2010-27046. Conditional Commitment for a Federal Loan Guarantee for Project Financing for Southwest Intertie Project-South

AGENCY:

U.S. Department of Energy, Loan Programs Office.

ACTION:

Record of decision.

SUMMARY:

The U.S. Department of Energy (DOE) has decided to offer Great Basin Transmission, LLC (Great Basin), a conditional commitment for a Federal loan guarantee for partial financing of the 235-mile southern portion of the Southwest Intertie Project (SWIP), a proposed 500-kilovolt (kV) transmission line that would extend from southern Nevada to southern Idaho. This Record of Decision (ROD) is based on the analysis in the Final Environmental Impact Statement for Project Financing for Southwest Intertie Project—South (SWIP South) (DOE/EIS-0443, January 2010) (DOE FEIS). The DOE FEIS consists of a cover sheet for the January 2010 adoption of the Bureau of Land Management (BLM) 1993 Southwest Intertie Project Environmental Impact Statement and Proposed Plan Amendment (SWIP EIS) and the BLM 2008 Environmental Assessment for the Southwest Intertie Project Southern Portion NV-040-07-048 (SWIP South EA). This ROD also reflects minor modifications to the Great Basin proposal and new information developed since DOE issued its FEIS.

DOE's offer of a conditional commitment for a loan guarantee for SWIP South is authorized under Title XVII of the Energy Policy Act of 2005, as amended by Section 406 of the American Recovery and Reinvestment Act of 2009 (Recovery Act). This conditional commitment to provide a Federal loan guarantee is contingent upon Great Basin satisfying all precedent funding obligations, and all other contractual, statutory, regulatory, environmental compliance, and other requirements specified by DOE. DOE has prepared this ROD in accordance with the Council on Environmental Quality regulations (40 CFR Parts 1500-1508) for implementing the National Environmental Policy Act (NEPA), and DOE's NEPA Implementing Procedures (10 CFR Part 1021).

FOR FURTHER INFORMATION CONTACT:

For further information about DOE's decision, contact Carol Hammel-Smith, NEPA Document Manager, Environmental Compliance Division, Loan Programs Office at [e-mail]. Ms. Hammel-Smith can be reached by mail at the U.S. Department of Energy, 1000 Independence Avenue, SW., LP-10, Washington, DC 20585. For information on the DOE NEPA process, contact Carol Borgstrom, Director, Office of NEPA Policy and Compliance, at [phone] or [phone], or by facsimile at [phone]. Ms. Borgstrom can be reached by mail at the U.S. Department of Energy, 1000 Independence Avenue, SW., GC-54, Washington, DC 20585.

SUPPLEMENTARY INFORMATION:

Project Background

SWIP South would begin at the existing Harry Allen Substation, located in Dry Lake, Nevada, approximately 20 miles northeast of Las Vegas, Nevada, and would run north to the proposed Thirtymile Substation, located approximately 18 miles northwest of Ely, Nevada, where it would interconnect with Sierra Pacific Power Company's existing Falcon-Gonder 345-kV transmission line. The SWIP South would traverse approximately 235 miles through parts of White Pine, Nye, Lincoln, and Clark counties in Nevada, and would consist of self-supporting and guyed structures placed approximately 1,200 to 1,500 feet apart. Because of its location SWIP South could be a vital link for distributing power from renewable energy sources to adjacent states that have adopted specific renewable energy standards. The SWIP South would have the potential to provide up to 600 megawatts of renewable energy-derived electricity to fulfill renewable energy standards.

The proposed project seeking a DOE loan guarantee also includes two elements related to the Falcon-Gonder transmission line: The Falcon Substation Upgrades and a Backup Communications System. Falcon Substation is an existing 345-kV switchyard owned by NV Energy (NVE) and located in Boulder Valley approximately 40 miles northeast of Battle Mountain, Nevada. SWIP South would connect to the Falcon-Gonder transmission line at the proposed Thirtymile Substation. The addition of the SWIP South line necessitates upgrades to NVE's Falcon Substation to improve the existing grid system's stability. The equipment included in the upgrade would consist of a 345-kV fixed and/or series capacitor bank and other facilities as required for system stability mitigation. Access to Falcon Substation during construction and operation of the expanded facility would be provided via existing access roads.

