fisheries would be to changes in reservoir elevation. Based on current diversity and abundance, other wildlife and vegetation resources have not suffered adverse effects due to the historical reservoir fluctuations. We therefore recommend that UPPCo operate the Au Train project with a continuous minimum powerhouse discharge of 50 cfs. When the basin level reaches 774.0 feet local datum and hydrologic conditions indicate that a minimum flow cannot be maintained without drawing the reservoir down below 772.0 feet, we recommend that UPPCo initiate consultation with MDNR, DOI, and USFS on which criteria should be modified. c. Agency notification MDNR recommends that UPPCo notify MDNR within 24 hours of any proposed or enacted emergency flowage draw-down and that UPPCo consult with MDNR on resource damage, response measures, and proposed mitigation. MDNR further recommends that, within 30 days, UPPCo consult with and submit a report to MDNR describing the emergency, the action taken, and UPPCo's proposed remedial measures, mitigation, and measures to prevent reoccurrence. DOI recommends that UPPCo notify MDNR and DOI of emergencies that affect water levels and flow releases. For proposed reservoir draw-downs and refills of more than 1 foot for dam maintenance, MDNR recommends that UPPCo obtain the necessary permits and USFS recommends that UPPCo be required to notify the agencies in advance of the event. MDNR and USFS further state that elevations may be temporarily modified if required by operating emergencies beyond the control of the licensee, and for short periods upon mutual agreement between UPPCo and MDNR. If this occurs, MDNR recommends that UPPCo 25 notify the Commission as soon as possible, but no later than 10 days after each such incident. DOI recommends that UPPCo consult with MDNR and DOI in advance of scheduled reservoir draw-downs for maintenance or fish and wildlife management. We recognize that in some instances, it may not be possible for a licensee to notify the agencies prior to a reservoir draw- down. However, we recommend that when possible, UPPCo notify the MDNR within 24 hours of any proposed or already enacted emergency draw-down. We disagree with MDNR that UPPCo should prepare a separate written report to MDNR describing the draw-down, proposed remedial measures, and proposed preventative measures for each emergency draw-down. Written notification to the Commission is required for any modification of project operation, including emergency and planned reservoir draw-downs. We recommend that this report also be provided to MDNR at the time it is filed with the Commission. We do not concur with the MDNR and USFS recommendation that UPPCo notify the agencies for all proposed draw-downs for maintenance that exceed 1 foot, or be required to obtain state permits. Staff's recommended reservoir operation allows up to an 8-foot draw-down. Requiring consultation for draw-downs within the permitted operational rules (for which we have concluded would produce no significant adverse effects) is inappropriate. We concur with the agencies that the license should allow UPPCo to temporarily modify recommended minimum elevations if required by operating emergencies beyond UPPCo's control and for short periods upon mutual agreement between UPPCo, MDNR, DOI, and USFS. If this occurs, UPPCo should notify the Commission as soon as possible, but no later than 10 days after each such incident. We concur with DOI's recommendations that UPPCo notify agencies during emergencies and consult with agencies on draw- downs as these occurrences may affect fish and wildlife habitat in the basin and down-stream. d. Bypass system MDNR and USFS recommend that UPPCo install a penstock bypass system to ensure that minimum powerhouse discharges are maintained during power outages and under maintenance situations. DOI recommends that UPPCo pass river inflow through the project instantaneously or within a few minutes of an emergency or planned turbine shutdown. DOI recommends that UPPCo provide this continuous flow either over the spillway or through the turbines. We conclude that some mechanism to provide a reliable flow to the Au Train River at all times is warranted to protect the fishery resources in the river. As discussed in detail in Section V.C.3.ÄFisheries Resources, we recommend that UPPCo 26 install a siphon system over the dam capable of supplying 10 cfs. We further recommend that UPPCo ensure that the system would be reliable and could be quickly deployed during the winter. e. Operation and minimum flow effectiveness analysis MDNR recommends that UPPCo develop and implement an operation effectiveness plan within 36 months of license issuance. The plan would include: (1) rainfall and snowpack monitoring system (2) inflow monitoring system (3) funding of approximately $9,600 annually to MDNR for fish population estimates in basin and tailwater (4) annual operations analysis and improvement options (5) annual consultation with resource agencies on operations, and (6) annual report to the Commission on Items 1-5. USFS also recommends that UPPCo consult annually with resource agencies regarding project operations, including measures needed to ensure the adequate protection and utilization of the area affected by the project. UPPCo believes that Items 1, 2, 4, 5, and 6 are unnecessary at this stage in the licensing process. UPPCo states that it has fully modeled and evaluated its proposed operating scheme and believes that further evaluation and revision of operations, including MDNR's recommended hydrologic monitoring, would be unnecessary and economically burdensome. Regarding Item 3, UPPCo states that it will continue to cooperate with MDNR on the fish surveys but that the open-ended and ill-defined studies outlined in Item 3 represent research that UPPCo should not be required to fund. Although we agree with MDNR that the hydrologic data specified in Items 1 and 2 are lacking in the watershed, rainfall, snowpack, and inflow monitoring to predict inflow would be very difficult because of the diffuse nature of inflow sources to the basin and the inherent uncertainty in this type of prediction. UPPCo's back-calculated inflows based on basin water levels and power production would be more reliable than estimated inflows based on diffuse local drainage and creek inflow to the basin. Further, our recommended operating plan focuses on maintaining minimum flows and reservoir elevations. Calculating approximate inflows would not significantly improve operations or 27 be useful in measuring compliance at the Au Train project. Therefore, we do not concur that Items 1 and 2 are warranted. MDNR's recommendation for funding for annual fisheries studies (Item 3) is addressed in Section V.C.3.ÄFisheries Resources. We agree that an annual summary of operations (Items 4 and 6) is necessary and recommend this in Section V.C.2.g. This would allow Commission review of operating data to assure that UPPCo is complying with its license conditions. The annual operating report should also be provided to the agencies. However, we do not concur that annual consultation with the agencies on operation of the Au Train project (Item 5) is appropriate. If agencies have concerns regarding operations, we recommend that they notify the Commission. The Commission will determine whether changes in operations are warranted. f. Water Quality The MDNR recommends that state water quality standards be included in the license and that the tailwater area meet state standards for a coldwater fishery when the river flow is greater than or equal to the 95 percent exceedence flow. This includes maintaining DO concentrations in the tailwater of at least 7.0 mg/l at all times, not warming the Au Train River below the powerhouse greater than a monthly average of 2øF above the temperature up-stream of the impoundment, and maintaining a monthly average temperature down-stream of the project consistent with coldwater temperature standards (68øF for June through August). The MDNR also states that violations of water quality standards shall require payment of liquidated damages for each event. The MDNR further recommends that UPPCo develop and implement a water quality monitoring program that includes: 1. Continuous monitoring of DO and temperature above the Au Train basin and below the Au Train powerhouse with sensor locations and sampling frequency to be determined in consultation with MDNR 2. Preparing operating procedures for MDNR review and concurrence, to mitigate conditions that deviate from the above water quality limits 3. Preparing a water quality mitigation plan 4. Preparing a water/sediment/fish monitoring plan UPPCo states that the water quality criteria are neither reasonable nor necessary to adequately protect the Au Train 28 River's aquatic resources and further notes that the local MDNR office has found that the brown trout population in the river is improving under the continuous powerhouse operation mode that UPPCo began in 1992 (UPPCo, 1994b). The Au Train River down-stream of the basin is a state- designated trout stream. The basin itself is designated a warmwater fishery. Temperature data collected at two locations in the river show that neither location meets coldwater standards from June through August. Temperature data collected in the basin in July 1991 also show that basin water temperature exceeds coldwater standards over the entire water column. Because there is no one up-stream source, we do not know if the basin warms the water significantly. Because impoundments are naturally warmed by solar radiation (due to reduced velocities of water, increased surface area, and reduced shading by shoreline vegetation), we expect that the Au Train basin does warm the water somewhat. However, we consider this temperature effect of the impoundment part of the existing condition associated with the project. DO data collected in July 1991 showed that DO was below the 5.0 mg/l warmwater standard near the reservoir bottom and below 7.0 mg/l throughout the water column. The Au Train River between the powerhouse and Au Train Lake supports a diverse range of fish species, including brook and brown trout, coho and chinook salmon, walleye, white sucker, and steelhead. We find no evidence that the short periods that the river does not meet coldwater standards in the summer adversely impacts aquatic resources. DO is maintained well above 5.0 mg/l, so fish kills are not a concern. UPPCo's proposed operation would enhance temperature conditions in the river by decreasing the basin detention time and thus limiting the time that water is warmed and DO is consumed in the basin. This would likely produce water discharged through the powerhouse with average temperatures lower and DO higher than historical average discharges. UPPCo proposes no new activities that would adversely affect water temperatures in the basin or below the dam. Because water temperatures and DO in the basin do not meet coldwater standards, it is unreasonable to expect discharges from the dam to meet coldwater standards. DO in the discharge cannot be improved without installing a costly aeration system. We conclude that there is nothing either technically or economically feasible that UPPCo could do to ensure that water in the Au Train River meets Michigan coldwater standards. Water quality monitoring up-stream of the Au Train project is infeasible because of the multiple inflow sources to the basin. Further, monitoring of the basin itself and the river down-stream of the project in 1991 showed no significant water quality problems in the project waters. Because of the very 29 small watershed with its minimal development, there is no evidence that conditions would substantially change in the future. Based on these findings, we conclude that no further water quality monitoring is warranted because it would neither mitigate existing water quality conditions nor substantially improve understanding of the project's water quality impacts. We do not agree that Michigan's water quality standards or requiring liquidated damages for violations of standards should be included in the license. Current water quality is sufficient to support warmwater fishery resources, although temperature deviations from Michigan's coldwater standards during summer months may limit the opportunity for coldwater fish in the river. As MDNR notes in its recommended terms and conditions, deviations from coldwater standards in the river cannot be mitigated. g. Compliance gaging MDNR recommends that UPPCo develop and implement a gaging and compliance plan with the following elements in consultation with the agencies within 12 months of license issuance to demonstrate compliance with run-of-river operation: ù Install, telemeter, operate, and maintain a USGS gage below the Au Train project to measure both bypassed channel and powerhouse flow ù Install, operate, and maintain a USGS gage with telemetry on Au Train basin ù Install a staff gage on the up-stream wall of the dam labeled with the target and minimum impoundment elevations ù Maintain a record of operation every 30 minutes and provide data to resource agencies upon request DOI recommends that UPPCo develop a plan, in consultation with the agencies, that includes the following compliance measures3: ù Install a staff gage on the up-stream wall of the dam that indicates minimum and maximum allowable water levels ù Employ automatic sensors for continuous readings of headwater and tailwater levels 3 DOI also had two recommendations related to agency notification and consultation. These were addressed in Subsection CÄNotification. 30 ù Maintain a daily record of project operation (including turbine operations, headwater and tailwater elevations, and flow releases through the powerhouse and spillway) and provide data to agencies upon request. ù Fund continued operation of the down-stream USGS gage for the term of the license We agree that UPPCo should provide sufficient means to demonstrate compliance with its license conditions and recommend that it prepare a gaging and compliance plan. We concur with MDNR and DOI's recommendation for the down-stream USGS gage. UPPCo already has installed a stream gage on the Au Train River down-stream of the Au Train tailrace in cooperation with USGS (USGS Station No. 04044724). The gage records river stage every 30 minutes. There is no telemetry currently installed at the gage. Although telemetry at the down-stream USGS gage would be convenient for agencies to obtain quick access to flow data, it is not necessary for compliance. We recommend that UPPCo provide this data to the agencies upon request. UPPCo has installed a level sensor in Au Train Basin. We conclude that this is consistent with MDNR's recommendation for a USGS gage in the basin. We recommend that UPPCo continue to collect and record basin level data with its remote basin level sensor and make the data available to the agencies upon request. As with the down-stream USGS gage, telemetry at the basin level sensor would be convenient for agencies but is unnecessary for compliance monitoring. Therefore we do not recommend telemetry be added to the basin level sensor. A tailwater level sensor, as recommended by MDNR, which would allow a direct estimate of flow through the turbine, is unnecessary for compliance because flows through the turbine can be calculated with reasonable accuracy from power production data or from the USGS flow minus leakage through the dam. Therefore, we conclude that a tailwater level sensor is not warranted. We agree with the agencies that UPPCo should install a staff gage on the up-stream wall of the dam and mark it with the minimum allowable water level (772.0 feet local datum). This would provide UPPCo staff and any visitors with the ability to verify basin water surface elevations when at the project site. We do not concur with MDNR's recommendation for maintaining a record of operations every 30 minutes, rather than hourly records. Our calculations show that, assuming a basin inflow rate of 300 cfs and outflow of 50 cfs, the basin elevation would rise about 0.01 foot in one hour. Therefore, we conclude that hourly water level data in the basin is adequate to monitor basin conditions. We concur with DOI's recommendations that UPPCo maintain a daily record of operations, including turbine operations, headwater and tailwater elevations, and flow releases 31 through the powerhouse and estimated flows over the spillway. We recommend that UPPCo summarize this data in an annual report to the Commission and make the report and data available to the MDNR and DOI upon request. Unavoidable Adverse Impacts: Operation of the Au Train project in a modified run-of-river mode with a winter draw-down would continue to cause basin level fluctuations of up to several feet in summer and up to 8 feet in winter. Aquatic resources in the basin have apparently adapted to this mode of operation and show no significant impairment. Water quality in the Au Train River down-stream of the powerhouse would continue to fail to meet coldwater standards in the summer, although the river continues to support a healthy and diverse fish population. 3. Fisheries Resources Affected Environment: a. Au Train Basin Abundant and varied fisheries habitat in the basin supports a diverse fish population. Aquatic vegetation is common throughout the Au Train Basin except in the deep mid-channel area (UPPCo, 1993a). At full pool, 687 acres (out of 1,557 acres) of aquatic vegetation and submerged wetland vegetation are available to fish and other aquatic wildlife. Submerged stumps, standing snags, logs, and other woody debris occupy extensive areas of the impoundment. The substrate composition of the Au Train Basin consists primarily of silt and organic debris that has accumulated over time. Isolated areas of sand, gravel bars, shoreline rock, and small boulder clusters represent less than 20 percent of the total substrate area. This diversity of vegetation, substrate types, and cover provides high quality habitat for the fish community. The water temperature of the basin ranges from near freezing in the winter to 79øC in July (UPPCo, 1993a). Temperature stratification is weak because of the shallow depth of the basin. The thermal regime is on the cool end of the warmwater fisheries spectrum based on MDNR standard definitions. Although cool enough to support a coldwater fishery (such as trout) most of the year, temperatures are too high in the summer to maintain quality cold-water habitat. MDNR manages the basin as a warm-water fishery primarily for northern pike, yellow perch, and walleye. The abundance of shallow aquatic vegetation and woody debris provides excellent spawning habitat through the early spring for northern pike and yellow perch. As such, these two species, as well as brown bullhead and white sucker, dominate the fish community (UPPCo, 1993a). 