[Federal Register Volume 80, Number 99 (Friday, May 22, 2015)]
[Notices]
[Pages 29667-29695]
[FR Doc No: 2015-12463]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Project No. 3030-019]

Antrim County; Notice of Availability of Environmental Assessment

    In accordance with the National Environmental Policy Act of 1969
and the Federal Energy Regulatory Commission's (Commission or FERC)
regulations, 18 Code of Federal Regulations Part 380 (Order No. 486, 52
FR 47879), the Office of Energy Projects has reviewed Antrim County's
application for a subsequent license for the Elk Rapids Hydroelectric
Project (FERC No. 3030), located on the Elk

River in the Village of Elk Rapids in Antrim, Grand Traverse, and
Kalkaska Counties, Michigan, and prepared an environmental assessment
(EA).
    In the EA, Commission staff analyze the potential environmental
effects of relicensing the project, and conclude that issuing a
subsequent license for the project, with appropriate environmental
measures, would not constitute a major federal action significantly
affecting the quality of the human environment.
    A copy of the EA is available for review at the Commission in the
Public Reference Room or may be viewed on the Commission's Web site at
www.ferc.gov using the ``eLibrary'' link. Enter the docket number,
excluding the last three digits, in the docket number field to access
the document. For assistance, contact FERC Online Support at
<EMAIL_ADDRESS>or toll-free number at 1-866-208-3676, or
for TTY,<PHONE_NUMBER>.
    You may also register online at www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances
related to this or other pending projects. For assistance, contact FERC
Online Support.
    Any comments should be filed within 30 days from the date of this
notice. The Commission strongly encourages electronic filing. Please
file the requested information using the Commission's eFiling system at
http://www.ferc.gov/docs-filing/efiling.asp. For assistance, please
contact FERC Online Support at<EMAIL_ADDRESS>(866) 208-
3676 (toll free), or<PHONE_NUMBER> (TTY). In lieu of electronic
filing, please send a paper copy to: Secretary, Federal Energy
Regulatory Commission, 888 First Street NE., Washington, DC 20426. The
first page of any filing should include docket number P-3030-019.
    For further information, please contact Patrick Ely by telephone at
(202) 502-8570 or by email at<EMAIL_ADDRESS>
    Dated: May 15, 2015.
Kimberly D. Bose,
Secretary.

Environmental Assessment for Hydropower License

Elk Rapids Hydroelectric Project, FERC Project No. 3030-019, Michigan

Federal Energy Regulatory Commission, Office of Energy Projects,
Division of Hydropower Licensing, 888 First Street NE., Washington, DC
20426

May 2015

Table of Contents

TABLE OF CONTENTS
LIST OF TABLES
ACRONYMS AND ABBREVIATIONS
EXECUTIVE SUMMARY
1.0 INTRODUCTION
    1.1 APPLICATION
    1.2 PURPOSE OF ACTION AND NEED FOR POWER
        1.2.1 Purpose of Action
        1.2.2 Need for Power
    1.2 STATUTORY AND REGULATORY REQUIREMENTS
        1.2.1 Federal Power Act
        1.2.2 Clean Water Act
        1.2.3 Endangered Species Act
        1.2.4 Coastal Zone Management Act
        1.2.5 National Historic Preservation Act
    1.3 PUBLIC REVIEW AND COMMENT
        1.3.1 Scoping
        1.3.2 Interventions
        1.3.3 Comments on the Application
2.0 PROPOSED ACTION AND ALTERNATIVES
    2.1 NO-ACTION ALTERNATIVE
        2.1.1 Existing Project Facilities
        2.1.2 Project Safety
        2.1.3 Existing Project Operation
    2.2 APPLICANT'S PROPOSAL
        2.2.1 Proposed Project Facilities
        2.2.2 Proposed Project Operation
        2.2.3 Proposed Environmental Measures
    2.3 STAFF ALTERNATIVE
    2.4 ALTERNATIVES CONSIDERED BUT ELIMINATED FROM DETAILED STUDY
        2.4.1 Issuing a Non-power License
        2.4.2 Federal Government Takeover of the Project
        2.4.3 Retiring the Project
3.0 ENVIRONMENTAL ANALYSIS
    3.1 GENERAL DESCRIPTION OF THE RIVER BASIN
    3.2 SCOPE OF CUMULATIVE EFFECTS ANALYSIS
    3.3 PROPOSED ACTION AND ACTION ALTERNATIVES
        3.3.1 Aquatic Resources
        3.3.2 Terrestrial Resources
        3.3.3 Threatened and Endangered Species
        3.3.4 Recreation, Land Use, and Aesthetic Resources
        3.3.5 Cultural Resources
    3.4 NO-ACTION ALTERNATIVE
4.0 DEVELOPMENTAL ANALYSIS
    4.1 POWER AND ECONOMIC BENEFITS OF THE PROJECT
    4.2 COMPARISON OF ALTERNATIVES
        4.2.1 No-Action Alternative
        4.2.2 Applicant's Proposal
        4.2.3 Staff Alternative
    4.3 COST OF ENVIRONMENTAL MEASURES

5.0 CONCLUSIONS AND RECOMMENDATIONS
    5.1 COMPREHENSIVE DEVELOPMENT AND RECOMMENDED ALTERNATIVE
        5.1.1 Measures Proposed by Antrim County
        5.1.2 Additional Measures Recommended by Staff
        5.1.3 Measures Not Recommended by Staff
        5.1.4 Conclusion
6.0 CONSISTENCY WITH COMPREHENSIVE PLANS
7.0 FINDING OF NO SIGNIFICANT IMPACT
8.0 LITERATURE CITED
9.0 LIST OF PREPARERS

List of Figures

Figure 1. Location of the Elk Rapids Hydroelectric Project, Michigan
 (Source: Antrim County, 2012; as modified by staff) 1043
Figure 2. Project facilities for the Elk Rapids Project (Source: Antrim
 County, 2012) 1049
Figure 3. Elk Rapids Project vicinity and direction of water flow
 through the chain-of-lakes (Source: Antrim County, 2012; as modified by
 staff) 1056
Figure 4. Public access sites around the Elk Rapids Project reservoir
 (Source: Antrim County, 2012; as modified by staff) 1080
Figure 5. Recreation facilities in the Elk Rapids Project boundary
 (Source: Antrim County, 2012) 1080

List of Tables

Table 1. Calculated monthly flows at the Elk Rapids Project intake from
 2001-2011. (Source: Michigan DNR, 2011; Antrim County, 2011; as
 modified by staff) 1060
Table 2. NPDES Permits within the Elk Rapids Project Vicinity [Source:
 U.S. Environmental Protection Agency (EPA), 2012a] 1061
Table 3. EPA and State of Michigan attainment goals at the Elk Rapids
 Project reservoir for Cold Water Fishery, Agriculture, Public Water
 Supply, and Navigation. (Source: Staff) 1062
Table 4. Summary of state water quality standards for DO and water
 temperature applicable to the Elk Rapids Project boundary (Source:
 State of Michigan, 1994, as modified by staff) 1062
Table 5. Public Water Access Sites at the Elk Rapids Project. (Source:
 Staff) 1076
Table 6. Parameters for the economic analysis of the Elk Rapids Project
 (Source: Antrim County, 2012; as modified by staff) 1085
Table 7. Summary of annual cost of alternative power and annual project
 cost for the action alternatives for the Elk Rapids Project (Source:
 Antrim County, 2012; as modified by staff) 1086
Table 8. Cost of environmental mitigation and enhancement measures
 considered in assessing the environmental effects of continued
 operation of the Elk Rapids Project (Source: Staff) 1088

Acronyms and Abbreviations

APE area of potential effects
cfs cubic feet per second
chain-of-lakes Elk River Chain of Lakes
Commission Federal Energy Regulatory Commission
Consumers Energy Consumers Energy Company
CWA Clean Water Act
CZMA Coastal Zone Management Act
dam gage datum Elk Rapids dam gage datum
DO dissolved oxygen
EA environmental assessment
Elk Rapids Hydro Elk Rapids Hydroelectric Power, LLC
Elk Rapids Project or project Elk Rapids Hydroelectric Project
EPA U.S. Environmental Protection Agency
ESA Endangered Species Act
[deg]F degrees Fahrenheit
FERC Federal Energy Regulatory Commission
FPA Federal Power Act
FWS U.S. Fish and Wildlife Service
Interior U.S. Department of Interior
Lakes Association Three Lakes Association
mg/l milligrams per liter
Michigan DEQ Michigan Department of Environmental Quality
Michigan DNR Michigan Department of Natural Resources
Michigan SHPO Michigan State Historic Preservation Officer
MISO Midcontinent Independent System Operator, Inc.
MiSWIMS Michigan Surface Water Information Management System
MW megawatt
MWh megawatt-hour
National Register National Register of Historic Places
NERC North American Electric Reliability Corporation
NHPA National Historic Preservation Act
NPDES National Pollution Discharge Elimination System
RFC ReliabilityFirst Corporation
USGS United States Geological Survey
Watershed Council Tipp of the Mitt Watershed Council
WQC Water Quality Certification

EXECUTIVE SUMMARY

Proposed Action

    On December 21, 2012, Antrim County filed an application with the
Federal Energy Regulatory Commission (Commission) for a new license for
the continued operation and maintenance its Elk Rapids Hydroelectric
Project No. 3030-019 (Elk Rapids Project or project).\1\ The 0.700
megawatt (MW) project is located on the Elk River in the Village of Elk
Rapids in Antrim, Grand Traverse, and Kalkaska Counties, Michigan.
Antrim County does not propose any increase in the project's generating
capacity or any new construction. The project does not occupy any
federal land.
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    \1\ The project is owned by Antrim County and is manually
operated by Elk Rapids Hydroelectric Power, LLC.
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Project Description