The Backup Communications System includes a communications network consisting of 16 microwave towers (on expanded existing sites and new sites) that would provide additional operational control to the primary fiber optic communications technology. The proposed communications towers would range in height from 80 feet to 300 feet. For each proposed site, the approximate area required would be up to 200 feet by 150 feet (0.7 acre), including ancillary support equipment and a small buffer area surrounding the site. Eight of the sites would require new graded access roads and/or power distribution lines.

Purpose and Need for Agency Action

Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511-16514), as amended by Section 406 of the Recovery Act, authorizes DOE to issue loan guarantees in support of debt financing for transmission infrastructure investment projects located in the United States. Title XVII as amended authorizes a new program for rapid deployment of renewable energy and electric power transmission projects (the Section 1705 Program). Section 1705 authorizes loan guarantees for “electric power transmission projects, including upgrading and reconductoring projects” that commence construction no later than September 30, 2011.

DOE's Proposed Action

DOE's proposed action is to offer Great Basin a conditional commitment for a Federal loan guarantee for partial financing of Great Basin's interest in SWIP South. Great Basin submitted an application to DOE to obtain a loan guarantee for financing Great Basin's interest in SWIP South—75% ownership interest in the SWIP South segment. The DOE loan guarantee would apply to no more than 80% of that share and other associated eligible costs. The balance of SWIP South—25% ownership interest—would be acquired by NVE and financed separately. The NVE subsidiaries with ownership in the 25% interest would include Nevada Power Corporation and Sierra Pacific Power Corporation.

NEPA Review

In July 1993, BLM completed the SWIP EIS in cooperation with the U.S. Forest Service, Bureau of Reclamation, National Park Service, and Bureau of Indian Affairs. The SWIP EIS analyzed the environmental impacts that would be associated with construction and operation of SWIP South and SWIP North, and addressed public comment. The environmental mitigation measures for SWIP South and SWIP North were specified in the ROD issued by BLM on December 14, 1994 (59 FR 30678), herein referred to as the BLM ROD. In 2008, BLM prepared the SWIP South EA to consider the impacts of amending the previously approved Right-of-Way (ROW) Grants to include a 4-mile extension on the southern end of SWIP South to allow interconnection with the existing Harry Allen Substation. The amendment included a shift in the location on the northern end of less than one mile to allow connection to the newly proposed Thirtymile Substation and to the existing Falcon-Gonder 345-kV transmission line. The SWIP South EA also provided an update on the key resource areas and impacts from the 1993 SWIP EIS. BLM issued a Finding of No Significant Impact (FONSI) on the SWIP South EA in July 2008.

In accordance with 40 CFR 1506.3, DOE, through its Western Area Power Administration (Western), on January 19, 2010, adopted the BLM's 1993 SWIP EIS or 2008 SWIP South EA to meet its NEPA obligations related to a proposal to finance part of SWIP South. The notice of adoption was published by the Environmental Protection Agency on February 19, 2010 (75 FR 7479). Western did not recirculate the SWIP EIS or SWIP South EA as a draft DOE EIS because the actions covered by the original SWIP EIS and SWIP South EA were substantially the same as those proposed by Western. Although Western has decided not to pursue its proposed financial assistance, DOE has decided to conditionally support SWIP South through DOE's Loan Guarantee Program.

BLM evaluated the Falcon Substation Upgrades described above as part of NVE's proposed One Nevada Line (ON Line) project, a transmission line similar to the SWIP South in design and geographic scope. BLM's evaluation, the Draft Supplemental Environmental Impact Statement for the ON Line Project, herein referred to as ON Line DSEIS (BLMNV/EL/EIS-GI-10/01+1793; DES 09-50), was published on November 20, 2009, and provides detailed information on the environmental effects of the Falcon Substation Upgrades. None of the 19 comment letters received concern the Falcon Substation Upgrades; therefore no changes are expected with respect to the Falcon Substation Upgrades when BLM issues the final SEIS.