32 The northern pike tend to overpopulate; therefore, the individual fish are stunted. The yellow perch population contains many larger individuals, which indicates that the abundant northern pike probably prey heavily on juvenile yellow perch. The yellow perch population provides good angling opportunities for fish exceeding 8 inches in length. MDNR has sought to improve the sport fishery in Au Train Basin by removing size restrictions on northern pike, stocking walleye, and manually removing brown bullhead and white sucker. In spite of these efforts, the overabundance of the highly predacious northern pike remains a principal influence on the fish community in the basin. b. Bypassed Reach The dam and powerhouse bypass a 0.7-mile section of the original river channel. About 5 to 12 cfs of flow are provided to this section of the river from dam seepage and groundwater seeps. A series of falls, located a short distance up-stream of the powerhouse in the bypassed reach, are natural barriers to fish migration. The lower portion of the bypassed reach provides coldwater habitat that may be an important rearing area for juvenile salmonids. The bypassed reach has limited potential for fish rearing due to its high gradient and natural migration barriers. c. Down-Stream of Powerhouse The Au Train River, from the powerhouse to just up-stream of Au Train Lake, is a state-designated trout stream (although water does not always meet coldwater temperature and DO standards in the summerÄsee Section V.C.2ÄWater Resources). MDNR historically (1930-1980) managed this segment of the Au Train River for brook trout; however, this fishery began declining in the 1970s because of several events, including the introduction of coho salmon and chinook salmon. Currently, MDNR manages the river for trout, salmon, and walleye. The primary resident species include brook and brown trout. Other resident species include white sucker and logperch. Migratory fish that reside in Lake Superior and spawn in the Au Train River include coho and chinook salmon and steelhead trout. Walleye reside in Au Train Lake but also use the river for spawning. The upper one-mile segment of the river below the powerhouse provides the most diverse and highest quality fish habitat in the reach, including excellent salmonid spawning and rearing habitat (UPPCo, 1993a). This segment has an average gradient of 18 feet per mile and is dominated by rocky substrate with riffle-run-pool sequences. It provides important spawning and early rearing habitat for steelhead trout, coho and chinook salmon, and walleye. Peak spawning periods are April and May (steelhead 33 trout and walleye) and October (brown and brook trout, and coho and chinook salmon). Down-stream of this one-mile segment, the stream gradient lessens to approximately five-feet-per-mile and habitat shifts toward sand-dominated pools and runs. Adult salmonids and walleye use this lower segment primarily for passage and staging before moving up-stream to spawn. Water quality in the river meets coldwater standards during these critical spring and fall spawning periods (see Section V.C.2ÄWater Resources). Chinook typically leave the river before summer when temperatures warm up; other species appear to handle the occasional exceedences of coldwater standards because the river continues to support a healthy fishery, although accurate population estimates for the current management species are not available. Environmental Impacts: a. Fish Exclusion MDNR recommends that UPPCo develop and begin implementation of a down-stream fish exclusion plan that includes evaluating potential exclusion devices to prevent fish escapement from the Au Train Basin, conducting computer hydraulic modeling of the devices, designing and installing a device, and developing operation and maintenance procedures for the device. Until such a device is implemented, MDNR recommends that UPPCo design, install, and maintain a barrier net from ice-out until October 15. MDNR states that an exclusion device is necessary because: (1) entrainment of warmwater reservoir fish to the river down-stream of the project causes competition for coldwater fish; and (2) there is no warmwater habitat down-stream of the project to allow fish from the basin to complete their lifecycle, therefore, fish are lost from the basin recreational fishery. MDNR believes that excluding the warmwater fish in the reservoir from down-stream would increase the productivity of salmonids down-stream. UPPCo states that a fish exclusion plan is not needed because entrainment does not adversely influence the reservoir or riverine fish community balance or fishery quality. UPPCo further states that its proposed operation combined with suitable management strategies would continue to maintain and enhance the existing coldwater fish community and help to restore the quality trout fishery down-stream of the project. We considered the potential for fish entrainment based on the fish entrainment and mortality study that UPPCo conducted. We then considered fish exclusion devices, including a barrier net. 34 UPPCo conducted a fish entrainment and mortality study at the project in 1991 in consultation with MDNR, whose primary concern was the potential effects of the project on quality-sized perch in the reservoir. The objective of the study was to estimate the potential loss of large yellow perch (greater than 6 inches) through turbine entrainment from the reservoir (UPPCo, 1993a). A total of 708 fish were captured during the entrainment sampling, representing fifteen species (Table 4). The majority of the fish captured were yellow perch (45 percent) and white suckers (38 percent). Gamefish, excluding yellow perch, comprised only about 4 percent of the total. No perch over 6 inches were captured; in fact, over 77 percent of the perch captured were less than 2 inches in length. Average turbine mortality was estimated at 6.7 percent. Table 4. Species composition from entrainment sampling at the Au Train powerhouse, 1991 (Source: UPPCo, 1993a). Total Percent Common Name Scientific Name Catch of Total Yellow perch Perca falvescens 317 44.8 White sucker Catostomus commersoni 271 38.3 Trout perch Percopsis omiscomaycus 31 4.4 Brown bullhead Ameriurus nebulosus 24 3.4 Logperch Percina caprodes 21 3.0 Rock bass Ambloplites rupestris 17 2.4 Pumpkinseed Lepomis gibbosus 7 1.0 Golden shiner Notemigonus crysoleucas 7 1.0 Northern pipe Esox lucius 5 0.7 Bluegill Lepomis macrochirus 3 0.4 Common shiner Notropis cornutus 1 0.1 Fathead minnow Pimephales promelas 1 0.1 Largemouth bass Micropterus salmoides 1 0.1 Northern redbelly dace Chrosmus eos 1 0.1 Walleye Stizostedion vitreum 1 0.1 Total 708 100.0 The results of the study show that large yellow perch are not entrained at the project, either because of their inherent behavior or because the one-inch bar racks exclude that size perch. Though UPPCo's study showed some entrainment and mortality for other fish species, we conclude that there is enough evidence to indicate that project operation is not significantly affecting 35 either the basin fishery or the down-stream fishery. The project has been operating since the early 1900s, and the basin still maintains a substantial population of the primary gamefish, yellow perch. According to MDNR, there is no habitat down-stream of the basin in which warmwater reservoir fish could reside in great numbers. However, the deeper, slow-flowing water in the 3.3-mile segment of the Au Train River just up-stream of Au Train Lake and the lake itself provide suitable habitat for warmwater species. Suitable habitat for both coldwater and warmwater species in the Au Train River is abundant. Perch are not riverine fish and will move into Au Train Lake; white sucker will not compete with coldwater species because of inherent differences in their habitat preferences. Therefore, competition for resources between entrained reservoir fish and resident coldwater species is doubtful. Further, warmwater species from Lake Superior can migrate up-stream to the Au Train River; therefore, providing a fish exclusion device in the basin would not preclude warmwater species from accessing the reach. Based on our analysis, we conclude that project operation is not significantly affecting the fishery resource of the Au Train River. We do not recommend that UPPCo be required to install a fish exclusion device, nor do we recommend that a barrier-net be installed at the project. The existing trash racks at the project provide a one-inch opening and a low approach velocity, which preclude larger fish from being entrained and/or impinging on the racks. We find no evidence that entrainment mortality is adversely affecting the fish community within the basin or down- stream in the river. b. Fishery damage assessment (FDA) study MDNR recommends that UPPCo fund, conduct, and complete an FDA or pay MDNR restitution value for the lost fishery resources within 24 months of license issuance. MDNR reasons that an FDA is warranted because fish are being killed through entrainment at the Au Train project. MDNR states that although UPPCo conducted an entrainment study at the project, the study was designed to determine the need for exclusion devices to prevent down-stream movement of reservoir fish, and that this study does not provide sufficient data to determine total entrainment and mortality from turbine passage. MDNR opposes use of this data to determine total project entrainment and mortality, and recommends that if its fish exclusion recommendation is rejected, that the Commission require a properly designed entrainment and turbine mortality study be conducted to determine resource damage from turbine passage at the project. UPPCo opposes MDNR's recommendation for an FDA and for payment of restitution values for lost fish, stating thatÄif 36 compensation is required for fish lost through entrainment mortalityÄit should be at published replacement values. We do not concur with MDNR's recommendation that UPPCo conduct an FDA, which would include a new comprehensive entrainment study. It is the Commission's policy not to conduct damage assessments because the Commission has no authority pursuant to the FPA to adjudicate claims for, or require payment of, damages. We also do not agree with MDNR's recommendation for a new entrainment study to support an FDA because we do not agree with the need for an FDA. Staff considered the option of requiring UPPCo to contribute to a compensatory mitigation fund based on the replacement value of the fish lost due to turbine entrainment mortality. This mitigation option has been used at other recently licensed hydropower projects in the midwest where fish protection measures, such as screening, were found to be infeasible or where the costs far exceeded the benefits of installing such devices. However, at this project, entrainment mortality is not having a significant effect on fish resources. The majority of the entrained fish are small perch less than 2-inches long and juvenile white sucker, a species considered an undesirable rough fish that MDNR routinely manually removes from the basin. Because entrainment is not adversely affecting the basin fishery, we do not recommend that UPPCo provide compensatory mitigation for entrained fish at the Au Train project. c. Bypass system MDNR and USFS recommend that UPPCo install a penstock bypass system to ensure that minimum flows are maintained during power outages and under maintenance situations. MDNR recommends installing a siphon system at the dam to provide a minimum flow continuation of 50 cfs. DOI recommends that UPPCo pass river inflow either over the spillway or through the turbines instantaneously or within a few minutes of an emergency or planned turbine shutdown. The agencies state that any interruption of flow in the Au Train River below the powerhouse could seriously impact aquatic life in the river. UPPCo states that an emergency bypass system is an unnecessary expense because total project shutdown is unlikely given that all equipment is in good condition and the project has inherent redundancy with two turbines. Further, UPPCo maintains that a bypass system capable of carrying the full minimum flow is excessive since this would be an emergency flow only. UPPCo states that if any bypass flow is required, a more appropriate flow would be 10 cfs. In the eight years since UPPCo took over ownership of the project, the plant has had to shut down only three times, once 37 because of a leak in the old wooden stave pipeline, and twice because of scheduled construction activities associated with replacing the wooden pipe with the steel pipe. Therefore, the need for this emergency flow would be very infrequent. Presently, if the turbines were to shutdown (either under planned or unplanned events) and the reservoir level was below 778.0 feet (below the spillway crest), river flow would be curtailed. In such an event, the interruption of flow to the Au Train River would temporarily and abruptly reduce aquatic habitat. If flow interruption were to last more than a few hoursÄparticularly during spawning periodsÄit could kill incubating eggs and small fish. Salmon spawning occurs in fall, and eggs develop over winter, hatching in late spring (between March and May). Therefore, loss of water during that critical periodÄdepending on length of time that no water would be providedÄwould cause desiccation of incubating eggs. Salmon spawn in the one-mile reach immediately down-stream of the powerhouse, where flow accretion from dam leakage and groundwater seeps is minimal. Because the upper one-mile reach of the river is such an important spawning area for salmon, we agree that some flow should be provided continuously to the river during emergencies to ensure that down-stream aquatic resources are protected. We analyzed appropriate flows that would protect the fisheries resource if flow were to be curtailed due to power outage or emergency situations. Under project shutdown, the river channel is not completely de-watered. Approximately 5 to 12 cfs enters the river between the dam and powerhouse from dam seepage and springs. Accretion down-stream of the powerhouse adds another 10 to 15 cfs to the river by the time it reaches Au Train Lake. Based on our review of cross sectional and habitat data for the uppermost segment of the Au Train River (where most of the suitable spawning and rearing habitat occurs), a flow of about 20 cfs corresponds closely with the optimal wetted perimeter. This suggests that temporary flow reductions of less than 20 cfs could have an adverse impact on small fish and incubating eggs. Under some power outage and emergency situations, water could not be passed through the powerhouse. However, providing 20 cfs could be accomplished by augmenting the flows already present in the bypassed reach with an additional 10 cfs released from the dam. Flow released from the dam would reach the critical spawning habitat just below the powerhouse within 30 minutes. Releasing more than 10 cfs is not warranted because this emergency flow would probably be needed only once in about 10 years, based on past experience at the project. Therefore, we do not concur that providing 50 cfs during emergencies is essential to protecting the fisheries resources in the river. 38 UPPCo provided cost estimates for three systems to discharge 10 cfs into the Au Train River. These included an auxiliary pipe through the dam ($56,500), a pump system ($38,500), and a siphon system ($13,450). UPPCo's cost for a siphon system is substantially less than MDNR's siphon system cost because UPPCo's system would be designed to convey only 10 cfs rather than 50 cfs. The siphon system is clearly the most cost-effective alternative. We conclude that UPPCo should install a siphon system to protect aquatic resources in the river during power outages or emergency circumstances. However, we are concerned that the siphon system may not be as reliable in the winter. Therefore, we recommend that, as part of its operating plan to be developed in consultation with the resource agencies, UPPCo include operating procedures for the system to ensure that water would be provided year-round, including during winter when the basin is frozen. d. Management of large woody debris MDNR recommends that UPPCo develop and implement a plan to increase large woody debris transport and control bank erosion in order to improve trout habitat in the Au Train River below the powerhouse. UPPCo states that the Au Train River down-stream of the powerhouse is rich in woody debris and that the pre-project source of woody debris was down-stream of the current basin location. Therefore the project has not altered the delivery rate of woody debris to the river. Staff inspected the Au Train River on a site visit and found that the reach immediately below the powerhouse had excellent trout habitat with its high gradient, rocky substrate, and pool and riffle segments. We conclude that, because existing trout habitat is excellent in the Au Train River down-stream of the powerhouse, no trout habitat enhancement is warranted. Bank erosion in the Au Train River below the powerhouse would be addressed in the erosion control plan we recommend in Section V.C.1. e. Future fisheries studies MDNR recommends (as part of its Operation and Minimum Flow Effectiveness Plan) that UPPCo provide funding to MDNR to conduct annual population estimates of selected fish species in the basin and tailwater areas in order to determine the effectiveness of recommendations in protecting aquatic resources at the project. Our review of existing fish population data indicates that both the river and the basin support a very good fishery. Further, UPPCo's proposed operating changes would enhance conditions for fish and other aquatic resources in the basin and 39 the river. Although the Au Train River water temperatures make management as a coldwater trout stream marginal, UPPCo's operations do not create these conditions nor could UPPCo feasibly mitigate the river temperature limitation. Based on our analysis, we conclude that UPPCo should not be required to fund MDNR's annual studies. We do, however, recommend that UPPCo cooperate with the MDNR during these and similar fisheries studies on UPPCo lands by allowing access and desirable flow rates, provided the requests do not conflict with license conditions. f. Fish and wildlife reopener MDNR recommends that the license include the Commission's standard fish and wildlife reopener article to ensure that there is a mechanism to resolve fish and wildlife issues that may arise in the future. We agree that in the 30-year life of the license for this project, unforeseen events may dictate need for changes in equipment or operation of the project in order to prevent major impacts on fish and wildlife resources in the project area. We recommend the use of the standard fish and wildlife reopener article for the Au Train Project. That license reopener can be used to require changes to projects upon Commission motion or as recommended by DOI or MDNR after notice and opportunity for hearing. Any entity may petition the Commission at any time during the license for relief if it determines that additional environmental protection measures are necessary for the project. Unavoidable Adverse Impacts: Unavoidable fish losses resulting from entrainment mortality would occur with continued project operation. The Au Train River down-stream of the powerhouse would not fully support its coldwater designation in summer months. These impacts, however, would not significantly affect fish populations and recreational fisheries in project waters. 