    The Elk Rapids Project consists of the following existing
facilities: (1) A reservoir that includes the 2,560-acre Skegemog Lake
and the 7,730-acre Elk Lake; (2) a 121-foot-long, 52-foot-high, 26-
foot-wide powerhouse that spans the north channel of the Elk River,
with an approximate operating head of 10.5 feet; (3) intake trashracks
having a 1.75-inch clear bar spacing; (4) four intake bays, each 22
feet wide with sliding head gates; (5) two 525 horsepower Francis
turbines, each coupled to a generator with an installed capacity of
0.350 MW, for a total installed capacity of 0.700 MW; (6) two turbine
gate cases used to spill excess water through the two intake bays that
do not contain turbines and generators; (7) a 14-foot-wide overflow
spillway located about 400 feet south of the powerhouse on the south
channel of the Elk River; (8) a 4.16-kilovolt (kV) transmission line
that extends about 30 feet from the powerhouse to a 20-foot by 30-foot
substation enclosure; (9) a 50-foot-long underground 12.5-kV
transmission line;

and (10) appurtenant facilities. Recreation facilities at the project
include an angler walkway that is attached to the tailrace side of the
powerhouse and a parking lot adjacent to the powerhouse. The average
annual generation is about 2,422 megawatt-hours.
    Antrim County operates the project in a modified run-of-river
mode.\2\ The water surface elevation of the project reservoir (measured
as Elk Rapids dam gage datum (dam gage datum) is maintained at 590.8
feet dam gage datum from April 15 through November 1 and at 590.2 feet
dam gage datum from November 1 through April 15.\3\ Flows greater than
the capacities of the project's two operating turbine/generator units
are passed through one or both of the two overflow turbine gate cases.
When flows in the Elk River are too low to operate one turbine/
generator unit, the overflow turbine gate case is used with decreased
gate openings to maintain a modified run-of-river mode of operation.
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    \2\ The project is operated in a modified run-of-river mode,
whereby the flows through the powerhouse and bypassed spillway
approximately equals inflow of the Elk River, but are modified so as
to maintain the seasonal water levels of Elk and Skegemog Lakes, as
required by the order approving settlement and amending license. See
88 FERC ] 62, 158 (1999).
    \3\ The elevations 590.80 and 590.20 feet dam gage datum are
equivalent to 588.26 and 587.66 feet International Great Lakes Datum
of 1955, respectively.
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Proposed Environmental Measures

    Antrim County proposes to continue operating the project in a
modified run-of-river mode to maintain existing seasonal lake levels.
Antrim County also proposes to continue to operate and maintain the
existing angler walkway and associated parking lot. No other
environmental measures are proposed.

Public Involvement

    Before filing its license application, Antrim County conducted pre-
filing consultation under the Commission's Traditional Licensing
Process. The intent of the Commission's pre-filing process is to
initiate public involvement early in the project planning process and
to encourage citizens, governmental entities, tribes, and other
interested parties to identify and resolve issues prior to an
application being formally filed with the Commission.
    Before preparing this environmental assessment (EA), staff
conducted scoping to determine what issues and alternatives should be
addressed. A scoping document was distributed to interested parties on
August 29, 2013, which solicited comments, recommendations, and
information on the project. Two scoping meetings were held on September
19, 2013, in Elk Rapids, Michigan. On December 26, 2013, staff issued a
ready for environmental analysis notice, requesting comments,
recommendations, terms and conditions, and prescriptions.

Alternatives Considered

    This EA considers the following alternatives: (1) Antrim County's
proposal; (2) Antrim County's proposal with staff modifications (staff
alternative); and (3) no action, meaning the project would continue to
be operated as it presently with no changes. The staff alternative
includes Antrim County's proposed measures with some additions as
described below. Staff's recommended additional environmental measures
include, or are based on, recommendations made by federal and state
resource agencies that have an interest in resources that may be
affected by operation of the proposed project.
    The staff alternative includes the following additional measures:
    (1) An operation compliance monitoring plan that includes a
description of project operation and the equipment and procedures
necessary to maintain and monitor compliance with the operational mode
required in any license issued;
    (2) posting signage that describes proper boat maintenance
techniques to reduce the spread of invasive plant and mussel species;
and
    (3) if archaeological resources are discovered during project
operation or other project-related activities, cease all activities
related to the disturbance and discovery area, and consult with the
Michigan State Historic Preservation Officer (Michigan SHPO) to
determine appropriate treatment.
    Under the no-action alternative, the project would continue to
operate and the terms of the existing license. No new environmental
protection, mitigation, or enhancement measures would be implemented.

Environmental Impacts and Measures of the Staff Alternative

    The primary issue associated with relicensing the Elk Rapids
Project is the regulation of the reservoir elevation, invasive species,
and recreational opportunities. Below we summarize the environmental
effects associated with staff's alternative and the measures
recommended to address those effects.
Aquatic Resources
    Operating the project in a modified run-of-river mode would enable
the project to continue to maintain seasonal lake levels in Elk and
Skegemong Lakes. Because the project currently operates in a modified
run-of-river mode, minimal changes to aquatic habitat are expected in
the reservoir, bypassed reach, and within the project tailrace by
continuing this mode of operation.
    An operation compliance monitoring plan that includes a description
of project operation and the equipment and procedures that would be
used by Antrim County to monitor project operation would provide a
means to verify compliance with the operational requirements of any
license issued for the project. Verifying compliance would, in turn,
prevent possible misunderstandings of project operation and reduce the
likelihood of noncompliance.
    Invasive curlyleaf pondweed, Eurasian watermilifoil, and zebra
mussels, which are all primarily transferred to other waterbodies by
boat, are found within and adjacent to the project boundary and are
present in the Elk River Chain of Lakes (chain-of-lakes) watershed.\4\
Zebra mussels are so pervasive throughout the chain-of-lakes, Michigan
DEQ has no plan to control or eradicate the in the chain-of-lakes
watershed. Posting signage that describes proper boat maintenance
techniques to reduce the spread of curlyleaf pondweed, Eurasian
watermilifoil, and zebra mussels would limit the spread of these
invasive species to other waterbodies, benefiting native species.
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    \4\ The chain-of-lakes watershed is a 75-mile-long waterway
consisting of 14 lakes (including Elk and Skegemog Lakes) and
connecting rivers that discharge to empty into Grand Traverse Bay,
Lake Michigan.
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Terrestrial Resources
    Current project operation and the presence of the project
powerhouse have been successful in preventing invasive fish species in
Lake Michigan from passing upstream of project into the chain-of-lakes.
Antrim County's proposal to continue current project operation would
ensure that invasive fish species are blocked from passing upstream of
the powerhouse.
Threatened and Endangered Species
    Kirtland's warbler, Rufa red knot, Pitcher's thistle, Houghton's
goldenrod, and northern long-eared bat are known to occur in Antrim,
Grand Traverse, and/or Kalkaska Counties, Michigan; however, no
federally listed threatened

or endangered species are known to occur within the project affected
area. Continued operation of the project would not affect the federally
listed Kirtland's warbler, Rufa red knot, Pitcher's thistle, and
Houghton's goldenrod because each species requires specialized habitat
that does not exist within the project boundary or in areas potentially
affected by the project.
    Continued operation of the project would not affect the federally
listed northern long-eared bat. The project is located in an area that
does not contain habitat needed for winter hibernation. Also, although
a limited amount of dispersed riparian and wetland habitat in the
project boundary could be used by northern long-eared bats for
roosting, foraging, and breeding, this habitat would not be affected
because there would be no changes to project operation, no new
construction, and there would be no changes to seasonal water levels.
Also, any maintenance activities would be restricted to areas around
the powerhouse and transmission lines, which do not contain habitat for
the northern long-ear bat.
Recreation, Land Use, and Aesthetics
    There are 38 public access points and three marinas around the
project reservoir or downstream of the project. In addition, Antrim
County owns and operates an existing angler walkway and parking lot.
Antrim County proposes to continue to operate and maintain the existing
angler walkway and parking lot, and does not propose any changes to
current project operation. The project would have no effect on existing
recreational use because there would be no change in existing lake
levels, recreational opportunities, or access.
Cultural Resources
    The project would not affect any known properties eligible for, or
listed on, the National Register of Historic Places. However, there is
a possibility that unknown archaeological resources may be discovered
during project operation or project-related activities. To ensure
proper treatment of any such unknown archaeological resources that may
be discovered, Antrim County would cease all land-disturbing activities
and notify the Michigan SHPO of any unknown archaeological resources
that are discovered, and follow the Michigan SHPO's guidance regarding
the evaluation of the archaeological resource and, if necessary, ways
to avoid, lessen, or mitigate for any adverse effects.

Conclusions

    Based on our analysis, we recommend licensing the project as
proposed by Antrim County, with staff modifications and additional
measures.
    In section 4.2 of the EA, Comparison of Alternatives, we estimate
the likely cost of alternative power for each of the alternatives
identified above. Our analysis shows that during the first year of
operation under the no-action alternative, project power would cost
$50,378, or $20.80/megawatt hour (MWh), more than the likely
alternative cost of power. Under Antrim County's proposal, project
power would cost $50,644, or $20.91/MWh, more than the likely
alternative cost of power. Under the staff alternative, project power
would cost $51,346, or $21.20/MWh, more than the likely alternative
cost of power.
    Based on our independent review of agency comments filed on this
project and our review of the environmental and economic effects of the
proposed project and its alternatives, we selected the staff
alternative, as the preferred option. The staff alternative includes
the applicant's proposal with additional staff-recommended measures.
    We chose the staff alternative as the preferred alternative
because: (1) The project would continue to provide a dependable source
of electrical energy for the local area; (2) the 0.700 MW of electric
capacity comes from a renewable resource that does not contribute to
atmospheric pollution, including greenhouse gases; and (3) the
environmental measures proposed by Antrim County, as modified by staff,
would adequately protect and enhance environmental resources affected
by the project. The overall benefits of the staff alternative would be
worth the cost of the recommended environmental measures.
    We conclude that issuing a subsequent license for the project, with
the environmental measures we recommend, would not be a major federal
action significantly affecting the quality of the human environment.