The NVE microwave system upgrades were evaluated by BLM in the Environmental Assessment—NV Energy Microwave and Mobile Radio Project, herein referred to as the Microwave EA, (DOI-BLM-NV-L 020-2009-0024-EA), published on August 27, 2010. BLM simultaneously issued a Finding of No Significant Impact (FONSI) and Decision Record (BLM N-84551-84563; N-85487 and DOI-BLM-NV-L000-2009-0024 EA, respectively) based on the environmental effects evaluated and disclosed in the Microwave EA. The Microwave EA evaluated 14 of the 16 communication sites proposed by Great Basin. Two locations on private land were not evaluated since BLM's ROW grant will not be applicable to those sites. DOE has evaluated these sites, as discussed below.

Environmental Impacts of the Falcon Substation Upgrades and the Backup Communications System

This section describes the potential environmental impacts of the Falcon Substation Upgrades and the Backup Communications System. This discussion is based on the ON Line DSEIS and the Microwave EA.

DOE evaluated the environmental impacts of the Falcon Substation Upgrades that were analyzed by BLM in the ON Line DSEIS. Chapters 3 and 4 identify minor environmental effects to air emissions (mitigatable through gravelling) and housing in Eureka or Elko Counties (during construction); low potential for encountering paleontological resources; and no adverse impacts to other resources.

DOE also evaluated the impacts of the Backup Communications System as analyzed in the Microwave EA, and found that impacts would be small or not adverse with adoption of mitigation measures and best management practices.

A migratory bird survey would be required prior to any disturbance during migratory bird breeding and nesting seasons; monitoring/reporting would be implemented. DOE also evaluated the two proposed communications sites on private land that were not analyzed in the BLM Microwave EA. Due to their location at existing facilities with access roads and power, the impacts of constructing and operating these new communications towers would be low. Both sites include pre-disturbed vegetation and wildlife habitat, and low potential for impacts to cultural resources due to hilltop locations.

The environmental impacts associated with the NVE communications system expansion, including the sites to be located on BLM land and on private land, would be brief in duration and would be minor or would be minimized or offset by the mitigation measures required by BLM. Further, the equipment associated with the NVE communications system expansion is not substantially different from the project features previously evaluated in DOE's EIS. Further, these projects are covered by DOE's NEPA categorical exclusion B1.19 (Appendix B to Subpart D, 10 CFR Part 1021), which is applicable to siting, construction, and operation of microwave and radio communications towers and associated facilities.

Review of Comments Received on DOE's 2010 Adoption of the 1993 SWIP EIS and 2008 SWIP South EA

As part of its decision process, DOE considered comments received on the DOE FEIS. In addition, DOE reviewed BLM's 2007 “Documentation of Land Use Plan Conformity and NEPA Adequacy” for SWIP South; the BLM-approved Construction, Operation & Maintenance Plan for the SWIP-Southern Portion (August 2010); and the BLM-approved Biological Assessment (2007) and the Biological Opinion (2007 and as amended in 2010) for SWIP South.

DOE reviewed comments received on February 22, 2010, from the Western Watersheds Project (WWP) in response to DOE's January 2010 adoption. WWP's comment attached two comment letters that WWP had previously submitted to BLM on November 11, 2007, as well as WWP's October 10, 2008, response to BLM and the Intervenors in the Interior Board of Land Appeals (IBLA) (which ruled against WWP's appeal on November 12, 2008).