4. Vegetation Resources Affected Environment: Northern hardwood communities dominate the forested areas surrounding the Au Train Basin and areas along the Au Train River down-stream of the basin. American beech, sugar maple, yellow birch, and basswood, as well as conifers such as white pine and hemlock, are typically present within these stands. Some individuals of eastern hemlock and white pine have grown to a height above the surrounding tree canopy. Sapling and shrub species within the understory consist of balsam fir, northern white cedar, and dogwood. Other lower understory species include raspberry, red elderberry, bracken 40 fern, gooseberry, and lady fern. Common forbs4 within these communities include wild sarsaparilla, meadow rue, trillium, and violet. Other upland areas around Au Train Basin consist of various forest cover types including planted areas of red pine. Species found within forest communities near UPPCo lands, including within the Hiawatha National Forest, include red pine, jack pine, quaking aspen, and oak (UPPCo, 1993a). In the southernmost areas of the Au Train Basin, cover types vary from forested hardwood stands to brushy areas and row crops. Portions of the southern one-quarter of the Au Train Basin are managed as part of the Au Train Basin Waterfowl Project. These areas include approximately 300 acres of previous agricultural land that has been planted with waterfowl food crops. Plant communities along the bypassed reach, powerhouse tailrace, and mainstem down-stream of the tailrace consist of similar northern hardwood forests, as well as more lowland forest types. Sugar maple and northern white cedar dominate the overstory in these areas. Ferns and forbs are diverse in the more lowland forest areas. Approximately 687 acres of wetlands occur within the basin at full pool (UPPCo, 1993b). Wetlands of the project area consist of palustrine5 systems of emergent6, scrub-shrub7, and forested vegetation. Wetlands are found primarily in the lakebed and shoreline of Au Train basin, its tributaries, and the Au Train River down-stream of the powerhouse. Stands of cattail are found along the basin margin, and several small islands within the basin support willows and a variety of sedges. Submerged aquatic vegetation also occurs within the basin, particularly in the southern end. Vegetation surveys of the project area in 1991 did not identify any federal or state threatened or endangered plant species. Two state species of special concern, club moss (Lycopodium selago) and a willow (Salix pellita), were found in 4 forbs: herbs other than grasses. 5 palustrine: all nontidal wetlands dominated by trees, shrubs, persistent emergents, emergent mosses, or lichens. 6 emergent: erect, rooted, persistent, or nonpersistent herbaceous vegetation. 7 scrub-shrub: woody vegetation less than 19 feet tall, including deciduous and evergreen shrubs or stunted trees. 41 the vicinity of the Au Train River down-stream of the powerhouse (UPPCo, 1993a). Environmental Impacts: USFS recommends that UPPCo develop and implement a plan to monitor wetlands and impacts to wetland species from the project operations. We recognize that changes in basin water levels, which can alternately inundate and/or dessicate8 wetland areas, can adversely affect wetland vegetation. However, the proposed changes in operation are generally expected to result in higher and more stable water levels within the basin compared to historical operations. As a result, we expect wetland acreage within the basin to remain unchanged or to potentially be enhanced. More stable water levels may also enhance species composition of basin wetland communities. Therefore, we do not concur with the need to monitor wetlands in the project area. MDNR and USFS recommend that UPPCo, in consultation with the resource agencies, develop and implement a plan to monitor and control and/or eliminate, when deemed appropriate, purple loosestrife (Lythrum salicaria) and Eurasian milfoil (Myriophylum spicatum) within the project area. Purple loosestrife and Eurasian water milfoil were introduced from Europe. Often, they grow profusely, at the expense of the native wetland vegetation, reducing wildlife habitat value of wetlands. At this time, these two species are not known to occur in the project area. Measures available to control purple loosestrife and Eurasian water milfoil are limited. However, recognizing the need for protection of the wetlands in the Au Train flowage from purple loosestrife and Eurasian water milfoil invasion, we recommend that UPPCo, in consultation with the USFS and MDNR, develop a monitoring plan, to be submitted to the Commission for approval, and upon approval, be implemented. It would include but not be limited to: (a) a description of the monitoring methods; (b) a monitoring schedule; and (c) a schedule for providing the monitoring results to the MDNR and USFS. Furthermore, if at any time the agencies deem it necessary to control/eliminate purple loosestrife and/or Eurasian milfoil (i.e., either plant becomes established in the flowage), and there is a biologically safe method of removal available, UPPCo should cooperate with the USFS and MDNR to control/eliminate either or both plants. USFS recommends that UPPCo conduct additional surveys to identify changes in status and/or location of endangered, threatened, and/or sensitive plants. UPPCo conducted surveys for sensitive species in 1991 and found no threatened or endangered 8 dessicate: to dry out. 42 plant species and only two state species of special concern in the project area. Therefore, we do not concur that additional surveys are necessary. Unavoidable Adverse Impacts: None. 5. Wildlife Resources Affected Environment: As many as 275 species of animals inhabit the Hiawatha National Forest in the project region (UPPCo, 1993a). Site-specific biological surveys of the Au Train Project area conducted by UPPCo in 1991 identified 66 species, including 11 species of mammals, 6 species of reptiles, and 49 species of birds (UPPCo, 1993a). Larger mammals in the project area include white-tailed deer, black bear, and moose, although moose are currently at low densities throughout the Upper Peninsula. Several predators also known to inhabit the region include red fox, coyote, and weasel. Small furbearers are also present including eastern cottontail, snowshoe hare, muskrat, and beaver. Abundant and diverse avian9 species are known to inhabit the area including several species of upland game birds, raptors, shorebirds, waterfowl, and songbirds. Eight raptorial10 species were observed during biological surveys conducted in 1991, including the red-tailed hawk, red-shouldered hawk, peregrine falcon, and bald eagle. Waterfowl observed in and around the basin include wood ducks, green-winged teal, mallard, American black duck, common merganser, and Canadian goose. A limited number of reptiles and amphibians were noted during the 1991 biological surveys, but several are known to inhabit the general area. Observed species of reptiles and amphibians include American toad, green frog, and garter snake. Fourteen threatened and endangered (three federally-listed and 11 state-listed) species and eight special concern species potentially occur in the project vicinity (Table 5). UPPCo's biological surveys conducted in 1991 identified six threatened and/or endangered species in the vicinity of the project (highlighted in bold in Table 5). Threatened and endangered species, including the bald eagle and peregrine falcon, have been documented in the project area. Peregrine falcons occur as transients to the project site, and are not likely to breed in the area because of the lack of 9 avian: of, relating to, or derived from birds. 10 raptorial: of, relating to, or being a bird of prey. 43 suitable habitat. Bald eagles are known to breed on an island within the basin. At least one pair of bald eagles have nested at the basin since as early as 1944. Regular monitoring of eagles at the project has occurred since 1977. Eight different nest sites have been previously identified to occur near or adjacent to the basin. These sites have all occurred within one mile of the basin or on an island in the basin. Winter surveys of the project area documented use by a limited number of individuals (UPPCo, 1993a). As part of bald eagle management in the Hiawatha National Forest, USFS closes areas adjacent to eagle foraging areas and perching, roosting, and nesting sites, by posting signs that designate the area as sensitive wildlife habitat and locking gates on access roads in early March each year. These protection policies are implemented for the existing bald eagle nesting site on the Au Train Basin. The public, including UPPCo staff, is not permitted to enter the closed area (the south portion of the basin) between March 1 and June 30, except in the case of project emergency or required inspections. 44 Table 5. Threatened and endangered species potentially occurring in the Au Train Project area (Source: UPPCo, 1993a). Federal Michigan Species Status Status Blanchard's cricket frog (Acris crepitans) SC Boreal chorus frog (Pseudacris triseriata) SC Wood turtle (Clemmys insculpta) SC Cooper s hawk (Accipter cooperii) SC Shorted-eared owl (Asio flammeus) E Red-shouldered hawk (Buteo lineatus) T Northern harrier (Circus cyaneus) SC Yellow-throated warbler (Dendroica dominica) T Merlin (Falco columbarius) T Peregrine falcon (Falco peregrinus) E E Common loon (Gavia immer) T Bald eagle (Haliaeetus leucocephalus) T T Osprey (Pandion haliaetus) T Double-crested cormorant (Phalacrocrax SC auritus) Caspian tern (Sterna caspia) T Common tern (Sterna hirundo) T Moose (Alces alces) SC Gray wolf (Canis lupus) E E Mountain lion (Felis concolor) E Lynx (Felis lynx) E Fisher (Martes pennanti) SC Pine marten (Martes americana) T E=Endangered; T=Threatened; SC=Special Concern Note: Species listed in boldface have been observed in the project area. Uplands in the southern one-quarter of the Au Train Basin are managed by MDNR as a wildlife refuge. The wildlife refuge, a 2,000 acre area, is part of the larger "Au Train Basin Waterfowl Project", a 21,000 acre area owned by federal, state, and private entities. MDNR has an agreement with UPPCo for use of 997 acres in the southern portion of the basin for the wildlife refuge. About 300 acres of agricultural lands within the refuge have been cleared and planted with food for waterfowl. The long-range objective is to support a fall population of 10,000 geese and 10,000 to 15,000 ducks. Sandhill cranes also stop over on their migration south. Refuge boundaries are posted between September 15 and November 10 each fall to prohibit public access for 45 hunting, fishing, or other activities in order to provide undisturbed use by migrating waterfowl. Environmental Impacts: a. Wildlife management plan MDNR recommends that UPPCo develop and implement a wildlife management plan to protect and enhance wildlife habitat on project lands, provide for the protection of environmentally sensitive areas on project lands, and provide waterfowl enhancements. The waterfowl enhancements include the construction and maintenance of two purple martin nesting colonies, one osprey platform, three bat nesting houses, 64 wood duck nest boxes, eastern blue bird houses, mallard nesting habitat, kestrel and owl nesting locations, wildlife habitat improvements in the rights-of-way, and funding to maintain and enhance the wildlife refuge at the south end of the basin. MDNR also recommends that the plan provide for annual consultation with resource agencies on the status of wildlife populations within the project area and measures to be performed to protect and enhance wildlife populations in the project area. DOI recommends the UPPCo develop a comprehensive resource management plan that includes provisions to protect environmentally sensitive areas and to provide for wildlife management compatible with forest harvest practices, existing recreational use, and future recreational development. UPPCo proposes no wildlife management plan but intends to continue with land management practices such as restrictions on commercial logging within established buffer zones. UPPCo proposes a 200-foot no-cut shoreline buffer zone to be incorporated into the bald eagle plan (see Section V.C.9-Land Use). Construction of artificial nest structures can be useful in areas where natural nesting sites are limited. MDNR states that agricultural development and timber harvest practices have reduced suitable breeding habitat for waterfowl. Although there is no evidence that project operations have negatively affected waterfowl populations near the project, the winter draw-down that our recommended plan allows (see Section V.C.2) could potentially affect wetlands and other natural breeding areas on the basin periphery. Therefore, we concur that installation of additional waterfowl nesting structures would enhance wildlife habitat in the project area. With regard to MDNR's recommendation to provide funds to maintain and enhance the wildlife refuge, we conclude that UPPCo's donation of 997 acres of UPPCo-owned lands for use as the wildlife refuge represents a significant contribution that enhances wildlife opportunities in the project area. MDNR does 46 not specify the enhancement measures it would like funded, nor the level of funding it is requesting. We conclude that MDNR has provided insufficient evidence of the need, purpose, or level of funding requested. Therefore, we do not recommend that UPPCo provide this funding. UPPCo owns 2,568 acres of land in the vicinity of the project that provide habitat for a wide variety of wildlife species. The buffer zone that UPPCo proposes would enhance natural nesting opportunities and provide protection for wildlife species. We agree that a wildlife management plan that formally documents practices within the buffer zone would enhance opportunities for existing and future wildlife within the project area. We recommend that UPPCo prepare a wildlife management plan, which would include procedures for protecting habitat within the 200-foot no-cut shoreline buffer zone both around the reservoir and along the down-stream river banks, the waterfowl habitat structures outlined in MDNR's May 3, 1994 recommended terms and conditions, and provisions for annual consultation with the resource agencies. b. Bald eagle plan DOI recommends that UPPCo, in finalizing its bald eagle management plan, incorporate and update specific protection measures to be consistent with DOI's updated policies. DOI recommends nine provisions; it also recommends that the project operation be consistent with the "Northern States Bald Eagle Recovery Plan" and the "Bald Eagle Winter Management Plan". DOI states that if its recommendations are adopted, further consultation under Section 7 of the Endangered Species Act (ESA) would not be required. MDNR recommends 17 provisions be incorporated in UPPCo's final bald eagle management plan. MDNR also recommends that UPPCo identify existing, new, or previously unknown nesting, roosting and perch sites on UPPCo-owned lands. We recommend that UPPCo's bald eagle plan be finalized in consultation with the MDNR, DOI, and USFS. We recommend that UPPCo, in finalizing its bald eagle plan, incorporate all of DOI's additional provisions and the majority of MDNR's provisions (with the exceptions noted below). We also recommend that UPPCo's plan incorporate and reference the "Northern States Bald Eagle Recovery Plan" and the "Bald Eagle Winter Management Plan" as recommended by DOI. These measures would ensure that bald eagles are fully protected, as required under the ESA. We do not recommend that all of MDNR's additional bald eagle provisions be incorporated into the final bald eagle plan. We do not agree that public information distribution and sign posting is needed beyond current levels implemented by other agencies. 