Environmental Assessment

Federal Energy Regulatory Commission, Office of Energy Projects,
Division of Hydropower Licensing, Washington, DC

Elk Rapids Hydroelectric Project, FERC Project No. 3030-019--Michigan

1.0 INTRODUCTION

1.1 APPLICATION

    On December 21, 2012, Antrim County (or applicant) filed an
application with the Federal Energy Regulatory Commission (Commission)
for a subsequent license for the existing Elk Rapids Hydroelectric
Project (Elk Rapids Project or project).\5\ The 0.700 megawatt (MW)
project is located on the Elk River in the Village of Elk Rapids in
Antrim, Grand Traverse, and Kalkaska Counties, Michigan (figure 1). The
project does not occupy any federal lands. The project generates an
average of about 2,422 megawatt-hours (MWh) of energy annually. Antrim
County is not proposing any change in operation, new construction, or
new generating capacity.
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    \5\ The project is owned by Antrim County and is manually
operated by Elk Rapids Hydroelectric Power, LLC (Elk Rapids Hydro).
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1.2 PURPOSE OF ACTION AND NEED FOR POWER

1.2.1 Purpose of Action
    The purpose of the Elk Rapids Project is to continue to provide a
source of hydroelectric power to meet the region's power needs.
Therefore, under the provisions of the Federal Power Act (FPA), the
Commission must decide whether to issue a license to Antrim County for
the Elk Rapids Project and what conditions should be placed on any
license issued. In deciding whether to issue a license for a
hydroelectric project, the Commission must determine that the project
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 (such as flood control,
irrigation, or water supply), the Commission must give equal
consideration to the purposes of: (1) Energy conservation; (2) the
protection of, mitigation of damage to, and enhancement of fish and
wildlife resources; (3) the protection of recreational opportunities;
and (4) the preservation of other aspects of environmental quality.
    Issuing a subsequent license for the project would allow Antrim
County to generate electricity at the project for the term of a
subsequent license, making electric power from a renewable resource
available for sale to Consumers Energy Company (Consumers Energy).
    In this environmental assessment (EA), we assess the environmental
and economic effects of continuing to operate the project: (1) As
proposed by Antrim County; and (2) with staff's recommended measures
(staff alternative). We also consider the effects of the no-action
alternative. Important issues that are addressed include the project's
effects on aquatic, terrestrial, threatened and endangered species, and
recreation resources.

1.2.2 Need for Power
    The Elk Rapids Project would provide hydroelectric generation to
meet part of the region's power requirements, resource diversity, and
capacity needs. The project would have an installed capacity of 0.700
MW and generate approximately 2,422 MWh per year.
    The North American Electric Reliability Corporation (NERC) annually
forecasts electrical supply and demand nationally and regionally for a
10-year period. The Elk Rapids Project is located in the
ReliabilityFirst Corporation (RFC) regional entity of NERC. However,
the NERC assessment was performed on the Midcontinent Independent
System Operator, Inc. (MISO) area although the Elk Rapids Project
belongs to the RFC regional entity. These assessment boundaries were
intended to more accurately reflect the planning and operational
properties of the bulk power system. MISO anticipates a system-wide
growth rate of approximately 0.72 percent, causing Total Internal
Demands of 96,879 MW and 103,056 MW in 2014 and 2023, respectively. The
MISO summer Adjusted Potential Planning Reserve Margin \6\ is
forecasted to range from 24.55 percent in 2014 to 20.28 percent in
2023. The MISO winter Adjusted Potential Planning Reserve Margin is
forecasted to range from 50.81 percent in 2014/2015 to 44.70 percent in
2023/2024. Throughout the assessment period, neither the summer nor the
winter Adjusted Planning Potential Reserve Margins are forecasted to
fall below the Reference Margin Level of 14.20 percent. However, the
MISO summer Anticipated Planning Reserve Margin is forecasted to range
from 18.28 percent in 2014 to 3.44 percent in 2023. The MISO winter
Anticipated Planning Reserve Margin is forecasted to range from 43.22
percent in 2014/2015 to 24.44 percent in 2023/2024. Based on MISO's
current awareness of projected retirements and the resource plans of
its membership, Planning Reserve Margins would erode over the course of
the next couple of years and would not meet the 14.2 percent Reference
Margin Level. The impacts of environmental regulations and economic
factors contribute to a potential shortfall of 6,750 MW, or a 7.0
percent Anticipated Planning Reserve Margin (7.2 percentage points
below the Reference Margin Level) by summer 2016. Accordingly,
Existing-Certain resources are projected to be reduced by 10,382 MW
because of retirement and suspended operation. At a 7.0 percent
Anticipated Reserve Margin in 2016, MISO does not have enough Planning
Resources to effectively manage risk associated with load uncertainty
and system outages and has an 87.0 percent chance of shedding firm load
on 2016 peak (NERC, 2013).
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    \6\ Planning Reserve Margin is approximately equivalent to the
following: [(Capacity minus demand) divided by demand]. Planning
Reserve Margin replaced Capacity Margin for NERC assessments in
2009.
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    We conclude that power from the Elk Rapids Project would help meet
a need for power in the MISO area in both the short and long-term. The
project provides low-cost power that displaces generation from non-
renewable sources. Displacing the operation of non-renewable facilities
may avoid some power plant emissions, thus creating an environmental
benefit.

[GRAPHIC] [TIFF OMITTED] TN22MY15.000

1.2 STATUTORY AND REGULATORY REQUIREMENTS

    A subsequent license for the Elk Rapids Project would be subject to
numerous requirements under the FPA and other applicable statutes. The
major regulatory and statutory requirements are described below.
1.2.1 Federal Power Act
<IP_ADDRESS> Section 18 Fishway Prescriptions
    Section 18 of the FPA states that the Commission is to require the
construction, operation, and maintenance by a licensee of such fishways
as may be prescribed by the Secretaries of Commerce or the U.S.
Department of the Interior. No fishway prescriptions or requests for
reservation of authority to prescribe fishways were filed under section
18 of the FPA.
<IP_ADDRESS> Section 10(j) Recommendations
    Under section 10(j) 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, or enhancement of fish and wildlife resources
affected by the project. The Commission is required to include these
conditions unless it determines that they are inconsistent with the
purposes and requirements of the FPA or other applicable law. Before
rejecting or modifying an agency recommendation, the Commission is
required to attempt to resolve any such inconsistency with the agency,
giving due weight to the recommendations, expertise, and

statutory responsibilities of such agency. No recommendations were
filed pursuant to section 10(j) of the FPA.
1.2.2 Clean Water Act
    Under section 401 of the Clean Water Act (CWA), a license applicant
must obtain certification from the appropriate state pollution control
agency verifying compliance with the CWA. On September 21, 2009, Antrim
County applied to the Michigan Department of Environmental Quality
(Michigan DEQ) for a section 401 water quality certification (WQC) for
the Elk Rapids Project. Michigan DEQ issued the WQC for the Elk Rapids
Project on June 26, 2012; however, because Michigan DEQ did not act on
the request within 1 year from receipt of the request, the WQC is
considered waived.\7\
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    \7\ Although the 401 WQC issued by Michigan DEQ is considered
waived, relevant conditions of the 401 WQC have been analyzed in
this EA as recommendations pursuant to section 10(a) of the FPA.
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1.2.3 Endangered Species Act
    Section 7 of the Endangered Species Act (ESA) requires federal
agencies to ensure their actions are not likely to jeopardize the
continued existence of endangered or threatened species or result in
the destruction or adverse modification of the critical habitat of such
species.
    Review of U.S. Fish and Wildlife Service (FWS) records in April
2015 indicate that one federally listed endangered species, the
Kirtland's warbler (Setophaga kirtlandii), and 4 federally listed
threatened species: (1) The Northern long-eared bat (Myotis
septentrionalis); (2) Rufa red knot (Calidris canutus rufa); (3)
Pitcher's thistle (Cirsium pitcher); (4) and Houghton's goldenrod
(Solidago houghtonii) are listed as occurring within one or more of the
counties where the Elk Rapids Project exists.\8\ There is no designated
critical habitat for these species.
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    \8\ Except for the federally threatened Houghton's goldenrod,
which is only listed in Kalkaska County, all of the other federally
listed species are listed as occurring in Antrim, Grand Traverse,
and Kalkaska Counties.
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    The types of habitats needed for the Kirtland's warbler, Rufa red
knot, Pitcher's thistle, and Houghton's goldenrod are not present at
the project. Although a limited amount of dispersed riparian and
wetland habitat in the project boundary could be used for foraging,
roosting, and breeding by northern long-eared bats, this habitat would
not be affected because there would be no changes to project operation,
no new construction, and no trees would be removed as part of the
proposed relicensing of the project. Also, maintenance activities would
be restricted to areas around the powerhouse and transmission lines,
which do not contain habitat for the northern long-ear bat. We conclude
that licensing the Elk Rapids Project, as proposed by Antrim County and
with staff recommended measures, would not affect listed species and no
further consultation under section 7 is needed.
1.2.4 Coastal Zone Management Act
    Under section 307(c)(3)(A) of the Coastal Zone Management Act
(CZMA), 16 United States Code [U.S.C.] 1456(3)(A), the Commission
cannot issue a license for a project within or affecting a state's
coastal zone unless the state CZMA agency concurs with the license
applicant's WQC of consistency with the state's CZMA program, or the
agency's concurrence is conclusively presumed by its failure to act
within 180 days of its receipt of the applicant's WQC.
    By letter dated September 28, 2012, and filed with the license
application, Michigan DEQ stated that the project is located within the
state-designated coastal management boundary. However, Michigan DEQ
determined that if the Commission's license requirements would be
implemented, there would be no adverse effects to coastal resources
from the relicensing of the project. Michigan DEQ concluded that the
project would be considered consistent with the CZMA.
1.2.5 National Historic Preservation Act
    Section 106 of the National Historic Preservation Act (NHPA) \9\
requires that every federal agency ``take into account'' how each of
its undertakings could affect historic properties. Historic properties
are districts, sites, buildings, structures, traditional cultural
properties, and objects significant in American history, architecture,
engineering, and culture that are eligible for inclusion in the
National Register of Historic Places (National Register).
---------------------------------------------------------------------------

    \9\ 54 U.S.C. 306108 (2014).
---------------------------------------------------------------------------

    By letter dated October 28, 2010, and filed with the license
application, the Michigan State Historic Preservation Officer (Michigan
SHPO) determined that there are no historic properties within the
project's area of potential effects (APE). We have determined that
there are no historic properties within the project's APE and that the
project would not affect historic properties. Therefore, the
Commission's regulatory requirements pertaining to section 106 of the
NHPA have been satisfied.