In its February 2010 communication to Western, WWP recommended that DOE deny funding for SWIP South and instead award to decentralized energy projects that would be accessed locally. DOE has determined that decentralized projects would not be eligible for loan guarantees under this loan solicitation since DOE was granted Recovery Act authority to provide funding for transmission projects, with priority to those that facilitate the delivery of renewable power. WWP's recommendation would not meet DOE's purpose and need for its loan guarantee action. WWP also raised concerns that the SWIP project could facilitate industrial development that could cause the destruction of sagebrush wild lands. DOE reviewed the 1994 SWIP EIS and the 2008 Interior Board of Land Appeals Westerm Watersheds Project v Bureau of Land Management and Great Basin Transmission, LLC (IBLA No.2008-252 addressing WWP's challenge to the 2008 BLM EA and FONSI for the SWIP-Southern Portion). DOE has determined that BLM adequately addressed potential development in the FEIS and that the 2008 appeals process established that there has not been sufficient change in anticipated cumulative impacts considered for the SWIP line to require a supplemental EIS. DOE also notes that other energy projects that might be located in sagebrush habitat on public lands would only be permitted if they have been reviewed under NEPA and are consistent with Federal law and policy.

WWP's comments included claims of segmentation of NEPA review for the SWIP project; failure to consider alternatives; and inadequate review of impacts associated with invasive weeds, the desert tortoise and sage grouse, soil erosion, off-highway vehicle use, wild horse management, global warming, and cumulative impacts.In evaluating WWP's claims, DOE reviewed and considered the relevant materials in the BLM administrative record for SWIP South and found that these issues had been adequately considered.

DOE reviewed the 19 comments that BLM received on its 2009 analyses addressing the Falcon Substation Upgrades and the Backup Communications System. None concern the Falcon Substation Upgrades, and therefore few changes are expected for the Final SEIS that BLM plans to issue at the end of October 2010. After a 30-day protest period, BLM expects to issue its ROD and ROW by December 2010.

DOE also reviewed four comment letters received on the Microwave EA. A 30-day comment period began on April 12, 2010, and closed on May 14, 2010. The State Historic Preservation Officer indicated completion of a Section 106 consultation for the Lower Spruce site; the Nevada Department of Wildlife recommended installing gates and anti-perching measures; the Southern Nevada Water Authority recommended construction coordination; and the Elk County Commissioners indicated support of the project. On August 27, 2010, BLM issued a FONSI for the Microwave EA.

Based on review of the documents pertaining to the IBLA review, DOE finds that the issues raised by WWP have been adequately addressed. Further, as a result of its review of the comments on the ON Line DSEIS and Microwave EA, DOE concludes that the comments do not present any significant new circumstances or information relevant to environmental concerns bearing on SWIP South, or associated potential environmental impacts.

Alternatives Considered

DOE considered two alternatives: The Proposed Action and No Action. Under the Proposed Action, DOE would offer Great Basin a conditional commitment to partially finance the proposed SWIP South transmission line. Under No Action, SWIP South most likely would not be built and the potential impacts discussed above and their related mitigation would not occur, nor would this transmission line be available to transmit power to meet the renewable energy standards in adjoining states.

Environmentally Preferred Alternative

The Proposed Action is the Environmentally Preferred Alternative for several reasons. First, the Proposed Action furthers the goals of Section 1705 of the Energy Policy Act of 2005 to promote the rapid deployment of renewable energy and electric power transmission projects that could reduce the generation of greenhouse gas and other air pollutants created by non-renewable, fossil-fuel generation sources.

Also, because neighboring states that could be serviced by SWIP South have renewable energy standards, SWIP South provides the capacity to deliver up to 600 megawatts of renewable energy-derived electricity to fulfill the requirements of these states. Specifically, Nevada is required to deliver 20% of its megawatt capacity generated by renewable energy sources by 2015; Arizona, 15% by 2025; California, 33% by 2030, and Colorado, 20% by 2020.

Consultation

A Section 106 review under the National Historic Preservation Act (NHPA) and Tribal consultation have been completed by BLM for the proposed SWIP South project. An NHPA Section 106 programmatic agreement was finalized during the DOE FEIS process, requiring that prior to construction, a preconstruction field survey and a mitigation plan be completed and approved. In July, 2010, the BLM submitted to the Nevada State Historic Preservation Office (SHPO) the Historic Properties Treatment Plans for SWIP South entitled: “Historic Properties Treatment Plan, Southwest Intertie Project, Southern Portion White Pine, Nye, Lincoln, and Clark Counties, Nevada, Volumes 1a-c (BLM Report Number 8111NG040-2009-1593d Volumes 1a-c).” The SHPO concurred with the BLM determination that the three submitted historic treatment plans, and BLM Archaeologist monitoring and consulting activities would be adequate treatment.