47 USFS currently posts signs prohibiting access to critical species habitat during critical periods. We do not agree with MDNR that all UPPCo-owned lands be incorporated into the bald eagle management plan. We conclude that the provisions in UPPCo's current bald eagle plan plus the additional measures recommended by DOI and MDNR regarding activities within the primary, secondary, and tertiary zones would adequately protect bald eagle habitat in the project area. We concur with MDNR's recommendation that UPPCo, in consultation with the resource agencies, identify areas of highest potential use for nesting by eagles in the future. If the current nest location fails, areas of highest potential use within the 200-foot buffer zone should be incorporated into the bald eagle management plan for protection. The final plan should also incorporate UPPCo's 200-foot no-cut policy along the reservoir shoreline and down-stream of the powerhouse (as recommended in Section V.C.9ÄLand Use). USFS recommends that (1) UPPCo provide partial funding of the USFS annual bald eagle monitoring effort, and (2) UPPCo protect bald eagle habitat on lands east of the basin. USFS did not provide a dollar value for its recommended monitoring funding. The provisions recommended by DOI and MDNR for inclusion in the final bald eagle management plan, which we also recommend, require periodic monitoring of nest activity. We do not recommend that UPPCo be required to also participate in USFS monitoring or provide funding for that monitoring. We also do not recommend that UPPCo be required to protect bald eagle habitat on all UPPCo-owned lands east of the basin, but do recommend that habitat be protected within the 200-foot buffer zone of the project shoreline. DOI recommends that UPPCo adhere to the "Recovery Plan for the Eastern Timber Wolf" guidelines if new roads are to be constructed on UPPCo lands adjacent to the project in the future. No new roads are planned as part of project operations. We recommend that if, in the future, any new roads are proposed as part of project operations or enhancement measures, that UPPCo adhere to these guidelines. Under the Commissions's standard land use article, which is included in every license, the agencies would be consulted and can comment on future actions on a case-by-case basis. Unavoidable Adverse Impacts: None. 6. Aesthetic Resources Affected Environment: The region's natural landscape character is defined by rolling hills, water features, and extensive forest cover (UPPCo, 1993a). The visual character of 48 the project area is consistent with most of the Upper Peninsula; it offers a pleasing setting although the scenic features are not unusual for the region. The Au Train Basin area has very little development (there are a total of 12 cottages along the shoreline), giving the shoreline the appearance of wilderness. Project facilities blend well with the surrounding landscape. Nearly all of the basin shoreline is forested. Scenic views from the water are of an undeveloped, natural shoreline. The dominant visual characteristic of the basin is the land/water relationship. Views of the basin are limited to the two public recreation areas and occasional viewing areas from local service roads within the state and national forests. Views from the public recreation facilities are scenic, unobstructed, and aesthetically pleasing. The dam is visible from State Highway M-94, which runs parallel to it. View duration is limited to the time it takes to pass the facilities; therefore, viewer sensitivity is considered to be low to moderate (UPPCo, 1993a). Upper and Lower Au Train Falls, which are prominent visual features in the area, are located within the bypassed reach (Figure 2). The falls are a stairstep cascade over limestone and sandstone formations that drop approximately 100 feet over a distance of 2,200 feet (UPPCo, 1993a). Upper Au Train Falls is characterized as a steady thin flow of water dropping over bedrock. Further down-stream, in the vicinity of Lower Au Train Falls, the river is broader and flatter, and the drop is gradual. The shores of the bypassed reach near both falls are vegetated, adding complexity to the landscape. Scenic waterfalls are common in the Upper Peninsula. About 200 falls are located in the Upper Peninsula, with 20 of them located in Alger County, most of which are near the project. Other nearby falls include Wagner Falls, Laughing Whitefish Falls, and Whitefish Falls. The Upper and Lower Au Train Falls are the most significant scenic feature at the project; however, they are not considered unique or distinctive regional aesthetic resources (UPPCo, 1993a). Geologic features in the bypassed reach are rugged. How- ever, the aesthetic character of Upper Au Train Falls is affected by the penstock above the falls. The penstock has been there since the early 1900s; it is considered part of the baseline condition. A flow of about 5 to 12 cfs flows through the bypassed reach from the dam flashboards and toe drains and groundwater seeps. Upper Au Train Falls is visible from the powerhouse access road. An informal viewing area provides parking for about five cars, with additional overflow parking just west of the viewing area. A gravel pit operation that UPPCo also uses to store old equipment is located west of the viewing area. The gravel pit does not impede the view of the falls; however, it detracts from the undisturbed character of the 49 entrance to the falls area and overall natural quality of the area. Lower Au Train Falls is accessible only by foot because the powerhouse access road is gated and vehicular access is limited to UPPCo personnel for hydroelectric facility maintenance. Visitors may park at the powerhouse access road gate and walk down the access road which leads to a bridge at the base of Au Train Falls. The bridge is the main viewpoint for Lower Au Train Falls. The powerhouse is located just east of the bridge; it is constructed of brick, is well maintained, and blends well with the surrounding environment. The river down-stream of the powerhouse meanders; its banks are forested and undeveloped. Flows from the dam have not altered the character of this visual resource and do not degrade the undisturbed aesthetic quality of the river. Environmental Impacts: The basin adds to the scenic diversity of the landscape by providing a water body in a forested setting. The project as proposed would maintain the visual qualities of the area during most months of the year. The proposed 50-cfs minimum flow down-stream of the powerhouse would sustain the visual appearance of the river. The resource agencies and UPPCo conclude that existing flow conditions (ranging from 5 to 12 cfs) are adequate to maintain the aesthetic character and value of Au Train Falls, and therefore, no minimum flow is proposed within the bypassed reach. We reviewed the project video of typical flows and views within the bypassed reach, and agree that existing flow levels provide adequate flows to protect the aesthetic character of both the Upper and Lower Au Train Falls. UPPCo's proposal to add a barrier-free aesthetic viewing area in the vicinity of Upper Au Train Falls would improve public access to that area. This is considered a benefit to recreationists by providing enhanced access to a view of the falls. As discussed in the (Section V.C.8ÄRecreation Resources), we have recommended that UPPCo provide interpretive signs at the site explaining the presence of the penstock (its history, purpose, and how it diverts water). We also recommend that UPPCo plant additional trees to screen the gravel pit/storage area from the viewing site. With these improvements, the viewing site would be adequately enhanced. Unavoidable Adverse Impacts: None. 50 7. Cultural Resources Affected Environment: Archaeological investigations in the vicinity of the project recorded 24 historical sites dating from the 1890s through the 1920s, including several logging camps, a log dam, a mill, a cabin, and a home or camp. These sites have been determined to be historically insignificant or have not been evaluated. The potential for discovery of additional late nineteenth and early twentieth century sites related to early Euro-American settlement and resource extraction is high. A 1991 Phase I cultural resources inventory of the project focused on the immediate vicinity of the hydroelectric facility (dam, penstock, and powerhouse), the access roads, and the public access areas on the shores of Au Train Basin. No prehistoric or historical cultural materials were encountered in the archaeological field work phase of the inventory. The likelihood that significant historical or archaeological resources exist within the project area is low to medium, depending on specific location (Patrick E. Martin Archaeological Consulting, 1991). In the basin area, no fossil beaches, sources of lithic materials, canoeable streams, or prime mammal or fish habitat are present, although conditions may have been more suitable to prehistoric use prior to the creation of Au Train Basin. The project powerhouse is over 75 years old, and its exterior has changed little. None of the structures associated with the project are of architectural importance, and a considerable portion of the project has been replaced, rebuilt, or installed since 1910. The 1991 cultural resources study concluded that the project does not merit inclusion on the National Register of Historic Places (NRHP) as a whole, but that the powerhouse may be eligible for listing because it is an uncommon surviving representative of turn-of-the-century hydroelectric technology and because it is the first hydro- electric plant erected by the Cleveland-Cliffs Iron Company (Patrick E. Martin Archaeological Consulting, 1991). The Michigan State Historic Preservation Office (SHPO) subsequently determined that the powerhouse does not meet the criteria for listing in the NRHP (Michigan SHPO, 1992). Environmental Impacts: The Michigan SHPO indicated in its February 21, 1992, letter that licensing the Au Train Project would not affect any known sites eligible for listing in the NRHP. The USFS recommends that UPPCo develop and implement a programmatic agreement (PA) addressing the treatment of cultural resources at all of UPPCo's projects to ensure that any cultural resources that exist or may be discovered in the future at this and other UPPCo projects will be treated properly. We cannot use 51 this EA to evaluate whether UPPCo should prepare an agreement concerning projects not included in this EA. Further, because the Michigan SHPO has found no potential cultural resource sites at the Au Train Project, we do not consider that a PA is necessary at this time. However, we do recommend that UPPCo consult with Michigan SHPO prior to initiating any construction activities to protect potential cultural resources that may be discovered during excavation or other construction activities. Implementing this measure would allow for the adequate management and protection of cultural resources in the project area. Unavoidable Adverse Impacts: None. 8. Recreation Resources Affected Environment: a. Regional and Project Area Recreation Resources Many recreation opportunities are available within Alger County. Developed facilities include four national park campgrounds, six national park picnic areas, five national forest campgrounds, two national forest picnic areas, two state forest campgrounds, two state parks, four township or city parks, and ten hiking trails. In addition, approximately 125 miles of the Michigan snowmobile trail system traverse Alger County. The region provides a variety of recreational opportunities such as fishing, boating, canoeing, hiking, camping, and sightseeing (UPPCo, 1993a). The Hiawatha National Forest and Escanaba River State Forest are both located in the immediate vicinity of the Au Train Basin, and provide many opportunities for dispersed recreation. Au Train Lake, located 6 miles down-stream of the basin, is moderately developed with year-round and seasonal residences and two resorts. The USFS maintains a campground and picnic area, a boat launch, and a swimming area at the lake. The Au Train River between Au Train Lake and Lake Superior is a popular canoeing river. The basin is located in a relatively remote area offering an abundance of recreation opportunities in an undeveloped setting. The USFS maintains no recreation facilities on the basin; MDNR maintains the primary recreation facility there. There are two formal recreation sites at the basin, and one informal viewing area down-stream of the dam. These facilities provide opportunities for fishing, camping, canoeing, boating, and sightseeing. The first formal recreation area, MDNR's Forest Lake State Forest Campground, is located on the west side of the basin. It provides the primary access to the basin. The facility consists of 23 campsites, a picnic area with three 52 picnic tables, six sanitary facilities (two of which are barrier- free), trash receptacles, a boat ramp, carry-in small boat access, shoreline fishing access, and a 25-car/trailer parking lot. UPPCo leases this land to MDNR for a nominal fee (in the past for $1; more recently there has been no fee). The site was developed with land and water conservation funds from the National Park Service (UPPCo, 1993b). The second formal recreation area is a primitive access site on the east side of the basin on lands owned by UPPCo. Small boat carry-in access and dispersed camping opportunities are provided at this location. There are approximately 10 unimproved campsites along the shore of the basin in the vicinity of the access site, and a parking area serves 10 cars or 5 car/trailer units (UPPCo, 1993a). The powerhouse road and parking area provide access to the bypassed reach of the river as well as to the tailrace area down- stream of the powerhouse. Upper Au Train Falls is visible from an overlook on the access road. A pulloff area provides informal parking for about 5 cars. About 250 feet north, UPPCo provides a 10-car parking area at the powerhouse access gate. The powerhouse road is accessible only by foot, so recreationists park at the gate and walk about 500 feet down the road to view Lower Au Train Falls or to fish in the tailrace area. Well- established footpaths to the powerhouse and tailrace area provide access to this area by recreationists. In addition, UPPCo forest lands surrounding the project offer land-based recreation opportunities. Public access is allowed on UPPCo lands and waters except for small areas near the dam, powerhouse, and substation that are restricted for public safety reasons. The wildlife refuge on the basin is open to the public except from September 15 to October 10 of each year, at which time the area provides opportunities for migratory birds to rest and feed. b. Recreation Use in the Region and Project Area Recreation use on the Hiawatha National Forest is increasing; this trend is expected to continue in the future (MDNR, 1991). However, overall, the amount of developed sites within the Forest far exceeds demand (USFS, 1986). The potential supply for Roaded Natural recreation opportunities (the type of recreation provided in the vicinity of the basin) is five times greater than demand. Although demand is projected to increase, the recreation supply is projected to be three times greater than demand (USFS, 1986). Recreation use of the state forest campgrounds and parks have remained steady from 1980 to 1990; activities such as fishing, hunting, boating, and off-road vehicle use have shown 53 modest increases (MDNR, 1991). MDNR does not plan to develop additional recreation facilities in Alger County, but intends to Table 6. Camping use focus on improvements to existing at the Forest Lake recreation sites. Camping at the Forest State Forest Camp- Lake State Forest Campground from 1985 to ground between 1985 1991 is shown in Table 6. Use of this and 1991 (Source: recreation area is considered moderate UPPCo, 1993). relative to site capacity (UPPCo, 1993a). Total Year Days Recreation demand at the project is characterized as light to moderate. Use is 1985 294 light in the spring and fall and moderate 1986 1,139 in summer and winter, with peak use 1987 1,325 occurring in July and August. In 1991, 1988 435 2,000 recreationists visited the area: 70 1989 642 percent to the bypassed reach down-stream 1990 630 of the dam; and 30 percent to the basin (UPPCo, 1993a). During 1991 833 that period, most recreationists visited the project for sightseeing activities (Table 7). Lower Au Train Falls is a more popular viewing area than Upper Au Train Falls. UPPCo's public survey of recreationists revealed that 77 percent of the visitors to the basin are state residents (UPPCo, 1993a). Ice fishing and snowmobiling occur in the winter in the vicinity of the basin. In 1992, UPPCo recorded 33 ice-fishing Table 7. Recreation use at the huts in January, 13 ice-fishing project area in 1991 (Source: huts in March, and snowmobile UPPCo, 1993). tracks. Recreation Percent of Activity Visitorsa Canoeing down-stream of the powerhouse to Au Train Lake is Sightseeing 60 reported to be almost Fishing 50 nonexistent, with only two to Camping 34 three canoeists sighted putting Hiking 26 in down-stream of the power-house Swimming 20 each year. aThe percent of visitors does not total 100 percent because recrea- Environmental Impacts: tionists reported more than one UPPCo proposes to develop a activity during their visits. formal recreation viewing area at Upper Au Train Falls overlook, which would involve removing vegetation that obstructs views, installing a crushed rock surface for seven parking spaces (two handicapped accessible), and installing a handrail. UPPCo also proposes to install additional directional signage to the Upper Au Train Falls viewing area. Implementing UPPCo's recreation enhancements would be a benefit to recreationists desiring to view the upper falls. MDNR concurs with these enhancements at the falls. 