1.3 PUBLIC REVIEW AND COMMENT

    The Commission's regulations (18 CFR 4.38) require that applicants
consult with appropriate resource agencies, tribes, and other entities
before filing an application for a license. This consultation is the
first step in complying with the Fish and Wildlife Coordination Act,
ESA, NHPA, and other federal statutes. Pre-filing consultation must be
complete and documented according to the Commission's regulations.
1.3.1 Scoping
    Before preparing this EA, we conducted scoping to determine what
issues and alternatives should be addressed in the EA. A scoping
document was distributed to interested agencies and other stakeholders
on August 29, 2013. The scoping meeting was noticed in the Federal
Register on September 6, 2013. Two scoping meetings were held on
September 19, 2013, in Elk Rapids, Michigan, to request oral comments
on the project. A court reporter recorded all comments and statements
made at the scoping meetings, and these are part of the Commission's
public record for the project.
1.3.2 Interventions
    On December 26, 2013, the Commission issued a notice accepting
Antrim County's application to license the Elk Rapids Project and
soliciting protests and motions to intervene. This notice set February
24, 2013, as the deadline for filing protests and motions to intervene.
In response to the notice, Michigan DNR filed a timely motion to
intervene on February 14, 2013.
1.3.3 Comments on the Application
    A notice requesting terms, conditions, prescriptions, and
recommendations was issued on December 26, 2013. The notice also stated
that the application was ready for environmental analysis. No entities
filed comments.

2.0 PROPOSED ACTION AND ALTERNATIVES

2.1 NO-ACTION ALTERNATIVE

    Under the no-action alternative, the project would continue to
operate under the terms and conditions of the existing license, and no
new environmental protection, mitigation, or enhancement measures would
be implemented. We use this alternative to establish the baseline
environmental conditions for comparison with other alternatives.

2.1.1 Existing Project Facilities
    The Elk Rapids Project consists of the following existing
facilities: (1) A project reservoir that includes the 2,560-acre
Skegemog Lake and the 7,730-acre Elk Lake; (2) a 121-foot-long, 52-
foot-high, 26-foot-wide powerhouse that spans the north channel of the
Elk River, with an approximate operating head of 10.5 feet; (3) intake
trashracks having a 1.75-inch clear bar spacing; (4) four intake bays,
each 22 feet wide with sliding head gates; (5) two 525 horsepower
Francis turbines, each coupled to a generator with an installed
capacity of 0.350 MW, for a total installed capacity of 0.700 MW; (6)
two turbine gate cases used to spill excess water through the two
intake bays that do not contain turbines and generators; (7) a 14-foot-
wide overflow spillway located about 400 feet south of the powerhouse
on the south channel of the Elk River, which consists of two adjacent
concrete drop structures, each with a 7-foot-long stop log to control
the lake level, with each drop structure leading to a 62.5-foot-long by
4.5-foot-diameter culvert that passes under Dexter Street; (8) a 4.16-
kilovolt (kV) transmission line that extends about 30 feet from the
powerhouse to a 20-foot by 30-foot substation enclosure; (9) a 50-foot-
long underground 12.5-kV transmission line to connect the project
substation to Consumers Energy Company's distribution lines; (10) an
angler walkway that is attached to the tailrace side of the powerhouse
and a parking lot adjacent to the powerhouse; and (11) appurtenant
facilities.
    The proposed project boundary would fully enclose all permanent
project features, including the powerhouse, overflow spillway, and the
project reservoir, which consists of Skegemog Lake, Elk Lake, and the
upper Elk River (i.e., the portion of Elk River upstream of the
project's powerhouse).

[GRAPHIC] [TIFF OMITTED] TN22MY15.001

2.1.2 Project Safety
    The project has been operating for more than 33 years under the
existing license and during this time Commission staff has conducted
operational inspections focusing on the continued safety of the
structures, identification of unauthorized modifications, efficiency
and safety of operations, compliance with the terms of the license, and
proper maintenance. As part of the relicensing process, the Commission
staff would evaluate the continued adequacy of the proposed project
facilities under a subsequent license. Special articles would be
included in any license issued, as appropriate. Commission staff would
continue to inspect the project during the subsequent license term to
assure continued adherence to Commission-approved plans and
specifications, special license articles relating to construction (if
any), operation and maintenance, and accepted engineering practices and
procedures.
2.1.3 Existing Project Operation
    The Elk Rapids Project is operated as a modified run-of-river
facility.\10\ The project is manually operated by Elk Rapids Hydro's
personnel. The powerhouse operation is checked by Elk

Rapids Hydro two to three times each day, seven days a week.
---------------------------------------------------------------------------

    \10\ The project is operated in a modified run-of-river mode,
whereby the flows through the powerhouse and bypassed spillway
approximately equals inflow of the Elk River and are modified so as
to maintain the seasonal water levels of Elk and Skegemog Lakes, as
required by the order approving settlement and amending license. See
88 FERC ] 62, 158 (1999).
---------------------------------------------------------------------------

    Water flows to the project facilities by way of the Elk River Chain
of Lakes (chain-of-lakes) \11\ from the Torch River into Skegemog Lake,
then to Elk Lake and then into the Elk River located immediately
upstream of the project. Skegemog Lake is connected to Elk Lake through
a 0.25-mile-long, 0.25-mile-wide, 5-foot-deep section of water known as
the Narrows. The Narrows does not restrict flow between Skegemog and
Elk Lakes, and therefore does not cause a surface level difference
between the lakes. Elk and Skegemog Lakes have seasonal lake levels
required by a court order issued in 1973 by the Circuit Court in Antrim
County, Michigan.\12\ The court order requires lake levels for the
period from November 1 to April 15 to be maintained at 590.2 feet dam
gage datum and 590.8 feet dam gage datum from April 15 (or the breakup
of ice, whichever date is later) through November 1.\13\ During the
semi-annual lake level change (every April and November), generation
and water flow through the project is adjusted gradually over a period
of two weeks to achieve the required lake level. The project is
responsible for maintaining the court ordered lake levels through its
normal operations.
---------------------------------------------------------------------------

    \11\ The chain-of-lakes watershed is a 75 mile-long waterway
consisting of 14 lakes and connecting rivers that discharge to empty
into Grand Traverse Bay on Lake Michigan.
    \12\ Circuit Court for the County of Antrim, dated September 25,
1973, in the Matter of the Petition of the Antrim County Board of
Commissioners for a Determination of the Normal Height and Level of
the Waters of Elk and Skegemog Lakes situated in the County (sic) of
Antrim, Grand Traverse and Kalkaska, Michigan file #962-CZ.
    \13\ The elevations 590.2 and 590.8 feet dam gage datum are
equivalent to 587.66 and 588.26 feet International Great Lakes Datum
of 1955, respectively.
---------------------------------------------------------------------------

    The project's normal operating head is about 10.5 feet. On the
intake side of the powerhouse, the reservoir level is dictated by the
required seasonal lake levels for Elk and Skegemog Lakes. At the
powerhouse, the two north bays contain the operating turbines and
generator units, and the two south bays, which don't have turbines or
generating units, are used to spill excess water and provide flows when
one or both of the generating units in the north bays are out of
service for maintenance, when the grid goes down, or as needed to
maintain the modified run-of-river operation. The project tailrace is
directly connected to Grand Traverse Bay, Lake Michigan. As a result,
the water levels in the tailrace are the same as water levels in Lake
Michigan, and the project's net head varies as water levels in Lake
Michigan rise and fall.
    The two turbines, located in bays #3 and #4 at the north end of the
powerhouse, each have a maximum hydraulic capacity of 504 cubic feet
per second (cfs). The spill control gate case at bay #1, the
southernmost bay, has a maximum hydraulic capacity of 239 cfs. The
spill control gate case at bay #2 has a maximum hydraulic capacity of
442 cfs. The maximum hydraulic capacity of all four units in the
powerhouse flowing at the same time is 1,620 cfs, which is less than
the sum of the individual units because of flow interference between
individual units. For the period from April 15 (or ice breakup on Elk
and Skegemog Lakes, whichever occurs later) to November 1 the minimum
flow increases because of the 0.6-foot higher lake level. Therefore,
the project has a maximum hydraulic capacity of 1,675 cfs during the
warmer months and 1,655 cfs during the colder months. Although the 1
percent flood is 1,800 cfs, the project can pass this flood because of
the attenuation from significant storage in Elk and Skegemog Lakes.
    About 400 feet adjacent (south) of the powerhouse, the upper Elk
River's south channel diverts into a 14-foot-wide overflow spillway
pond that is stop log controlled with two 5-foot-diameter culverts.
During the winter, when the lake level is 590.2 feet dam gage datum,
the south channel spillway provides a minimum flow of 35 cfs. During
the summer, when the lake level is raised to 590.8 feet dam gage datum,
the south channel spillway provides a minimum flow of 55 cfs. Flows
over the spillway enter the Kids' Fishing Pond then continue as a small
stream and discharge directly into Grand Traverse Bay.
    When flows are too low to operate one turbine/generator with a
minimum of efficiency and stability of operation, bays #1 and/or #2 are
used at smaller gate openings to maintain modified run-of-the-river
operation. This minimum level of operation and increasing instability
occurs at about 0.070 MW, which corresponds to a flow value of about
280 cfs.
    Because of actively flowing water at the intakes, ice generally
does not form in the project forebay area; however, during very cold
weather, ice sheets can form in the forebay and sometimes these ice
sheets break and become submerged and block flows through the
trashracks. When sheet ice prevents project operation, different units
are opened/started and/or closed/shut down simultaneously to shift the
ice within the forebay so it becomes fractured, disperses among the
four intake bays, and melts the flowing water.
    The project's average annual energy produced during the period from
2001 to 2011 ranged from 2,162 MWh to 2,711 MWh, with an estimated
average annual generation of 2,422 MWh.