An Endangered Species Act (ESA) (16 U.S.C. 1536) Section 7 consultation was completed by BLM during the DOE FEIS NEPA process. The Service has issued four Biological Opinions for the proposed project: (1) May 1993; (2) March 1994, which included an analysis of potential effects to the desert tortoise and its designated critical habitat; (3) December 2007, which incorporated project realignments and the use of H-frames with perching deterrents within desert tortoise critical habitat; and (4) June and July 2010, which respectively amended the 2007 Biological Opinion to incorporate an additional tower design (tubular guyed-V tower) with perching deterrents, and modifications to include additional disturbance of desert tortoise habitat due to a minor calculation error.

Mitigation

DOE will require Great Basin to employ all practicable means to avoid or minimize environmental harm as a result of the proposed action. The loan guarantee agreement between DOE and Great Basin would require that Great Basin implement all project-specific environmental protection measures specified in the “Construction, Operation, and Maintenance Plan for the Southwest Intertie Project 500-kV Transmission Line; SWIP—Southern Portion; SWIP Central Portion (COM Plan),” and in the BLM Notice to Proceed, issued in August 2010. After the DOE loan guarantee is retired, enforcement of environmental protection will continue through the BLM ROW grant provisions for the life of the project.

The NEPA analysis completed in the DOE FEIS indicates that SWIP South would result in low environmental impacts after mitigation measures required for BLM's ROW are implemented. The mitigation measures are a condition of BLM issuance of the ROW that provides Great Basin access to construct, operate, and maintain SWIP South on BLM land. The BLM documents the conditions under which Great Basin must operate in the COM Plan approved by BLM in 2010. The COM Plan incorporates the mitigation measures required by the DOE FEIS, the 2010 Historic Properties Treatment Plan, and the 2010 Biological Opinion.

Decision

DOE has decided to offer Great Basin a conditional commitment for a Federal loan guarantee for partial financing of SWIP South. This decision is contingent on Great Basin satisfying all precedent funding obligations, and all other contractual, statutory, regulatory, environmental compliance, and other requirements specified by DOE.

In reaching this decision, DOE reviewed the SWIP NEPA documentation and considered the potential impacts of the selected alternative with implementation of the stipulated mitigation measures.

DOE has prepared this ROD in accordance with the Council on Environmental Quality regulations (40 CFR Parts 1500-1508) for implementing NEPA and DOE's NEPA Implementing Procedures (10 CFR Part 1021).

Basis for Decision

DOE has determined that the potential environmental impacts analyzed in the DOE FEIS will be minor after implementation of the mitigation provisions for the SWIP South BLM ROW. The mitigation measures will be reflected in the DOE Loan Guarantee Common Agreement, and will remain in the BLM COM Plan for the duration of the granted ROW.

DOE has also determined that potential environmental impacts associated with the Falcon Substation Upgrades and the Backup Communications System would not be adverse or can be characterized as minor. DOE has determined that no further analysis is required, and incorporates by reference the environmental analyses conducted on these project elements. Further, DOE has also considered the Congressional direction specified in Section 2003 of H.R. 4899, the 2010 Supplemental Appropriations Act, Public Law 111-212, effective on July 29, 2010 (the 2010 Supplemental Appropriations Act) in its decision to issue this ROD. The 2010 Supplemental Appropriations Act allows DOE to provide or facilitate Federal financing for SWIP under the American Recovery and Reinvestment Act of 2009 (Pub. L. 111-5; 123 Stat. 115), or the Energy Policy Act of 2005 (42 U.S.C. 15801 et seq.), based on the comprehensive reviews and consultations performed by BLM under the Secretary of the Interior.

Issued in Washington, DC, on October 18, 2010.

Jonathan M. Silver,

Executive Director, Loan Programs Office.