54 MDNR also recommends other recreation enhancements, as follows: ù At the falls, provide an accessible vault toilet and a barrier-free fishing platform ù On the basin, construct, operate, and maintain a barrier-free shoreline fishing/viewing pier, seven parking spaces (two designated handicapped), a barrier- free vault toilet, hardened paths, and signage ù At the Forest Lake State Forest Campground, upgrade the boat ramp to barrier-free standards (skid pier, two handicapped parking spaces, and a hardened path) ù In the tailwater area (in view of Lower Au Train Falls), construct, operate, and maintain a barrier-free fishing and aesthetic viewing platform, seven parking spaces (two designated handicapped), an accessible vault toilet, hardened paths, and signage MDNR and USFS recommend that UPPCo provide funding for operation and maintenance of the Forest Lake State Forest Campground. The USFS clarified in its recommendations that the primitive access site located on the east side of the basin has never been under USFS management (as was stated by UPPCo). Accordingly, USFS indicates that operation and maintenance of that recreation site is the responsibility of UPPCo. The USFS further recommends that UPPCo develop a recreation plan and consult annually with resource agencies on project operations. The USFS has long-term plans to develop a Lake Superior-to-Lake Michigan canoe trail, and this would be a likely component of future consultations. We concur with UPPCo's proposal to enhance the existing informal viewing area at Upper Au Train Falls. This area is a popular public recreation resource in the area, and providing upgraded facilities would enhance recreationists' viewing opportunities. We also recommend that UPPCo improve the aesthetic value of the view by: (1) planting trees to partially screen the gravel pit located west of the site; and (2) installing interpretive signage. The signage could detail the site layout, explain the hydroelectric project (specifically the penstock, which would be within their view), and direct viewers to Lower Au Train Falls. We recommend that the site be made accessible to persons with disabilities. We concur with the USFS recommendation that the primitive access site located on the east side of the basin is the 55 responsibility of UPPCo, and recommend that UPPCo operate and maintain the facility. We disagree with MDNR's recommendation to provide a new shoreline fishing/viewing pier on the basin because existing use and demand do not warrant it. We conclude that the existing facilities are adequate for present use. We also disagree with MDNR's recommendation to provide a tailwater recreation facility down-stream of the powerhouse within view of the Lower Au Train Falls because there is insufficient room for development of the site. The powerhouse is located at the base of a steep, wooded hillside, with no room for expansion or development of a facility with parking. The road descending from the powerhouse gate to the tailrace is steep, which would create potential safety hazards as well as maneuvering problems. The site is accessible by foot (with adequate parking at the powerhouse gate), and there are ample shoreline fishing opportunities. Therefore, the existing access is adequate for current use levels. We disagree with MDNR's recommendation to upgrade the existing boat launch at the Forest Lake State Forest Campground. Because the basin is shallow, most boaters visit the basin to fish or view wildlife. The existing boat launch, although not barrier-free, is adequate for the type and size of boats that use the reservoir, and the amount of boating use that it receives. We disagree with MDNR's and USFS's recommendation that UPPCo provide operation and maintenance funding to MDNR for the Forest Lake State Forest Campground and boat launch facility. MDNR estimates this cost at $20,000 annually. UPPCo currently contributes to this facility by leasing the property to MDNR at low or no cost. In the lease agreement, MDNR agreed to manage and maintain the campground. In addition, MDNR used National Park Service grant funds to construct the campground. When MDNR accepted the funds, it agreed to manage the facility (UPPCo, 1994b). We conclude that the contribution UPPCo makes to recreation at this site by providing a no or low cost lease is adequate; requiring UPPCo to also maintain and operate the site at a substantial annual cost would be unreasonable. We also disagree with USFS that annual consultation with the resource agencies is warranted. Our recommended operating plan would be beneficial for recreation resources and would not result in any appreciable issues that would require annual consultation. We concur with the USFS recommendation that UPPCo prepare a recreation plan in consultation with MDNR and USFS. The plan should include a schedule for implementing UPPCo's proposed and our recommended recreation enhancements within 12 months of 56 license issuance. Monitoring should be consistent with FERC Form 80 filings. Unavoidable Adverse Impacts: None. 9. Land Use Resources Affected Environment: About 85 percent of Alger County is wooded; and the predominant land use is commercial forestry. Other county land uses are as follows: about 3 percent of the land is in agricultural use, 1 percent is developed into urban uses, 2 percent is water (lakes, river, and reservoirs), 5 percent of the land is wetlands, and the remaining 4 percent is open or barren land (UPPCo, 1993a). The town of Au Train is the nearest community to the project. Located 7 miles down-stream of the dam, residences are scattered along the shore of Au Train Lake. The city of Munising, located on Lake Superior (1990 population of 2,783), is about 15 miles northeast of the project. Most of UPPCo's lands are bordered on the west by the Escanaba River State Forest (ERSF) and on the east by Hiawatha National Forest (Figure 6). In addition to state and federal forest lands, UPPCo lands adjoin private property, the majority of which are owned by Benson Forests. ERSF is a 460,000-acre state forest located in portions of Marquette, Alger, Delta, and Menominee counties. The ERSF is managed by MDNR to optimize timber, fish, and wildlife resources and to enhance opportunities for the enjoyment of outdoor recreation, aesthetic experiences, and related amenities. Management emphasis of ERSF lands in the vicinity of the basin is (1) expansion of agriculture to benefit migrating geese as part of the Au Train Waterfowl Project, and (2) old growth forest management (MDNR, 1991). The Hiawatha National Forest is managed by the USFS to provide for multiple use and sustained yield of forest products and services, particularly by coordinating the use of the following resources: outdoor recreation, timber, wildlife, fish, and wilderness. Forest lands within the vicinity of the basin are managed for (1) conifer management for sawlog production, (2) conifer stands of the same age for certain wildlife species, (3) dispersed and developed recreation, (4) enhanced vegetative composition for certain wildlife species, and (6) uneven-aged management of hardwoods for quality sawlogs (USFS, 1986). Lands adjacent to the basin are owned by UPPCo (2,568 acres) and managed for timber production, wildlife management, and dispersed recreation. The area in which the project is located is rural and wooded. 57 Figure 6 58 Land in the project area is zoned for "timber production" by Alger County. Permitted uses of lands within this zoning district include growing/harvesting timber, recreation, and seasonal dwellings (UPPCo, 1993a). UPPCo leases various parcels adjacent to the basin, as described briefly below: ù UPPCo has a non-fee use agreement with MDNR for a wildlife refuge (the Au Train Basin Waterfowl Project) located at the south end of the project. ù UPPCo leases a dozen small parcels for residential use. ù UPPCo leases lands to MDNR for the Forest Lake State Forest Campground. UPPCo's land management policy excludes commercial logging within 200 feet of project waters at the basin or Au Train River. Exceptions to this practice may occur when USFS or MDNR recommend selective logging because of forest fire, tree disease, or an emergency situation. The Au Train River is not a designated National Wild and Scenic River or a National Wild and Scenic River study river. The Au Train River is also not listed on the Nationwide Rivers Inventory, nor is it part of the Michigan Natural Rivers System (UPPCo, 1993a). Environmental Impacts: UPPCo proposes to maintain a 200- foot no-cut buffer along the reservoir shoreline and down-stream of the powerhouse on lands that it owns. UPPCo does not propose any other land use measures as part of licensing the project, nor does it propose to change land uses at or adjacent to the project. The resource agencies (DOI, MDNR, and USFS) recommend that (1) UPPCo establish a boundary at this project and include 2,568 acres of UPPCo-owned lands within it, (2) UPPCo develop a comprehensive land management plan (CLMP) in consultation with agencies for maintenance of those lands, and (3) any proposal to withdraw lands from the project boundary be reviewed by agencies before final approval by the Commission. USFS further recommends that UPPCo's logging activities on its lands generally follow Hiawatha National Forest Plan standards and guidelines. USFS also recommends that UPPCo maintain a 200-foot buffer along the basin shoreline, and that down-stream of the dam, UPPCo maintain a 600-foot buffer along both sides of the river to discourage establishment of vegetation attractive to the beaver, as well as to protect cold-water seeps. 59 We conclude that it is not necessary that all UPPCo-owned lands be included in a project boundary because these lands are not necessary for operation of the project, nor do they provide an enhancement measure associated with project operation. We conclude that the 200-foot shoreline buffer that UPPCo maintains on its company-owned lands, both in the basin and down- stream of the powerhouse, is valuable to environmental resources, and recommend that this policy be incorporated into appropriate resource protection plans. We do not agree with USFS's recommendation that a 600-foot buffer is necessary along the Au Train River down-stream of the dam. We conclude that the 200- foot shoreline buffer provides adequate protection of vegetation. A 200-foot no-cut buffer zone would protect the shoreline, as well as provide vegetation to support future nesting sites for the bald eagle as well as other wildlife species. We recognize that there are portions of UPPCo's shoreline where recreation activities and residential development (the 12 lots that UPPCo leases) prevent the buffer zone from being a "no-cut" zone, therefore, we recommend that UPPCo establish policies for treatment of the buffer area where there is existing development. We recommend that UPPCo modify its bald eagle management plan to include policies for protection of the 200-foot buffer on all UPPCo-owned lands. UPPCo's management of its lands is consistent with forest practices and objectives defined for the both the Hiawatha National Forest and ERSF, and its land management practices provide long-term benefits to wildlife habitats and populations (UPPCo, 1993a). We recommend that specific forest practices be incorporated into UPPCo's buffer management provisions within its updated bald eagle management plan. We recommend that the plan be updated in consultation with the resource agencies. Unavoidable Adverse Impacts: Construction of UPPCo's proposed aesthetic viewing site would require clearing a small area of the shoreline in the bypassed reach down-stream of the dam. However, our buffer zone recommendation permits UPPCo to establish policies to permit cutting of trees in areas in the vicinity of existing or proposed recreation facilities or development; therefore, impacts on the buffer zone are not considered significant. 60 10. Socioeconomic Considerations Affected Environment: The city of Munising, with a 1990 population of 2,783 (Rand McNally, 1995), is the largest community near the project. Alger County, Michigan, had a 1990 population of 8,972, which is a 2.7 decrease from 1980. The six- Table 8. Michigan demographic county area, which includes Alger characteristics (Source: MDNR, County, experienced a 3 percent 1991). decline in population during the Central State of 1980s (Table 8). Population Region a Michigan Per capita income in Alger 1980 182,390 9,295,044 County was $9,669 in 1989, 1990 177,692 9,262,044 compared to $14,154 statewide Percent change -3.0% -0.4% (CUPPAD Regional Commission, aCentral region includes Marquette, 1993). Manufacturing, forestry Dickenson, Menominee, Alger, products, and tourism are Delta, and Schoolcraft counties. important sources of employment. Important tourist attractions in the area include Lake Superior, Pictured Rocks National Lakeshore, and other outdoor recreation sites. Environmental Impacts: Neither UPPCo nor the agencies propose specific measures related to general socioeconomics. UPPCo proposes no substantial construction or expansion of existing facilities, nor do we recommend any development that would have a significant socioeconomic effect on the area. Operation of the Au Train Project would continue to provide benefits to the local and regional economy. Unavoidable Adverse Impacts: None. 11. Air Quality Affected Environment: Air quality in the project area is generally good. Contributions to air pollution in the project area are primarily from distant pollutant sources such as pulp and paper mills, metal foundries, and chemical plants. The U.S. Environmental Protection Agency (EPA) has estab- lished national ambient air quality standards for six common air pollutants: ozone, carbon monoxide, nitrogen dioxide, sulfur dioxide, particulate matter less than 10 microns in diameter (PM10), and lead. Table 9 presents the national ambient air quality standards. Michigan does not have state ambient air quality standards that supersede the national standards. The project area currently meets all national ambient air quality standards. Environmental Impacts: The project currently generates about 5.9 GWh of energy annually. This amount of hydropower 61 generation, when contrasted with the generation of an equal amount of energy by fossil-fueled facilities, avoids the unnecessary emission of a moderate quantity of atmospheric pollutants. Staff's recommended operation modifications (see Section V.C.2ÄWater Resources) would result in a decrease of 64 MWh of energy generated annually. An increase in generation from fossil fuel plants (e.g., coal or oil, which are irreplaceable fossil fuels) would likely replace lost hydropower generation. This would result in an increase in air emissions. However, the increased air emissions would be minor and have no effect, because project area currently meets all national ambient air quality standards. Table 9. National ambient air quality standards (Source: CARB, 1994). Pollutant Averaging Time Primary Standard Secondary Standard Ozone 1 Hour 0.12 ppm 0.12 ppm Carbon Monoxide 8 Hour 9 ppm -- 1 Hour 35 ppm -- Nitrogen Dioxide Annual Average 0.053 ppm 0.053 ppm Sulfur Dioxide Annual Average 80 æg/m3 -- 24 Hour 365 æg/m3 -- 3 Hour -- 1,300 æg/m3 (PM 10) Annual Arithmetic 50 æg/m3 50 æg/m3 Mean 24 Hour 150 æg/m3 150 æg/m3 Lead Calendar Quarter 1.5 æg/m3 1.5 æg/m3 Notes: National standards, other than ozone and those based on annual averages or annual arithmetic means, are not to be exceeded more than once a year. The ozone standard is attained when the expected number of days per calendar year with maximum hourly average concentrations above the standard are equal to or less than one. Primary standards are the levels of air quality necessary, with an adequate margin of safety, to protect the public health. Secondary standards are the levels of air quality necessary to protect the public welfare from any known or anticipated adverse effects of a pollutant. Unavoidable Adverse Impacts: Proposed operating modifications would reduce power production, which would lead to the need to replace the lost hydropower generation with fossil fuel generation. This would result in a minor increase in air emissions. VI. DEVELOPMENTAL ANALYSIS In this section, we analyze the project's use of the river's water resources to generate hydropower by estimating the economic benefits of the proposed project. We also address the economic 62 effects of various measures considered in the EA for the protection, mitigation, or enhancement of area resources. We base our independent economic studies on current electric power conditions. We do not consider future inflation or escalation of prices.11 We base our estimate of the cost of alternative capacity and energy on the applicant's avoided cost. We used UPPCo's estimate of the cost of alternative power in the region of 25 mills/kWh for on-peak usage and 17.4 mills/kWh for off-peak usage. We base our economic analysis of the alternatives on the data shown in Table 10. Table 10. Staff's assumptions for economic analyses of the Au Train Hydroelectric Project (Source: Staff) Assumption Value Source O&M Costs (1996 dollars) $123,800 UPPCo Discount Rate 10% Staff Book Value and construction cost $752,700 UPPCo (penstock replacement) Application preparation cost $905,000 UPPCo Based on these assumptions, we estimate that the annual cost of the existing project to produce about 5.895 GWh of energy annually would be about $157,200 (26.7 mills/kWh) more than the currently available alternative. A. Proposed Project In this section, we present the applicant's proposal which consists of continued operation of the Au Train Hydroelectric Project with its proposed environmental measures. Table 11 summarizes the costs and current net annual benefits of the applicant's proposal. This current net annual benefits for the applicant's alternative would be about -$183,700 or about -31.5 mills/kWh. 11 See Mead Corporation, Publishing Paper Division, 72 FERC Para. 61, 027 (July 13, 1995). 