2.2 APPLICANT'S PROPOSAL

2.2.1 Proposed Project Facilities
    Antrim County does not propose to construct any new facilities or
modify any existing project facilities.
2.2.2 Proposed Project Operation
    Antrim County proposes to operate the project as it has been
operated under the existing license.
2.2.3 Proposed Environmental Measures
    Antrim County proposes to operate and maintain the existing angler
walkway, which is attached to the tailrace side of the powerhouse, and
associated parking lot.

2.3 STAFF ALTERNATIVE

    Under the staff alternative, the project would include Antrim
County's proposed measures and the following modifications and
additional measures:
     An operation compliance monitoring plan that includes a
description of project operation and the equipment and procedures
necessary to maintain and monitor compliance with the operational mode
required in any license issued;
     posting signage that describes proper boat maintenance
techniques to reduce the spread of invasive plant and mussel species;
and
     if archaeological resources are discovered during project
operation or other project-related activities, cease all activities
related to the disturbance and discovery area, and consult with the
Michigan SHPO to determine appropriate treatment.

2.4 ALTERNATIVES CONSIDERED BUT ELIMINATED FROM DETAILED STUDY

    We considered several alternatives to the applicant's proposal, but
eliminated them from further analysis because they are not reasonable
in the circumstances of this case. They are: (1) Issuing a non-power
license; (2) Federal Government takeover of the project; and (3)
retiring the project.
2.4.1 Issuing a Non-Power License
    A non-power license is a temporary license the Commission would
terminate whenever it determines that another governmental agency will
assume regulatory authority and

supervision over the lands and facilities covered by the non-power
license. At this time, no agency has suggested a willingness or ability
to do so. No party has sought a non-power license, and we have no basis
for concluding that the project should no longer be used to produce
power. Thus, we do not consider issuing a non-power license a realistic
alternative to relicensing the project in this circumstance.
2.4.2 Federal Government Takeover of the Project
    We do not consider federal takeover to be a reasonable alternative.
Federal takeover and operation of the project would require
Congressional approval. Although that fact alone would not preclude
further consideration of this alternative, there is no evidence to
indicate that federal takeover should be recommended to Congress. No
party has suggested federal takeover would be appropriate, and no
federal agency has expressed an interest in operating the project.
2.4.3 Retiring the Project
    Project retirement could be accomplished with or without the
removal of the powerhouse or overflow spillway. Either alternative
would involve denial of the license application and surrender or
termination of the existing license with appropriate conditions. No
participant has suggested that the removal of the powerhouse or
overflow spillway would be appropriate in this case, and we have no
basis for recommending it. The project reservoir (i.e., Elk and
Skegemog Lakes) formed by the powerhouse and overflow spillway serve
other important purposes, such as use for recreational activities and
in providing water for irrigation. Thus, removal of the powerhouse and
overflow spillway is not a reasonable alternative to relicensing the
project with appropriate protection, mitigation, and enhancement
measures.
    The second project retirement alternative would involve retaining
the powerhouse and overflow spillway, and disabling or removing
equipment used to generate power. Project works would remain in place
and could be used for historic or other purposes. This alternative
would require us to identify another government agency with authority
to assume regulatory control and supervision of the remaining
facilities. No agency has stepped forward, no participant has advocated
this alternative, nor have we any basis for recommending it. Because
the power supplied by the project is needed, a source of replacement
power would have to be identified. In these circumstances, we do not
consider removal of the electric generating equipment to be a
reasonable alternative.

3.0 ENVIRONMENTAL ANALYSIS

    In this section, we present: (1) A general description of the
project vicinity; (2) an explanation of the scope of our cumulative
effects analysis; and (3) our analysis of the proposed action and other
recommended environmental measures. Sections are organized by resource
area (aquatic, recreation, etc.). Under each resource area, historic
and current conditions are first described. The existing condition is
the baseline against which the environmental effects of the proposed
action and alternatives are compared, including an assessment of the
effects of proposed mitigation, protection, and enhancement measures,
and any potential cumulative effects of the proposed action and
alternatives. Staff conclusions and recommended measures are discussed
in section 5.1, Comprehensive Development and Recommended Alternative
of the EA.\14\
---------------------------------------------------------------------------

    \14\ Unless otherwise indicated, our information is taken from
the application for license filed by Antrim County on December 21,
2012, and the response to deficiencies and requests for additional
information filed on October 16, 2013.
---------------------------------------------------------------------------

3.1 GENERAL DESCRIPTION OF THE RIVER BASIN

    The chain-of-lakes watershed is a 75-mile-long waterway consisting
of fourteen lakes (including Elk Lake and Skegemog Lake) and connecting
rivers in the northwestern section of the Lower Peninsula of the state
of Michigan, which empties into Lake Michigan. The total drainage area
of the entire chain-of-lakes covers about 512 square miles across five
counties (Antrim, Grand Traverse, Kalkaska, Charlevoix and Otsego) in
northwestern Michigan.
    The project is located within the Elk-Skegemog subwatershed of the
chain-of-lakes (figure 3). The total drainage area of the Elk-Skegemog
subwatershed is about 214 square miles. Within the Elk-Skegemog
subwatershed, water flows from the Torch River into Skegemog Lake,
which is the meeting point of Antrim, Grand Traverse, and Kalkaska
Counties. Skegemog Lake then connects to Elk Lake, and flows from Elk
Lake into the Elk River upstream of the project (i.e., upper Elk
River). Flows from the upper Elk River are then released into the
section of the Elk River downstream of the project (i.e., lower Elk
River) or over an overflow spillway through the Kids' Fishing Pond, and
then into the east arm of Grand Traverse Bay, Lake Michigan (figure 3).

[GRAPHIC] [TIFF OMITTED] TN22MY15.002

    The project is located on the Elk River in the Village of Elk
Rapids in Antrim, Grand Traverse, and Kalkaska Counties, Michigan. The
project powerhouse is located approximately 1,000 feet upstream from
the confluence of the lower Elk River with Grand Traverse Bay, Lake
Michigan. The project's physical structures are located on a 3.7-acre
parcel of land owned by Antrim County, which extends from the west edge
of Dexter Road to Grand Traverse Bay (Lake Michigan) and includes a
narrow strip of land on both sides of the Elk River. Dam Road borders
the north side of the project. The project occupies about 0.46 acres of
the land parcel, and the remainder of the parcel is leased to the
Village of Elk Rapids under a 99-year lease for use as public open
space and recreational use.

3.2 SCOPE OF CUMULATIVE EFFECTS ANALYSIS

    According to the Council on Environmental Quality's regulations for
implementing the National Environmental Policy Act (40 CFR 1508.7), a
cumulative effect is the impact on the environment that results from
the incremental impact of the action when added to other past, present
and reasonably foreseeable future actions regardless of what agency
(federal or non-federal) or person undertakes such actions. Cumulative
effects can result from individually minor but collectively significant
actions taking place over a period of time, including hydropower and
other land and water developmental activities.
    Based on our review of the license application and agency and
public comments, we have determined that no

resources would be cumulatively affected by the continued operation of
the project. The project is located in a where there is no proposed
future hydropower development other than the Elk Rapid Project.

3.3 PROPOSED ACTION AND ACTION ALTERNATIVES

    Only resources that would be affected, or about which comments have
been received, are addressed in detail in this EA and discussed in this
section. We have not identified any substantive issues related to soils
and geology or socioeconomics associated with the proposed action;
therefore, we do not assess environmental effects on these resources in
this EA. We present our recommendations in section 5.1, Comprehensive
Development and Recommended Alternative section.
3.3.1 Aquatic Resources
    <IP_ADDRESS> Affected Environment
Water Quantity
Project Reservoir
    Skegemog Lake, Elk Lake, and the upper Elk River have the same
water surface elevation and constitute the project reservoir. Waterways
upstream of the reservoir (e.g., Torch Lake) are not included in the
project boundary because their surface water levels do not influence
the surface levels of Elk and Skegemog Lakes.\15\
---------------------------------------------------------------------------

    \15\ The Torch River, which connects Torch Lake with Skegemog
Lake (see figure 1), has a flow restriction that creates a surface
level difference between Torch Lake and Skegemog Lake.
---------------------------------------------------------------------------

    Skegemog Lake has a surface area of four square miles (2,560 acres)
and a volume of 30,700 acre-feet, with a flushing rate of 24 days.
Skegemog Lake has a maximum depth of about 29 feet and an average depth
of about 12 feet. Skegemog Lake's shoreline is approximately 11 miles.
    Elk Lake, which is the last lake in the chain-of-lakes, has a
surface area of 12 square miles (7,730 acres) and a volume of 548,830
acre-feet, with a flushing rate of 365 days. Elk Lake has a maximum
depth of about 192 feet and an average depth of about 71 feet. Elk
Lake's shoreline is approximately 26 miles.
    Water flows to the project by way of the reservoir. Skegemog Lake
is connected to Elk Lake via a 0.25-mile-long, 0.25-mile-wide, 5-foot-
deep section of water known as the Narrows (figure 3). The Narrows does
not restrict flow between the lakes and therefore does not cause a
surface level difference between the lakes. As discussed in section
2.1.3, Existing Project Operation, Elk and Skegemog Lakes have the same
seasonal, legally established lake levels. The lake level for the
period from November 1 to April 15 are maintained at 590.2 feet dam
gage datum and 590.8 feet dam gage datum from April 15 (or the breakup
of ice, whichever date is later) through November 1. During the semi-
annual lake level change (every April and November), power generation
and water flow through the project is adjusted gradually over a period
of two weeks to achieve the required lake levels. The project is
responsible for maintaining the court ordered lake levels through its
normal operations.
    The project's normal operating head is about 10.5 feet. On the
intake side of the powerhouse, the reservoir level is dictated by the
court ordered lake levels for Elk and Skegemog Lakes. At the
powerhouse, the two north bays contain the operating turbines and
generator units, and the two south bays, which don't have turbines or
generating units, are used to spill excess water and provide flows into
the lower Elk River when one or both of the generating units in the
north bays are out of service for maintenance. The project tailrace is
directly connected to Grand Traverse Bay, Lake Michigan. As a result,
the water levels in the tailrace are the same as water levels in Lake
Michigan, and the project's net head varies as water levels in Lake
Michigan rise and fall.
Project Outflow
    Historical generation data was used to calculate a continuous
record of accurate outflow for the Elk River drainage basin from 2001-
2011. Generation data from the project was gathered from Consumers
Energy. The generation data was converted into daily flow values using
the United States Geological Survey's (USGS) calibrated turbine rating
curves. Historic operation logs from the previous plant operator,
Traverse City Light and Power,\16\ were used to modify the resulting
data for bypassed flows that were encountered during repairs or down
time of the generating units. Further adjustments were made to the data
twice annually to offset the effects of raising and lowering the Elk
Lake level during the legally mandated spring and fall seasons. A final
adjustment was made by adding the flow through the spillway located on
south channel of the Elk River. The results showed that the highest
mean monthly flow on record is 720 cfs for the month of May and the
lowest is 412 cfs for September, while the maximum monthly flow on
record is 1,049 cfs for June and the minimum monthly flow is 247 cfs
for September (table 1).
---------------------------------------------------------------------------

    \16\ The project was operated under contract on Antrim County's
behalf by Traverse City Light and Power until 2007 when Antrim
County entered into the current operating agreement with Elk Rapids
Hydro.

 Table 1--Calculated Monthly Flows at the Elk Rapids Project Intake From
                               2001-2011.
 [Source: Michigan DNR, 2011; Antrim County, 2011; as modified by staff]
------------------------------------------------------------------------
                                                 Max      Mean     Min
                    Month                       (cfs)    (cfs)    (cfs)
------------------------------------------------------------------------
January......................................      933      663      369
February.....................................      805      656      391
March........................................      857      644      375
April........................................    1,044      714      370
May..........................................    1,016      720      396
June.........................................    1,049      661      386
July.........................................      792      497      349
August.......................................      753      454      308
September....................................      904      412      247
October......................................      871      537      301
November.....................................      951      651      363
December.....................................      823      636      355
------------------------------------------------------------------------

    About 400 feet adjacent (south) of the powerhouse, the upper Elk
River's south channel spillway diverts into a 14-foot-wide overflow
spillway pond (i.e., Kids' Fishing Pond) that is stop log controlled
with two 5 foot diameter culverts. During the winter, when the lake
level is 590.2 feet dam gage datum, the south channel spillway provides
a minimum flow of 35 cfs. During the summer, when the lake level is
raised to 590.8 feet dam gage datum, the south channel spillway
provides a minimum flow of 55 cfs. The flows then continue unimpeded
after leaving the Kids' Fishing Pond as a small stream that discharges
directly into Grand Traverse Bay.
Water Use
    The project was originally constructed to produce hydropower.
Presently, the project continues to generate hydropower and provides
recreational opportunities (e.g., fishing, boating, and wildlife
viewing) to the area. The Village of Elk Rapids withdraws surface water
for fire protection and for limited irrigation of parks and public
properties at four locations, two upstream of the project and two
downstream.\17\ In addition, riparian landowners and golf courses are
permitted to withdraw surface water for irrigation; some riparian
landowners also have seasonal pumps that they use for irrigating their
lawns and gardens.
---------------------------------------------------------------------------

    \17\ Upstream of the project, water is withdrawn from the north
channel of the Elk River off the west side of U.S. 31 south of
Dexter Street and at a location east of U.S. 31. Along the south
channel of the Elk River, water is withdrawn downstream of the
project at Memorial Park and on Dexter Street near the Kids' Fishing
Pond.

---------------------------------------------------------------------------

    There are two National Pollution Discharge Elimination System
(NPDES) permits for discharges within the project, all of which are
monitored by Michigan DEQ (table 2). The outfall pipe for the Village
of Elk Rapids Water Treatment Plant (NPDES Permit MIG570208) is located
immediately downstream of the powerhouse and discharges into the
tailrace. The outfall for Burnette Foods is an unnamed tributary
downstream of the south channel bypass of the Elk River.

      Table 2--NPDES Permits Within the Elk Rapids Project Vicinity
       [Source: U.S. Environmental Protection Agency (EPA), 2012a]
------------------------------------------------------------------------
            Location                Permit holder           NPDES
------------------------------------------------------------------------
Elk River......................  Village of Elk      MIG570208
                                  Rapids Wastewater.
Elk River......................  Burnette Foods,     MI0000485
                                  Inc.
------------------------------------------------------------------------

Water Quality
    The Michigan DEQ sets surface water quality standards based on
specified designated uses. State water quality standards specify which
uses (such as industrial or aquatic life use) individual waters should
support (EPA, 2010). According to the Michigan Surface Water
Information Management System (MiSWIMS) database (MiSWIMS, 2014), and
the EPA (EPA, 2013 and 2014), the surface waters in the project
boundary have been recently assessed for the following designated uses:

 Agriculture
 Public water supply
 Navigation
 Coldwater fishery

    Results show that the overall status of the project reservoir is
considered ``good'', meaning that the reservoir is meeting its
attainment goals for Cold Water Fishery, Agriculture, Public Water
Supply, and Navigation (table 3) (EPA, 2013 and 2014; MiSWIMS, 2014).

  Table 3--EPA and State of Michigan Attainment Goals at the Elk Rapids
   Project Reservoir for Cold Water Fishery, Agriculture, Public Water
                         Supply, and Navigation
                             [Source: Staff]
------------------------------------------------------------------------
                                  Designated use group       Project
        Designated use *                   **               reservoir
------------------------------------------------------------------------
Agriculture....................  Agricultural..........  Good.
Cold Water Fishery.............  Fish, Shellfish, and    Good.
                                  Wildlife Protection
                                  and Propagation.
Public Water Supply............  Industrial............  Good.
Navigation.....................  Other.................  Good.
------------------------------------------------------------------------
* State water quality standards specify which uses individual waters
  should support.
** The parent designated use represents an EPA-assigned, general
  categorization for the specific, state-reported designated use.

    Michigan DEQ administers federal and state surface water quality
standards for wastewater, non-point source pollution, seepage and NPDES
permits. State water quality standards for temperature and dissolved
oxygen (DO) applicable to the project area are summarized in table
4.\18\
---------------------------------------------------------------------------

    \18\ Michigan water quality standards are described in detail in
Part 4 Rules of Part 31 of the Water Resources Protection Act 451 of
1994.

   Table 4--Summary of State Water Quality Standards for DO and Water Temperature Applicable to the Elk Rapids
                                                Project Boundary
                             [Source: State of Michigan, 1994, as modified by staff]
----------------------------------------------------------------------------------------------------------------
                Parameter                         Application                           Standard
----------------------------------------------------------------------------------------------------------------
Dissolved Oxygen........................  All surface waters of the    Min. 7 milligrams per liter (mg/L) in
                                           State.                       designated coldwater fisheries; Min. 5
                                                                        mg/L in designated warmwater fisheries.
Temperature.............................  Inland Lakes...............  No receipt of a heat load is permitted
                                                                        that will increase the receiving water's
                                                                        temperature more than 3 [deg]Fahrenheit
                                                                        ([deg]F) above the existing natural
                                                                        water temperature. No receipt of a head
                                                                        load is permitted that will increase the
                                                                        temperature of the hypolimnion (the
                                                                        dense, cooler layer of water at the
                                                                        bottom of a lake) or decrease its
                                                                        volume.
                                          Great Lakes and connecting   (1) No receipt of a heat load is
                                           waters.                      permitted that will increase the
                                                                        receiving water's temperature more than
                                                                        3 [deg]F above the existing natural
                                                                        water temperature.
                                                                       (2) No receipt of a heat load is
                                                                        permitted that will increase the
                                                                        receiving water's temperature more than
                                                                        the following monthly maximum
                                                                        temperature ([deg]F):
----------------------------------------------------------------------------------------------------------------