63 Table 11. Summary of costs and current net annual benefits of the applicant's proposed projectÄ1996 $ (Source: Staff). Annual Capital Annual Net Enhancement Measure Cost Cost Benefit Existing project -- -- -$157,200 Operate modified run-of-river -- $8,500 -$8,500 Down-stream USGS gage and basin level $30,000 $11,000 -$15,300 sensor Recreation improvements (viewing area $10,000 $1,300 -$2,700 at Upper Au Train Falls) Total: $40,000 $12,300 $-183,700 B. Staff's Alternative12 In this section, we present the additional costs and current net annual benefits of the staff's recommended alternative, which consists of the applicant's proposed project with staff modifications. Table 12 presents the summary of these costs and the current net annual benefits. The current net annual benefits for the staff's alternative would be about -$199,500 or about -34.2 mills/kWh. Table 12. Summary of costs and current net annual benefits of the staff's alternative--1996 $ (Source: Staff). Annual Annual Net Enhancement Measure Capital Cost Cost Benefit UPPCo's proposed project $40,000 $12,300 -$183,700 Erosion control plan $5,000 $1,000 -$1,700 Bypass $15,000 $1,000 -$3,100 Staff gage $1,000 -- -$100 Staff recreation enhancements $10,000 $1,300 -$2,700 (maintain east side access site) Recreation plan $5,000 -- -$700 Wildlife structures $7,500 $1,000 -$2,100 Wildlife plan $10,000 $1,000 -$2,400 12 This alternative reflects the staff's final proposed alternative after reviewing 10(j) recommendations as discussed in Section VII. 64 Bald eagle plan $2,000 $1,000 -$1,300 Purple loosestrife monitoring $5,000 $1,000 -$1,700 Total: $100,500 $19,600 -$199,500 C. No-action Alternative Under the no-action alternative, the project would continue to operate under the current mode of operation, and no new environmental protection, mitigation, or enhancement measures would be implemented. The annual cost of the existing project, including carry charges on net investment and application preparation costs is about $358,600 (60.8 mills/kWh), for the existing generation of about 5.895 GWh of energy annually. We estimate that the cost of alternative power is about 34.2 mills/kWh. Therefore, the existing project would produce power at an annual cost of about $157,200 (26.7 mills/kWh) more than the currently available alternative. D. Economic Comparison of the Alternatives Table 13 presents a summary of the current net annual benefits for the various alternatives. Table 13. Comparison of economic analyses for the Au Train Hydroelectric Project alternatives (Source: Staff) Alternatives UPPCo's Staff's No-Action Dependable capacity (MW) 0.9 0.9 0.9 Annual generation (GWh) 5.8 5.8 5.9 Annual cost of alternative power (thousand $) 193 193 202 (mills/kWh) 33.1 33.1 34.2 Annual project cost (thousand $) $377 $392 $359 (mills/kWh) 64.6 67.3 60.8 Current net annual economic benefits (thousand $) -$184 -$199 -$157 (mills/kWh) -31.5 -34.2 -26.7 Our evaluation of the economics of the proposal and staff's alternative shows that both appear to cost more than currently available alternative power. As we explained in Mead, our 65 economic analysis is by necessity inexact, and project economics is moreover only one of the many public interest factors we consider in determining whether or not, and under what conditions, to issue a license. Based on the record in this proceeding, we conclude that it is in the public interest to license the project, conditioned as appropriate under Section 10(a)(1) of the FPA, and leave to the applicant the decision of whether or not to continue operating the existing project in light of the economic analysis set forth herein. E. Pollution Abatement The Au Train Hydroelectric Project annually generates about 5.9 GWh of electricity on average. This amount of hydropower generation, when contrasted with the generation of an equal amount of energy by fossil-fueled facilities, avoids the unnecessary emission of a moderate quantity of atmospheric pollutants. Assuming that the 5.9 GWh of hydropower generation would be replaced by an equal amount of coal-fired generation, generating electric power equivalent to that produced by the Au Train Hydroelectric Project would require combustion of about 2,500 tons of pulverized bituminous coal annually. Without pollution control and assuming the sulfur content of the coal to be about 1.0 percent the following approximate quantities of atmospheric pollutants would be produced annually: Oxides of sulfur 48 tons Oxides of nitrogen 22 tons Carbon monoxide 1.1 ton Carbon dioxide 5,695 tons Removing the oxides of sulfur and nitrogen from the flue gas produced by the combustion of fossil fuels increases the cost of generating electricity. State-of-the-art pollution technology is capable of removing about 95 percent of the oxide in sulfur and 60 percent of the oxides of nitrogen from the uncontrolled flue gases. Estimates of these control costs are about $500 per ton for oxides of sulfur and $385 per ton for oxides of nitrogen removed. The cost of removing 95 percent of the 48 tons of oxides of sulfur would be about $23,000. The cost of removing 60 percent of the 22 tons of oxides of nitrogen would be about $5,000. VII. COMPREHENSIVE DEVELOPMENT AND RECOMMENDED ALTERNATIVE Sections 4(e) and 10(a)(1) of the FPA require the Commission to give equal consideration to all uses of the waterway on which a project is located. When the Commission reviews a hydropower project, the recreation, fish and wildlife and other nondevelopmental values of the waterway are considered equally 66 with its electric energy and other developmental values. In deciding whether or not and under what conditions to issue a hydropower license, the Commission must weigh various economic and environmental trade-offs. We considered the applicant's proposed project, agency recommendations, our recommended protection, mitigation, or enhancement measures, and the no-action alternative under Sections 4(e) and 10(a) of the FPA. From our independent analysis of the environmental and economic effects of the alternatives, we selected the applicant's proposed project with our additional recommended measures (staff's alternative) as the preferred alternative. This alternative consists of: ù operating the project in a modified run-of-river mode with winter draw-down ù maintaining a year-round minimum water elevation of 772.0 feet local datum (773.7 feet mean sea level) to protect bald eagle habitat from predators and recreationists ù maintaining a minimum continuous powerhouse discharge of 50 cfs to enhance fisheries resources in Au Train River ù installing a bypass to maintain down-stream flows during emergency interruption of water flows to protect fisheries habitat down-stream ù installing and funding operation of a USGS gage on the Au Train River down-stream of the powerhouse to document compliance with continuous powerhouse discharge ù installing a level sensor on Au Train basin to document compliance with basin water level restrictions ù installing a staff gage on the up-stream face of the dam to allow public observance of water level compliance ù consulting with the MDNR and the DOI in advance of scheduled reservoir draw-downs to protect fish and wildlife resources ù preparing an operational compliance plan, including annual reports to the Commission to document compliance with license conditions 67 ù preparing an erosion control plan to protect project resources from degradation due to existing and potential future erosion ù maintaining a 200-foot buffer adjacent to the reservoir and river down-stream of the powerhouse on UPPCo-owned lands to minimize soil erosion and maintain aesthetic quality ù developing a wildlife management plan including construction of waterfowl habitat structures ù developing and implementing a bald eagle management plan to protect and preserve critical habitat ù developing and adopting a plan to monitor purple loosestrife and Eurasian milfoil ù constructing a barrier-free viewing area and providing directional signage to Upper Au Train Falls to enhance recreational resources at the project ù installing interpretive signage at Upper Au Train Falls to provide the public information about facilities and natural resources at the site ù planting trees to screen gravel pit/storage area at Upper Au Train Falls to improve aesthetics ù amending the 200-foot-wide buffer policy at existing development sites to allow limited vegetative management ù consulting with Michigan SHPO prior to initiating any construction activities to protect potential cultural resources that may be discovered ù developing a recreation plan including our recommended recreation enhancements ù operating and maintaining the recreation site on the east side of the basin Implementation of these measures would improve water quality, fisheries, wildlife, and recreation resources; increase access to the river in the project area; and provide for the best use of the waterway. The costs of some of these measures would, however, reduce the net benefits of the project. Specifically, eight of the recommended measures would reduce economic benefits of the project. These include: (a) installing a bypass structure; (b) installing project gaging; (c) preparing 68 an erosion control plan; (d) preparing a wildlife plan; (e) preparing a bald eagle plan; (f) preparing a purple loosestrife monitoring plan; and (g) preparing a recreation plan and providing recreation enhancements. We summarize these recommendations briefly in the following section. The annual costs of agency-recommended measures, where it could be determined, are shown in Table 14. A. Installing a bypass structure MDNR and USFS recommend that UPPCo install a 50-cfs bypass system to ensure that minimum flows are maintained during power outages and maintenance shutdowns. DOI also recommends that UPPCo pass river flow instantaneously over the spillway or through the turbines during an emergency or planned turbine shutdown. The Au Train project has no such emergency device in place. During a project shutdown, the only flow provided to the Au Train River would be a 5 to 12 cfs leakage flow unless the basin water level was higher than the spillway crest. UPPCo states that an emergency bypass system is an unnecessary expense because total project shutdown is unlikely given that all equipment is in good condition and the project has inherent redundancy with two turbines. We conclude that interruption of flow to the Au Train River could kill incubating eggs and small fish, particularly if it occurred during spawning periods and lasted more than a few hours. Because the one-mile reach of the river immediately down- stream of the powerhouse is such an important spawning area for salmon, we agree that some flow should be provided continuously to the river during emergencies to ensure that down-stream aquatic resources are protected. We recommend that UPPCo install a bypass structure to provide 10 cfs flow during plant shutdowns. When combined with leakage and accretion, this 10 cfs flow would provide an optimal wetted perimeter in the river. Because the bypass system would be needed infrequently, we do not concur that a 50 cfs emergency flow is essential to protecting the fisheries resources in the river. We calculate that the current net annual cost of our recommended bypass structure would be $3,100. B. Compliance gaging MDNR and DOI recommend that UPPCo develop a plan to demonstrate compliance with run-of-river operations including gaging and recording operations. UPPCo proposes to install and fund a down-stream USGS gage and a level sensor in the basin. We agree with the agencies that UPPCo should provide sufficient means to demonstrate compliance with the conditions of the license. Accordingly, we recommend that UPPCo prepare an 69 operational compliance plan. The plan should include gaging to demonstrate compliance with license provisions including: a staff gage on the up-stream wall of the basin, funding for the down-stream USGS gage, and an automatic level sensor to record basin water level. We also recommend that, as part of its plan, that UPPCo record hourly operating data (turbine operations, headwater elevation, flow through the turbine, estimate of flow spilled to the bypassed reach, and flow measured by the down- stream USGS gage) and summarize the data in an annual report to be submitted to the Commission. We calculate that the current net annual cost of this plan would be $15,400. C. Preparing an erosion control plan MDNR states that past operations have resulted in erosion in the project area and recommends that UPPCo develop and implement a plan in consultation with MDNR to address both present and future erosion problems. UPPCo disagrees that an erosion plan is needed, stating that there are no significant areas of shoreline erosion within the basin, nor have erosion effects of historic peaking or current operations been identified. Because UPPCo has documented several areas of erosion in the past, we conclude that future periodic inspections for erosion are warranted. We recommend that UPPCo prepare a plan to inspect the shoreline annually for erosion and report its findings to the Commission every 3 years to ensure that erosion that develops in the future does not adversely affect project resources. If specific areas of active shoreline erosion are identified, we recommend that UPPCo include methods and a schedule to repair the site in a report to the Commission. We estimate that the annual cost of this measure would be approximately $1,700. D. Preparing a wildlife management plan MDNR and DOI recommend that UPPCo develop and implement a wildlife management plan to protect and enhance wildlife habitat on project lands. MDNR recommends that the wildlife management plan include construction and maintenance of various wildlife structures and provision for funds to maintain and enhance the wildlife refuge at the south end of the basin. UPPCo proposes no wildlife measures other than continuing land management practices such as restrictions on commercial logging within established buffer zones. Construction of artificial nest structures can be useful in areas where natural nesting sites are limited. Winter draw-down of the reservoir can limit wetland habitat in the late winter/early spring. Artificial nest structures would increase habitat opportunities for various waterfowl species. We recommend that UPPCo construct and maintain these structures. 70 UPPCo owns 2,568 acres of land in the vicinity of the project that provide habitat for a wide variety of wildlife species. The buffer zone that UPPCo proposes would enhance natural nesting opportunities and provide protection for wildlife species. We agree that a wildlife management plan that formally documents practices within the buffer zone would enhance opportunities for existing and future wildlife within the project area. We recommend that UPPCo prepare a wildlife management plan, which would include procedures for protecting habitat within the 200-foot no-cut shoreline buffer zone both around the reservoir and along the down-stream river banks, the waterfowl habitat structures, and provisions for annual consultation with the resource agencies. We calculate that the current net annual cost of these enhancements would be $4,500. E. Preparing a final bald eagle plan UPPCo has a bald eagle protection plan that is consistent with the Northern States Bald Eagle Recovery Plan and Bald Eagle Management Guidelines. DOI and MDNR both recommend that UPPCo incorporate a number of provisions into its final bald eagle protection plan. DOI recommends 9 measures and MDNR recommends 17 measures be included in the final plan. We agree that bald eagle protection is an important part of protecting and enhancing opportunities in the project area for this threatened species. We recommend that UPPCo incorporate all of DOI's measures in its final plan. We also recommend that UPPCo incorporate the majority of MDNR's measures into the final plan. Some measures, such as providing additional signage and public information materials and including all lands in the project boundary are not necessary for protection of critical habitat. We calculate that finalizing the bald eagle protection plan would have a current net annual cost of $1,300. F. Purple loosestrife monitoring UPPCo has not proposed any plans for monitoring or controlling the spread of invasive aquatic plants such as purple loosestrife or Eurasian water milfoil. MDNR and USFS recommend that UPPCo cooperate with the agencies to develop and implement a plan to monitor and control and/or eliminate purple loosestrife and Eurasian water milfoil within the project area, when deemed appropriate by the agencies. We agree that the spread of invasive exotic plants threatens the integrity of existing wetland systems. We, therefore, concur that UPPCo should consult with MDNR and USFS to develop a plan to control the spread of these species in the project area. We also recommend that, if invasive species become established in the 71 project area, UPPCo cooperate with MDNR and USFS to develop control strategies. We calculate that preparation of the plan would have a current net annual cost of $1,700. G. Recreation plan and enhancements UPPCo proposed to develop a recreation viewing area at Upper Au Train Falls. MDNR and USFS recommended additional recreation enhancements. Based on our independent analysis, we conclude that some of the recommendations are warranted to increase public awareness of availability of facilities in the area. We also identified additional recreation enhancements at the site visit with MDNR and UPPCo. We recommend that UPPCo prepare a recreation plan including UPPCo's proposed recreation enhancements and our recommended facilities. We recommend that UPPCo complete the plan within 12 months of license issuance. We calculate that the current net annual cost of our proposed recreation enhancements (including UPPCo's proposed recreation enhancements) and recreation plan would be $6,100. H. Conclusions Based on our independent review and evaluation of the proposed Au Train Hydroelectric Project, agency recommendations, the proposed project with our protection, mitigation, or enhancement measures, and the no-action alternative as documented in this EA, we have selected as the preferred alternative the applicant's proposed project with our additional recommended measures (staff's alternative). The current net annual benefit for the staff's alternative would be -$200,000 or about -34.3 mills/kWh. We recommend this option because: (1) our required measures would protect, mitigate, or enhance environmental resources in the Au Train River basin; and (2) the electricity generated would continue to conserve nonrenewable resources and reduce