   Jan.      Feb.      March     April      May      June     July     Aug.    Sept.     Oct.     Nov.     Dec.
----------------------------------------------------------------------------------------------------------------
      38        38        48        54        65       68       68       68       63       56       48       40
----------------------------------------------------------------------------------------------------------------

    The Tip of the Mitt Watershed Council (Watershed Council) has been
collecting water quality data in the project boundary since 1992, and
is currently the primary source for water quality information for Elk
River, Elk Lake, and Skegemog Lake. Other general water quality data
comes from Michigan DEQ who periodically collects data from Elk and
Skegemong Lakes. The Michigan DEQ last collected water quality data
from Elk Lake in 1985 and from Skegemog Lake in 2003. Overall, the data
indicates that water quality within the project reservoir have remained
relatively consistent over the past 10-20 years and typically meets
state water quality standards.
    Elk and Skegemog Lakes experience thermal stratification \19\
during summer. Results from a 2007 water quality study at Elk Lake
(Watershed Council, 2008), demonstrates that water temperatures are
similar throughout the water column during the spring, meaning that Elk
Lake is unstratified (i.e., completely mixed). By late June, Elk Lake
is completely stratified, and surface water temperatures throughout the
summer (i.e., late June through August) can occasionally exceed the
state standard for temperature of 20 [deg]C (i.e., 68 [deg]F). Results
from previous water quality studies conducted in Elk Lake during 1985
and 1993 support these recent findings, where water surface
temperatures ranged from 21.0 to 24.3 [deg]C (i.e., 69.8 to 75.7
[deg]F) during July and August (Weiss, 1995; Antrim County, 2012).
---------------------------------------------------------------------------

    \19\ Thermal stratification is a seasonal phenomenon that refers
to a change in water temperatures at different depths in a lake.
This phenomenon is caused by the seasonal changes of water
temperatures that result in changes in water density (i.e., cold
water sinks because it is denser than warm water). Because of this
density-temperature relationship, a lake can stratify, that is,
separate into distinct layers within the water column.
---------------------------------------------------------------------------

    Elk Lake is classified as an oligotrophic lake, which are
characteristically deep, clear, nutrient poor (i.e., low algal
biomass), and with abundant levels of DO. Low algal biomass in the lake
allows deeper light penetration into the lake resulting in less
decomposition of vegetative material, which decreases DO levels.
Because oxygen is more soluble in colder water, DO concentrations may
therefore increase with depth below the thermocline \20\ in Elk Lake.
---------------------------------------------------------------------------

    \20\ A thermocline is the transition layer between the mixed
layer at the surface and the deep water layer.
---------------------------------------------------------------------------

    According to the Watershed Council (2008), results from monitoring
Elk Lake from 1998 through 2006 show that high DO concentrations
persist in the deeper waters of the lake throughout the most of the
summer, and only slightly decline in the deepest potions of the lake
toward the end of summer. The Watershed Council (2008) also states that
during the course of the 2007 water quality study, DO levels in Elk
Lake throughout the water column were consistently around 8 mg/l, and
have only been recorded below the state standard of 7 mg/l on one
occasion in late summer at the very bottom of the lake (i.e., around
192 feet deep). Results from previous water quality studies conducted
in Elk Lake during 1985 and 1993 support these findings, where bottom
DO levels in the lake ranged from 8.9 to 10.2 mg/l and surface DO
levels in the lake ranged from 8.1 to 9.6 mg/l during July and August
(Weiss, 1995; Antrim County, 2012).
Fishery Resources
Fish Community
    Skegemog Lake supports a mixed warmwater/coolwater fishery. Typical
fish species found in Skegemog Lake include largemouth bass, northern
pike, smallmouth bass, sucker species, sunfish, walleye, rock bass,
muskellunge, and yellow perch (Michigan DNR, 2014).
    Elk Lake, the last lake in the chain-of-lakes, is classified as a
coldwater fishery. Because of its cold, deep, and well oxygenated
waters, Elk Lake is managed by the Michigan DNR for coldwater species
and supports populations of lake trout, lake whitefish, lake herring
(i.e., cisco), burbot, and deepwater sculpin. Coolwater species (e.g.,
smallmouth bass, rock bass, muskellunge, walleye) can be found
throughout both Elk and Skegemog Lakes, but tend to concentrate around
the Narrows.
    The most recent fish survey in the project reservoir (i.e., Elk and
Skegemog Lakes) was conducted by Michigan DNR (2011) from April 2008
through March 2009. During the 2008-2009 survey, a total of 21 species
were captured using netting and electrofishing techniques; the most
abundant species was rock bass, followed by white sucker, yellow perch,
and smallmouth bass.
    The less than 0.5-mile-long Elk River is a mixed warmwater/
coolwater/coldwater fishery. Coldwater species from Lake Michigan,
including steelhead trout and other salmonids, are present in the lower
Elk River downstream of the project. The south channel bypass pond
(Kids' Fishing Pond) is about three acres and also provides a mixed
warmwater/coolwater/coldwater fishery; species in the Kids' Fishing
Pond include bullhead, largemouth Bass, rainbow trout, suckers,
sunfish, and yellow perch (Michigan DNR, 2013).
Aquatic Habitat
    Unlike Skegemog Lake, which has an abundance of submerged woody
debris along its shoreline (Diana et al., 2014), naturally occurring
fish cover (e.g., woody debris) in Elk Lake is limited as a result of
shoreline development. In an effort to improve fish habitat by adding
structural cover in Elk Lake and other lakes within the chain-of-lakes,
a five year collaborative program headed by the Three Lakes Association
(Lakes Association), which started in 2012, is currently underway in
which man-made fish shelters (e.g., crates, slab trees, and tree
stumps) are being deployed in areas devoid of natural habitat (Varga,
2012). At present, 15 fish shelters have been deployed in Elk Lake
(Lakes Association, 2014).
    The addition of these types of cover structures into Elk Lake and
other water bodies is an accepted practice and is a suitable form of
habitat enhancement, particularly in areas where cover is limiting fish
production (Roni et al., 2005). Researchers have shown that the
addition of physical habitat may increase juvenile fish survival in
lakes where cover is limited (Bolding et al. 2004). For example, Tugend
et al. (2002) referenced two studies that showed increases in
production of age-0 fish (i.e., young-of-the year fish) as a result of
habitat improvement efforts.
Invasive Aquatic Plants
    According to Antrim County, Eurasian watermilfoil and curly-leaf
pondweed are present in the chain-of-lakes and within and adjacent to
the project boundary.
Invasive Mussels
    Zebra Mussels are an invasive species that were introduced into the
Great Lakes in the late 1980s and-have invaded most water bodies in the
chain-of-lakes, including Elk Lake and Skegemog Lake. There is no plan
to control or eradicate the zebra mussel in the chain-of-lakes
watershed because it is so pervasive (Michigan DEQ, 2002).
Invasive Fish Species
    Sea lamprey, round goby, alewife, common carp, and white perch are
all invasive fish species that are currently known to inhabit Lake
Michigan. At present, none of these species have been detected within
the project boundary or upstream of the project (i.e., within the
chain-of-lakes watershed).

<IP_ADDRESS> Environmental Effects
Project Operation
    Antrim County proposes to continue to operate the project as
currently operated. The project would operate in a modified run-of-
river mode, whereby outflows from the powerhouse and overflow spillway
approximately equals inflow from the chain-of-lakes and are modified to
maintain a seasonal reservoir water surface elevations of 590.2 feet
dam gage datum from November 1 through April 15 and 590.8 feet dam gage
datum from April 15 (or the breakup of ice, whichever date is later)
through November 1. Also, the project would continue to meet the lake
levels by gradually adjusting the project's water surface levels over a
two-week period during each seasonal changeover period (i.e., every
April and November).
    Michigan DEQ recommends that during adverse conditions, when the
operational requirements specified in the 1973 court order cannot be
met, Antrim County should consult with the Supervisor for Michigan DEQ,
Water Resources Division, regarding emergency actions taken or proposed
measures that are planned to meet project operation. Michigan DEQ
additionally recommends that when operational requirements specified in
the court order are temporarily suspended for maintenance activities,
inspections, or dam safety related issues, Antrim County should provide
prior notice of these actions to the Supervisor for Michigan DEQ, Water
Resources Division.
Our Analysis
    Operating the project in a modified run-of-river mode, as proposed
by Antrim County, would enable existing project operation to continue
to meet the seasonal lake levels. Because the project currently
operates in a modified run-of-river mode, minimal changes to aquatic
habitat are expected in the reservoir, bypassed reach, and within the
project tailrace by continuing this mode of operation.
    Scheduled maintenance activities and dam safety inspections have
the potential to create situations whereby Antrim County may deviate
from its modified run-of-river operation requirements. Also, adverse
conditions or emergency situations may create situations whereby Antrim
County is unable to comply with its modified run-of-river operation.
However, providing notification to not only the Michigan DEQ, but also
to the Michigan DNR before or after such incidents and consulting with
both agencies until normal project operation can resume, would allow
for the state resource agencies to be promptly alerted to these non-
compliance events which could potentially affect resources under their
respective jurisdictions. Additionally, providing such notification to
the Commission that details the cause of the deviation would assist the
Commission with administering compliance directives for any license
issued for the project.
    Developing a compliance monitoring operation plan, after
consultation with Michigan DEQ and Michigan DNR, would be beneficial in
that it would document the procedures Antrim County would employ to
demonstrate compliance with any license requirements for operating the
project, including but not limited to, operating in a modified run-of-
river mode, maintaining lake level requirements, and meeting reservoir
drawdown and refill protocols. A detailed description of the equipment
and procedures necessary to maintain, monitor, and report compliance
would prevent possible misunderstandings of project operation and
reduce the likelihood of complaints regarding project operation.
Water Quality and Monitoring
    Michigan DEQ recommends that Antrim County operate the project in
such a manner as to adhere to state water quality standards (for
temperature and DO) in the Elk River downstream of the powerhouse.
Specifically, Michigan DEQ recommends that project operation not cause
the waters of the Elk River downstream of the powerhouse to exceed the
following state standard monthly average temperatures (shown in
[deg]F):