atmospheric pollution and the associated environmental impacts from acid precipitation, fossil-fuel extraction, and transportation. VIII. RECOMMENDATIONS OF FISH AND WILDLIFE AGENCIES Under the provisions of the FPA, each hydroelectric license issued by the Commission must include conditions based on recommendations provided by federal and state fish and wildlife agencies for the protection, mitigation, and enhancement of fish and wildlife and their habitat affected by the project. Section 10(j) of the FPA states that whenever the Commission believes any fish and wildlife agency recommendation may be inconsistent with the purposes and requirements of the FPA or 72 other applicable law, the Commission and the agency shall attempt to resolve any such inconsistency, giving due weight to recommendations, expertise, and statutory responsibilities of the agency. Pursuant to Section 10(j) of the FPA, we have preliminarily determined that certain of the recommendations of the federal and state fish and wildlife agencies may be inconsistent with the purposes and requirements of Part 1 of the FPA or other applicable laws. Recommendations or parts of recommendations that were considered inconsistent with Section 10(j) conflict with the comprehensive planning and public interest standards of Section 4(e) and 10(a) of the FPA. As shown in Table 14, we preliminarily determined that 27 of the 40 recommendations made by fish and wildlife agencies are within the scope of Section 10(j) of the FPA. Of the 27 recommendations, we adopted 14 fully and 6 in part. We identified 7 resource agency recommendations that we have determined to be inconsistent with the Federal Power Act: ù Maintain specified target and minimum elevations in reservoir ù Allow no more than a 20 percent fluctuation from previous day's flow ù Maintain state water quality standards for DO and temperature ù Develop and implement water quality monitoring ù Develop and implement a down-stream fish exclusion plan and effectiveness study and install an interim fish barrier net during ice-out periods ù Include all UPPCo-owned lands within a project boundary, retain all licensee-owned lands within the project boundary ù Develop and implement a CLMP for all UPPCo-owned lands For the Au Train Project, MDNR and DOI have had the opportunity to make comments and recommendations. Both agencies have provided recommendations, and all recommendations are evaluated and discussed in their specific resource sections of this EA. We present our preliminary conclusions concerning the merits of these recommendations there. In Table 14, we summarize MDNR's and DOI's recommendations, show the annual cost of environmental measures, show if they are within the scope of 10(j), and whether they are adopted under staff's alternative. 73 Table 14. Summary of all fish and wildlife resource agency recommendations under FPA Sections 10(j) and 10(a). Within Annual Cost of Scope of Environmental No. Agency Agency Recommendation 10(j) Measure Adopted 1 MDNR Maintain monthly target Yes High No; historical draw- reservoir elevations; notify downs have not caused agencies within 7 days of adverse effects; some falling below target draw-down is needed to elevation to absolute minimum maintain continuous elevation discharge 2 DOI Maintain minimum reservoir Yes High Partial; recommend elevation of 772.0 feet May minimum elevation of through February, and 776.5 772.0 feet year-round feet in March and April 3 MDNR Do not operate in peaking Yes High Yes mode 4 MDNR Provide stable daily flow Yes High No; cannot be achieved from powerhouse without more with modified run-of- than 20 percent fluctuation river operation from previous day's flow 5 MDNR Provide continuous powerhouse Yes Low Partial; recommend target discharge; notify continuous powerhouse agencies within 7 days of discharge of 50 cfs falling below target to year-round absolute minimum discharge 6 DOI Provide minimum 50 cfs flow Yes Low Yes from the powerhouse year- round 7 MDNR Project operation may be Noa Low Yes DOI modified temporarily due to emergency, notify agencies and consult on remedial measures 8 MDNR Obtain permits from MDNR and Noa Low No; UPPCo must seek notify agencies in advance of Commission approval for proposed draw-downs for draw-downs maintenance purposes that exceed 1 foot 9 DOI Consult with agencies in Yes Low Yes advance of scheduled draw- down 74 Table 14. Summary of all fish and wildlife resource agency recommendations under FPA Sections 10(j) and 10(a). Within Annual Cost of Scope of Environmental No. Agency Agency Recommendation 10(j) Measure Adopted 10 DOI In the event of emergency or Yes $6,100 Partial; provide planned shutdowns, pass mechanism to provide 10 inflow instantaneously, or cfs flow in case of within a few minutes, through power shutdown or the turbines or over the emergency spillway 11 MDNR Install a bypass system to Yes $6,100 Partial; provide ensure minimum flows down- mechanism to provide 10 stream of the powerhouse cfs flow in case of power shutdown or emergency 12 MDNR Develop and implement an Nob $51,600 Partial; provide annual operation effectiveness plan consultation and reporting 13 MDNR Maintain state water quality Yes High No; down-stream cannot standards for dissolved meet coldwater DO or oxygen and temperature temperature standards 14 MDNR Develop and implement a water Yes $20,500 No; project operation quality monitoring program not affecting water quality 15 MDNR Pay liquidated damages to Noa High No; Commission will state for each violation of determine need for water quality standards mitigation 16 MDNR Develop and implement an Yes Low Yes DOI operational compliance plan 17 MDNR Install and operate a USGS Yes $15,300 Yes gage below the powerhouse and on basin 18 DOI Fund continued operation of Yes $13,600 Yes the down-stream USGS gage 19 MDNR Telemeter USGS gage down- Noa $3,400 No; not needed for stream and on basin compliance 20 MDNR Install staff gage on the up- Noa $100 Yes DOI stream wall of the dam for public viewing 21 MDNR Maintain a record of Noa $12,100 Partial; recommend operation on a 30-minute hourly records be basis recorded 22 DOI Use automatic sensors to Yes $1,700 Yes continuously read headwater elevations, and maintain daily record of operations 75 Table 14. Summary of all fish and wildlife resource agency recommendations under FPA Sections 10(j) and 10(a). Within Annual Cost of Scope of Environmental No. Agency Agency Recommendation 10(j) Measure Adopted 23 DOI Install an automatic Noa $1,700 No; tailwater sensor not tailwater sensor to needed for compliance continuously record elevations 24 MDNR Develop and implement a down- Yes $137,400 No; fish are not stream fish exclusion plan adversely affected and effectiveness study; design, install, and maintain a barrier net during ice-out periods in interim 25 MDNR Fund, conduct, and complete a Noa $58,000 No; Commission has no fishery damage assessment and authority pursuant to make appropriate payments, or the FPA to adjudicate pay restitution value for claims for, or require lost fishery resources payment of, damages 26 MDNR Develop and implement a plan Yes $8,000 Partial; habitat is to increase the amount of abundant down-stream; woody debris and control bank erosion would be erosion in the river down- addressed in erosion stream of the powerhouse in control plan order to improve trout habitat 27 MDNR Specific recreation facility Noa $39,200 Partial; recommend some enhancements facility enhancements 28 MDNR Include all UPPCo-owned lands Yes High No; additional lands DOI within project boundary, beyond 200-foot buffer retain all licensee-owned are not needed for lands within the project operation or enhancement boundary; notify agencies measures before modifying project boundary or restricting public access 29 MDNR Develop and implement CLMP Yes $2,400 No; management of lands DOI for all UPPCo-owned lands beyond 200-foot buffer is not needed for operation or enhancement measures 30 MDNR Develop and implement a Yes $2,400 Yes DOI wildlife management plan 76 Table 14. Summary of all fish and wildlife resource agency recommendations under FPA Sections 10(j) and 10(a). Within Annual Cost of Scope of Environmental No. Agency Agency Recommendation 10(j) Measure Adopted 31 MDNR Provide the following Yes $2,100 Yes DOI wildlife and waterfowl structures: ù 64 wood duck boxes or a waterfowl nesting island ù 1 osprey nesting platform ù 2 purple martin nesting colonies ù 3 bat nesting houses ù eastern bluebird houses ù kestrel and owl nesting locations ù wildlife habitat in project rights-of-way 32 MDNR Fund maintenance and Noa Low No; no justification enhancement of the existing provided for need or use waterfowl refuge on UPPCo's of funds, UPPCo provides lands 997 acres which are protected 33 MDNR Finalize the Bald Eagle Yes $1,300 Partial; recommend final DOI Management Plan with plan include most additional provisions provisions 34 DOI Operate project consistent Yes Low Yes with the "Northern States Bald Eagle Recovery Plan" and the "Bald Eagle Winter Management Guidelines" 35 DOI Adhere to the "Recovery Plan Yes Low Yes for the Eastern Timber Wolf" guidelines if new roads are constructed on UPPCo lands adjacent to the project in the future 36 MDNR Develop and implement a plan Yes $1,700 Yes to monitor and control purple loosestrife and Eurasian milfoil on project waters 37 MDNR Develop and implement a plan Yes $1,700 Yes to inventory, control, and repair present and future erosion 77 Table 14. Summary of all fish and wildlife resource agency recommendations under FPA Sections 10(j) and 10(a). Within Annual Cost of Scope of Environmental No. Agency Agency Recommendation 10(j) Measure Adopted 38 MDNR 10 years after license Noa $41,200 No; UPPCo has sufficient issuance, perform project resources to retire retirement study and project if warranted in establish retirement fund future 39 MDNR Include standard fish and Yes Low Yes DOI wildlife reopener 40 DOI Reserve Section 18 authority Noc Low Yes aNot a specific measure to protect fish and wildlife bStudies could have been requested and completed during pre-licensing consultation cMandatory under Section 18, not considered under Section 10(j) As noted above, conditions based on fish and wildlife recommendations submitted pursuant to Section 10(j) must be included in the license unless the Commission determines that the recommendations are inconsistent with the purposes and requirements of the FPA or other applicable law. If the Commission does not adopt a recommendation submitted pursuant to Section 10(j), it must explain, pursuant to Section 10(j)(2), how the recommendation is inconsistent with applicable law and how the conditions selected by the Commission adequately and equitably protect, mitigate damages to, and enhance fish and wildlife. In doing so, we first determine whether the recommendation is supported by substantial evidence in the record, that is, whether there is evidence in the record adequate to support a conclusion. If not, the recommendation is inconsistent with the requirement of Section 313(b) of the FPA that Commission orders be supported by substantial evidence.13 Next, we determine whether a substantiated recommendation is inconsistent with the FPA or other applicable determinations under the equal consideration/comprehensive development standards of FPA Sections 4(e) and 10(a)(1), in that the recommendation conflicts unduly with another project purpose or value (including the project's economic benefits).14 In short, we determine whether the recommendation would have a significant, negative impact on a valuable project purpose or beneficial use. Because implementing all the agency recommendations taken together would have substantial adverse effects on project purposes, including economics as shown in Table 14, we looked closely at each individual recommendation to determine whether 13 See IV FERC Statues and Regulations, supra,  30,921 at p. 30, 157. 14 See Mead Corporation, Publishing Paper Division, 72  61,027 (1995) 78 benefits to the environment would be worth the cost of implementing the measure. For the reasons discussed in the following paragraphs, we determined the following recommendations to be inconsistent with Sections 4(e) or 10(a) of the FPA and either partially adopted or did not adopt them. We do not recommend that UPPCo maintain specific target and absolute minimum water surface elevations, as recommended by MDNR, DOI, and USFS. The agencies provide insufficient evidence, pursuant to Section 313(b) of the FPA, that the historical draw- downs have adversely affected basin resources. Higher basin water levels would preclude UPPCo from providing a continuous powerhouse discharge to enhance riverine fish and wildlife resources. Since providing higher basin water levels would significantly reduce the probability of continuous flows discharged down-stream from the powerhouse and thus potentially damage the riverine fishery, we conclude that MDNR's recommendation is inconsistent with the comprehensive planning standard of Section 10(a) of the FPA. We also conclude that our recommendation would adequately and equitably enhance fish resources, consistent with Section 10(j) of the FPA. Our recommended operating plan represents an enhancement over historical conditions, in that the reservoir would be held an average of one foot higher, bald eagle habitat would be protected, and down-stream aquatic and recreational resources would benefit from a continuous reliable flow in the Au Train River. MDNR's recommendation that no daily discharge deviate from the previous day's discharge more than 20 percent is inconsistent with its recommendation for a continuous powerhouse discharge to protect down-stream fisheries resources. MDNR presented insufficient evidence, pursuant to Section 313(b) of the FPA that the 20 percent limitation is feasible, given UPPCo's current equipment or that the limitation is necessary to protect down- stream resources. Because the recommendation is infeasible and incompatible with other MDNR 10(j) recommendations, we do not concur with this recommendation. Our recommendation for a continuous powerhouse discharge of 50 cfs would protect down- stream fisheries resources. We partially adopted MDNR's recommendation for a continuous powerhouse discharge ranging from 70 to 100 cfs. Flows can be released through the powerhouse at a rate of approximately 50 to 69 cfs (one turbine) or at 100 to 136 cfs (two turbines). Therefore, consistent minimum flows of 70 cfs, as MDNR recommends, are not possible with existing equipment. With UPPCo's limited ability to regulate flows between one and two turbine operation, continuous minimum flows must be either 50 or 100 cfs. A continuous flow of 100 cfs would cause unnecessary basin draw-downs with little gain in down-stream habitat improvement. Therefore, we conclude that MDNR's recommendation 79 is neither in the public interest nor consistent with the Commission's balancing responsibilities, pursuant to Sections 10(a) and 4(e) of the FPA. Based on our review of the habitat- discharge relationships that UPPCo developed in its instream flow study, we conclude that a 50 cfs minimum discharge, supplemented with leakage and accretion, would significantly enhance rearing conditions for the various salmonid species that inhabit the Au Train River compared to historic operation where powerhouse discharge was occasionally terminated. We partially adopted DOI's recommendation to pass inflow instantaneously and MDNR's recommendation to install a bypass system to ensure minimum flows down-stream of the powerhouse in the event of an emergency or planned project shutdown. We determined that providing the full minimum powerhouse discharge of 50 cfs to the Au Train River in an emergency would impose a significant cost on the project. Based on our analysis of habitat-discharge curves for the river and our knowledge of flow leakage through the dam and accretion to the river, we determined that providing a bypass structure capable of discharging 10 cfs in an emergency would adequately protect down-stream fisheries resources. Therefore, we conclude that the DOI and MDNR recommendations are inconsistent with the Commission's balancing responsibilities under Sections 10(a) and 4(e) of the FPA. The MDNR's request to include water quality standards in the license is subject to balancing considerations under Section 10(j), the public interest standards of Section 4(e), and the comprehensive planning standards of Section 10(a) of the FPA. As noted previously, Michigan did not respond to UPPCo's request for water quality certification within 1 year so we deem certification to be waived for FPA licensing purposes. Current water quality is sufficient to support warmwater fishery resources, although temperature deviations from Michigan's coldwater standards during summer months may limit the opportunity for coldwater fisheries in the river. The river supports a diverse population of both cold and warmwater species, including brown and brook trout, coho and chinook salmon, walleye, and steelhead trout. As MDNR notes in its 10(j) terms and conditions, the deviations from coldwater standards in the river cannot be mitigated. Therefore, including water quality standards in the license or requiring liquidated damages for violations of standards is not in the public interest or consistent with the Commissions's balancing responsibilities, pursuant to Section 10(a) of the FPA. We do not concur with MDNR's recommendation that UPPCo conduct water quality monitoring. UPPCo's 1991 monitoring demonstrated that water quality is generally very good in the project area and that operation of the Au Train project does not significantly affect water quality in the Au Train River. The significant cost associated with conducting periodic monitoring 80 ($20,500 annualized cost) is not commensurate with the limited benefit that could be realized by obtaining more data. Water quality deviations from coldwater standards down-stream cannot be mitigated by the project. Therefore, we conclude that this recommendation is inconsistent with our balancing responsibilities of Section 10(a) of the FPA. We did not adopt MDNR's recommendation for a fish exclusion plan, because results of an entrainment study demonstrated that operations are not significantly affecting target fish species in the reservoir. The majority of entrained fish are juvenile or rough fish that MDNR manually removes from the basin because they are undesirable (see Section V.C.3ÄFisheries Resources). We conclude that, given the results of the entrainment study, the benefits of a fish exclusion plan and interim barrier net are not justified by the significant effect that they would have on project economics ($137,400 annual cost). Therefore, we conclude that MDNR's recommendation is inconsistent with the comprehensive planning standard of Section 10(a) of the FPA, including the equal consideration provision of Section 4(e) of the FPA. We do not recommend that UPPCo develop a plan to increase the amount of woody debris in the Au Train River down-stream of the powerhouse. MDNR provided no evidence that woody debris is lacking in that reach of river. To the contrary, we found the river to have excellent shelter and habitat for fish during staff's site visit to the project. The significant annual cost ($8,000) that would be associated with providing woody debris periodically is not commensurate with the minimal benefits that would be realized by additional woody debris in a river that has sufficient cover and habitat. Therefore, we find this recommendation inconsistent with our balancing responsibilities under Sections 4(e) and 10(a) of the FPA. We do not agree with the MDNR and DOI recommendation that all UPPCo owned lands be included within the project boundary, and that UPPCo notify agencies before modifying project boundary during the life of the license. As a minor license, no project boundary is required. There is no evidence that these lands are necessary for operation of the project. UPPCo's proposed 200- foot shoreline buffer would protect resources along the basin shoreline and down-stream of the powerhouse. Therefore, we conclude that this recommendation is inconsistent with the Commission's balancing responsibilities under Sections 4(e) and 10(a) of the FPA. We do not agree with the need for a CLMP for all UPPCo-owned lands because all of UPPCo's lands are not necessary for operation of the project, nor do they provide an enhancement measure associated with project operation. Therefore, we conclude that MDNR's recommendation is inconsistent with the comprehensive development standard of Section 10(a) of the FPA. 81 We do not agree with all of MDNR's additional bald eagle provisions for incorporation into UPPCo's final bald eagle plan. We do not agree that public information distribution and sign posting is needed beyond current levels implemented by other agencies. USFS currently posts signs restricting access to critical habitat. We conclude that requiring additional signage is unnecessary and requiring UPPCo to prepare public information/education materials would not enhance habitat opportunities for the bald eagle above what is currently provided. Including all UPPCo-owned lands in a project boundary to ensure that they are included in the bald eagle management plan is excessive. We conclude that the provisions in UPPCo's current bald eagle plan plus the additional measures recommended by DOI and MDNR regarding activities within the primary, secondary, and tertiary zones would adequately protect bald eagle habitat in the project area. We recommend that UPPCo finalize its bald eagle plan, incorporating the "Northern States Bald Eagle Recovery Plan" and the "Bald Eagle Winter Management Plan" as recommended by DOI. These measures would ensure that bald eagles are fully protected, as required under the ESA. We conclude that MDNR's additional provisions are inconsistent with the Commission's balancing responsibilities under Sections 4(e) and 10(a) of the FPA. Recommendations outside of Scope of Section 10(j) We preliminarily determined that 13 of the 40 recommendations of the federal and state fish and wildlife agencies are outside of the scope of Section 10(j) because they are not specific measures to protect fish and wildlife. These recommendations are therefore considered under the public interest standards of Section 10(a) of the FPA. We determined that 6 of these recommendations have merit and, therefore, we have adopted or partially adopted them. The remaining 7 recommendations are not in the public interest, and we did not adopt them for the following reasons: ù MDNR's recommendations that UPPCo identify mitigation for emergency violations of impoundment fluctuations and that maintenance draw-downs greater than 1 foot require an MDNR permit because our recommended allowable draw-down is 8 feet. Draw-downs within the permitted operating band should not require special notification. In the event of an emergency violation, UPPCo would be required to report to the Commission (see Section V.C.2ÄWater Resources). ù MDNR's recommendation that UPPCo pay liquidated damages for all violations of water quality standards in the Au Train River because the project does not significantly contribute to nor can it mitigate for deviations from coldwater temperature standards. Further, the 82 Commission has no authority pursuant to the FPA to adjudicate claims for, or require payment of, damages. (See Section V.C.2ÄWater Resources). ù MDNR's recommendation to add telemetry to the down- stream USGS gage and the level sensor in the basin because this measure would not be useful for project operations or necessary to demonstrate compliance. The limited benefit is not commensurate with the significant annual cost of this measure ($3,400). (See Section V.C.2-Water Resources). ù DOI's recommendation to install an automatic tailwater sensor to continuously record tailwater elevations because compliance with the minimum flow would be measured by the down-stream USGS gage and verified with turbine operations. An additional gage in the tailwater, which would have an annual cost of $1,700, would be redundant. ù MDNR's recommendation to conduct an FDA to determine compensation for unavoidable fish losses because results on an entrainment study demonstrated that operation of the turbines does not significantly affect fisheries in the basin or the river. Fish species are diverse and abundant. We conclude that entrainment and turbine mortality is not having a major impact on fishery resources. Further, the Commission has no authority pursuant to the FPA to adjudicate claims for, or require payment of, damages. (see Section V.C.3ÄFisheries Resources). ù MDNR's recommendation that UPPCo fund maintenance and enhancement of the existing waterfowl refuge on UPPCo's lands. MDNR did not provide information on specific enhancement measures it would like funded and the amount of funding requested or the need for enhancements at the refuge. We concluded that UPPCo's donation of the nearly 1,000 acres for use in the creation of the wildlife refuge was and is a significant ongoing contribution to the wildlife refuge and further funding requirements is unnecessary. ù MDNR's recommendation to study and develop a plan for project removal during the license period, and establish a trust fund for project retirement. With respect to the last recommendation concerning development of a plan for dam removal and establishment of a trust fund for project retirement, we consider the issue separately from other nondevelopmental issues. 83 MDNR recommended that UPPCo develop, 10 years after license issuance, a plan to study the costs for (1) permanent nonpower operation, (2) partial project removal, or (3) complete project removal. A subsequent study would address establishment of a retirement trust fund. The purpose of this recommendation is to address future project retirement and the consequences to fisheries habitat of these facilities when they have exceeded their economic life and are sold, transferred to other owners, or otherwise fall into disrepair. The Commission's position is set forth in the December 14, 1994 Policy Statement.15 With respect to retirement with or without dam removal, it retains jurisdiction of hydropower projects until a comprehensive resolution with respect to retirement of the project at the end of the license term or, in the event of a license denial, resolution is arranged with the licensee, the state, and other pertinent parties. The Commission recognizes the need for responsible state agencies to be partners in any arrangement that is worked out at the time when federal licensing ends. The Commission also notes that once the Commission's jurisdiction has concluded, the preemption that earlier displaced any state laws would be at an end. The state would then be at liberty to impose its own licensing or other regulatory regime free from any restrictions imposed earlier by the FPA. Through the retirement process the Commission's objective is to resolve, on a case-by-case basis, and to the satisfaction of the successor agency, matters pertaining to retirement at the end of the license term and to accomplish a mutually acceptable resolution of the issues. Therefore, we have not adopted MDNR's recommendation at this time, because it would be addressed at the end of the term of the license. With respect to establishing a trust fund for project retirement, the Commission stated that it will not generically impose retirement funding requirements on a licensee. However, the licensee is ultimately responsible for meeting a reasonable level of retirement costs when the project is retired. The licensee should plan accordingly and the Commission will not accept the lack of adequate preparation as justification for not retiring a project. Provision for midcourse funding may become appropriate. The Commission encourages affected parties to develop creative solutions to pre-retirement funding in such situations. In certain situations, where supported by the record, the Commission may impose license conditions to ensure that funds are 15 FERC Statutes and Regulations 31,011 (1994). 84 available to do the job when the time for retirement arrives. The Commission reserves authority to determine on a case-by-case basis whether or not to impose funding requirements at the time of licensing. The Commission needs reasons to require a retirement trust fund beyond a general belief in having such a fund. The policy states: There may be particular facts on the record in individual cases, however, that will justify license conditions requiring the establishment of retirement cost trust funds in order to assure the availability of funding when decommissioning occurs. The Commission would consider, for example, whether there are factors suggesting that the life of the project may end within the next 30 years, and would also look at the financial viability of the licensee for indications that it would be unable to meet likely levels of expenditures without some form of advance planning. There are no data to suggest that the Au Train Hydroelectric Project is in poor physical condition. Further, as discussed in Mead Paper, 72 FERC 61,027 (1995) and Duke Power, 72 FERC 61,030 (1995), a finding that a project currently appears to have negative annual benefits does not preclude issuance of a license and whether the project should continue operation is a business decision for the licensee to make. Therefore, we have not adopted MDNR's recommendation for UPPCo to study dam removal or establish a trust fund. IX. COMPREHENSIVE PLANS Section 10(a)(2) of the FPA 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. Pursuant to Section 10(a)(2)(A), federal and state agencies filed 55 plans that address various resources in Michigan. Of these, we identified six plans relevant to the project16. Other management plans consulted in addition to those on the Commission's list of comprehensive plans include the Michigan Department of Natural Resources 1990 Escanaba River State Forest Comprehensive Management Plan. The proposed project, with our 16 U.S. Forest Service, 1986, Hiawatha National Forest Land and Resource Management Plan and amendments; Michigan Department of Natural Resources, Fisheries Division, 1978, Au Train Basin Fisheries Management Plan; Michigan Department of Natural Resources, Recreation Division, 1991, 1991-1996 Michigan Recreation Plan; U.S. Fish and Wildlife Service, undated, Fisheries USA; U.S. Fish and Wildlife Service, 1990, North American Waterfowl Management Plan; National Park Service, 1982, The Nationwide Rivers Inventory. 85 enhancement measures, is consistent with these comprehensive plans. X. FINDING OF NO SIGNIFICANT IMPACT Implementing the protection and enhancement measures described in this EA would ensure that the environmental effects of continued project operation would be insignificant. Based on our independent analysis, issuance of a license for this project with our environmental recommendations would not constitute a major federal action significantly affecting the quality of the human environment. We conclude that no resources would experience significant adverse effects under the proposed action or any of the action alternatives considered in this EA. XI. LITERATURE CITED Alger County. 1995. Alger County Atlas/Plat Book. California Air Resources Board (CARB). 1994. California Air Quality Data. Summary of 1993 Air Quality Data Gaseous and Particulate Pollutants. Annual Summary. Vol. XXV. CUPPAD Regional Commission. 1993. Annual Overall Economic Development Program Report. June 1993. Department of Interior. 1994. Recommended Terms and Conditions Letter for the Au Train Project from Don Henne, Regional Environmental Officer to FERC. April 29, 1994. DieGuire, Laura. Michigan Department of Natural Resources. Personal communication with John Castleberry/CH2M HILL on March 3, 1995. Michigan Department of Natural Resources (MDNR). Michigan Administrative Code. Water Resources Commission General Rules, Part 4 Water Quality Standards; Adopted effective December 13, 1973; Amended effective January 18, 1985; November 29, 1986. Michigan Department of Natural Resources (MDNR). 1984. Fisheries Management Plan for Au Train River. MDNR District III Fisheries Division, Escanaba, Michigan. 9 pp. Michigan Department of Natural Resources (MDNR). 1991. 1991- 1996 Michigan Recreation Plan. 86 Michigan Department of Natural Resources (MDNR). 1991. Escanaba River State Forest Comprehensive Resource Management Plan. December 1991. Michigan Department of Natural Resources. 1994. Recommended Terms and Conditions Letter for the Au Train Project from James G. Truchan, MDNR FERC Program Manager, Fisheries Division. May 3, 1994. Michigan State Historic Preservation Office (Michigan SHPO). 1992. Letter from K. Eckert, Michigan State Preservation Officer, to H. Copeland, Stone & Webster Michigan, Inc. February 21, 1992. Mid-America Interconnected Network, Inc. (MAIN). 1994. Regional Reliability Council Coordinated Bulk Power Supply Program. Department of Energy Code OE-411. April 1, 1994. Patrick E. Martin Archaeological Consulting. 1991. Au Train Hydroelectric Project: Historic and Archaeological Overview. Final Report. November 1991. Rand McNally. 1995. Road Atlas. Sanchez, Lynda. MDNR, Land and Water Management Division. 1995. Letter from Lynda Sanchez to Ken MacDonald/CH2M HILL confirming that the Au Train Hydroelectric Project is not within the jurisdiction of the Coastal Zone Management Act. September 25, 1995. Upper Peninsula Power Company (UPPCo). 1993a. Application for Initial License, Minor Project - Existing Dam, Au Train Hydro- electric Project, FERC Project No. 10856. April 1993. Upper Peninsula Power Company (UPPCo). 1993b. Application for Initial License, Minor Project - Existing Dam, Au Train Hydroelectric Project, FERC Project No. 10856. Response to Additional Information Request. November 1993. Upper Peninsula Power Company (UPPCo). 1994a. Comments on the Scoping Document, Au Train Hydroelectric Project, FERC Project No. 10856, Upper Peninsula Power Company. August 30, 1994. Upper Peninsula Power Company (UPPCo). 1994b. Responses to Recommended License Conditions, Au Train Hydroelectric Project, FERC Project No. 10856, Upper Peninsula Power Company. July 5, 1994. U.S. Department of Agriculture, Forest Service (USFS). 1986. Final Environmental Impact Statement, Land and Resource Management Plan, Hiawatha National Forest. 87 U.S. Forest Service. 1994. Comments on the Application for Initial License for Au Train Minor Project, letter from William Spinner, Forest Supervisor. April 28, 1994. XII. LIST OF PREPARERS Federal Energy Regulatory Commission Staff John Blair, Task Monitor (Land Use Planning/Parks and Recreation, B.B.A., Industrial Management; M.S., Park and Recreation Administration; 27 years' experience). CH2M HILL Staff Earl Byron, Water Resources (Water Quality Biologist; Ph.D. Ecology and Limnology; B.A. Biology; 15 years' experience). Jack Dingledine, Vegetation Resources and Wildlife Resources (Applied Ecologist; M.S. Wildlife Ecology; B.A. Biology; 11 years' experience). Wendy Haydon, Assistant Project Manager (Environmental Planner; M.S. Recreation Administration; B.A. Environmental Studies; 8 years' experience). Ken MacDonald, Project Manager (Senior Environmental Scientist; M.B.A.; B.A. Biological Sciences; 10 years' professional experience). Roger Mann, Socioeconomics, Economics (Economist; Ph.D. Agricultural Economics and Economics; M.S. Agricultural and Resource Economics; B.S. Resource Economics; 15 years' experience). Larry Martin, Deputy Project Manager (Environmental Planner, B.A., Urban Planning; 25 years' experience). Mark Mullins, Fisheries Resources (Fisheries Biologist; M.S. Fish and Wildlife Management; B.S. Biology; 4 years' experience). Forrest Olson, Fisheries Resources (Fisheries Biologist; M.S. Fisheries Science; B.S. Food Science; 15 years' experience). Paul Otter, Economics (Civil Engineer, B.S., Civil Engineering; 34 years' experience). Marie Strum, Water Resources (Water Resources Engineer, B.S. Civil Engineering; M.S. Environmental Systems Engineering; 9 years' experience). 88 Christine Washburn, Aesthetic Resources, Recreation Resources and Land Use Resources (Environmental Planner, M.U.P. Urban Planning; 10 years' experience). 89