----------------------------------------------------------------------------------------------------------------
   Jan.      Feb.      March     April      May      June     July     Aug.    Sept.     Oct.     Nov.     Dec.
----------------------------------------------------------------------------------------------------------------
      38        38        48        54        65       68       68       68       63       56       48       40
----------------------------------------------------------------------------------------------------------------

    However, Michigan DEQ states that deviations from these water
temperature standards would be acceptable when natural temperatures of
Elk Lake, as measured in the Elk River upstream of the project, exceed
these specified monthly average temperature values. Michigan DEQ also
recommends that project operation does not cause DO concentrations to
be less than the state standard of 7.0 mg/L in the Elk River downstream
of the powerhouse at any time.
    To verify project-related effects on water quality, Michigan DEQ
recommends that Antrim County monitor temperature and DO concentrations
in the Elk River downstream of the project on an hourly basis from July
1 through August 31 beginning the first year after license issuance,
for a minimum of one year.
Our Analysis
    Recent and previous water quality studies demonstrate that surface
water temperatures of Elk Lake occasionally exceed state standards
(Weiss, 1995; Watershed Council, 2008; Antrim County, 2012), usually in
late summer, in shallow, nearshore areas as a result of the effects of
the thermocline, a naturally occurring phenomenon. Michigan DEQ states
that deviations from the state water quality standards for temperature
would be acceptable when natural temperatures of Elk Lake, as measured
in the Elk River upstream of the project, exceed the specified monthly
average temperature values.
    Monitoring water temperature downstream of the project would only
reflect water temperatures that are entering the project, which
typically meeting state standards and any deviations in water
temperatures would be caused by natural phenomena and not project
operation; therefore, monitoring water temperature downstream of the
project would not provide any additional benefits.
    According to a condition of the 1999 settlement agreement, the
project is required to operate in such a manner as to be in compliance
with state water quality standards. Water quality assessments of
Skegemog Lake, Elk Lake, and Elk River have demonstrated that
temperature and DO levels within the reservoir have remained relatively
consistent over the past 10 to 20 years and that water surface DO
concentrations are typically at or above 8 mg/L throughout the summer
months. Additionally, a recent study by Rediske et al. (2010) showed
that DO levels within Grand Traverse Bay, near the project, were at or
above 10 mg/l during July and August. Given that downstream of the
project, the less than 0.5-mile-long Elk River flows directly into
Grand Traverse Bay, any temporary decreases

in DO levels that may occur in the tailrace would be quickly mitigated
by the high DO levels occurring in the bay. Therefore, continued
operations of the project in the same mode of operation it has used in
the past, would have little effect on water quality in the Elk River
downstream of the powerhouse and that the state DO standard of 7 mg/L
would continue to be met and monitoring DO downstream of the project
would not be necessary.
Fish Impingement and Entrainment
    The operation of the project has the potential to result in some
fish impingement on the project trashracks and fish entrainment through
the project turbines. Antrim County does not propose any additional
measures to minimize fish mortality related to entrainment and
impingement.
Our Analysis
    The level of fish entrainment and impingement at the project is
dependent upon many factors; including age, swim speeds, size, and the
seasonality of entrainment and impingement patterns of fish present at
the site (EPRI, 1992). Although turbine passage mortality rate
estimates can be relatively variable, some trends have been recognized.
For example, certain species typically dominate entrainment
collections, and the dominant fishes entrained usually represent those
species that are highly abundant (FERC, 1995) and are usually fish
species that are very fecund (i.e., high reproductive rates). However,
fish size rather than species is usually the critical factor
influencing the rates of turbine-related mortality. In general, most
fish entrained at hydroelectric projects tend to be smaller fish less
than 4 to 5 inches long and are often juvenile fish or species such as
minnows that never exceed a length of 3 or 4 inches (FERC, 1995; EPRI,
1997).
    The velocity of water surrounding a hydroelectric water intake is
also an important component in determining the level of potential fish
entrainment and impingement. At the project, when the turbines are
operated at full gate, the intake velocity in front of the trashrack is
2.0 feet/sec; however, because the project operates at 90 percent of
full gate whenever possible (about 98 percent of the time), the intake
velocity is typically 1.8 feet/sec. Research has shown that a fish can
swim about 8 to 12 body lengths per second in a burst mode that can
last up to 20 seconds (Bell, 1986; Videler and Wardle, 1991; Aadland,
2010). For example, a four-inch long fish would have a burst speed of
around 2.7 to 4.0 feet/sec. Therefore, most fish species greater than 4
inches in length exposed to the 1.8-2.0 feet/sec velocity at the
project intake are likely to escape impingement and entrainment.
    Although impingement and turbine entrainment at the project likely
causes some losses of resident fish, these losses do not approach a
magnitude that adversely affects fish populations. Evidence supporting
this conclusion is that the reservoir is currently meeting its
designated use attainment goal as a Coldwater Fishery. Also, there is
no evidence that existing levels of fish impingement, entrainment, and
related mortality, are adversely affecting fish communities in the
project area. Therefore, continued operation of the project in the same
mode of operation it has used in the past, would likely have little to
no adverse effect on the overall fish community in the project
reservoir.
Aquatic Invasive Plant and Mussel Species
    Aquatic invasive species compete with native species for food and
habitat, and can directly or indirectly kill or displace native
species, degrade habitat and alter food webs. Eurasian milfoil and
curly-leaf pondweed are present in the chain-of-lakes and within and
adjacent to the project boundary. Also, the zebra mussel invaded the
chain-of-lakes in the 1980s and is still present in the watershed,
including in Elk Lake and Skegemog Lake. Antrim County does not propose
any measures to address invasive species within the project boundary.
Our Analysis
    Dense growth of curlyleaf pondweed and Eurasian watermilfoil
reduces populations of native submersed plant species and alters the
ecosystem so that it is inhospitable to fish and other fauna (Wolf,
2009; Madsen, 2009). Because curlyleaf pondweed and Eurasian
watermilfoil can each form dense mats on the water's surface in May and
June, they can inhibit fishing, boating, and other types of water
recreation (Madsen, 2009).
    Because curlyleaf pondweed and Eurasian watermilifoil may become
tangled on the nets, ropes, and propellers of recreational boats, the
spread of these species into new waters is often the result from
overland dispersal by recreational boaters (Leung et al., 2006).
    The zebra mussel, based on its ecological and economic effects, is
considered the most aggressive freshwater invaders in the Northern
hemisphere (Nalepa and Schloesser, 1993; Karatayev et al., 2014). The
zebra mussel is a prolific filter feeder, removing substantial amounts
of phytoplankton and suspended particulates from the host water body
adversely affecting aquatic ecosystems by altering food webs (USGS,
2013). Zebra mussels have high reproductive potential, planktonic free-
swimming larvae called veligers, and an attached benthic adult stage.
This life history facilitates their success as invaders, allowing it to
spread rapidly across landscapes, and become extremely abundant when
introduced into a new waterbody (Karatayev et al., 2014). Because zebra
mussels can attach to the hulls of boats, and their veligers (i.e.,
planktonic larvae) may be taken up and carried in the bilge water of
recreational vessels, the majority of new invasions result from
overland dispersal by recreational boaters (Leung et al., 2006).
    Curlyleaf pondweed, Eurasian watermilifoil, and zebra mussels are
all transferred to other waterbodies primarily by boats. While there is
no plan to control or eradicate the zebra mussel in the chain-of-lakes
watershed because it is so pervasive, public education may reduce the
transfer of the invasive mussel to other water bodies. Also, public
education on how to minimize transfer of curlyleaf pondweed and
Eurasian watermilifoil could reduce the likelihood of further invasions
of project waters and other waterbodies. As discussed in section
<IP_ADDRESS>, Regional Recreation Resources, the project's recreation site
is near a marina. Developing signage, in consultation with the Michigan
DNR and Michigan DEQ, regarding cleaning and drying of boats between
launches, and posting the signage at the project recreation site, would
help inform the public of proper management techniques to reduce the
spread of curlyleaf pondweed, Eurasian watermilifoil, and zebra
mussels.
Invasive Fish Species
    Invasive fish species are known to spread quickly and out-compete
native fish for food and habitat, which can cause a decline in the
diversity of aquatic ecosystems. Sea lamprey, round goby, alewife,
common carp, and white perch are all invasive fish species that are
currently known to inhabit Lake Michigan. At present, none of these
species have been detected upstream of the project powerhouse (i.e.,
within the chain-of-lakes watershed). Once established in a water body
(e.g., Lake Michigan), invasive fish species primarily spread to new
water bodies (e.g., inland lakes) by way of direct hydrologic
connection.

Our Analysis
    To date, project operation and the presence of the project
powerhouse have been successful in preventing the invasive fish species
identified above from passing upstream into the reservoir. No invasive
fish species have been collected upstream of the project powerhouse
during the surveys conducted by Michigan DNR in 1990, 1996, and 2011.
Therefore, continuing to operate the project in a modified run-of-river
mode, and maintaining the project powerhouse, as proposed by Antrim
County, would likely continue to block invasive fish species from
passing upstream of the project.
3.3.2. Terrestrial Resources
<IP_ADDRESS> Affected Environment
Botanical Resources
    The chain-of-lakes watershed is classified as a flat lake plain
with well-drained sand, dominated by northern hardwoods in the uplands,
conifer swamps in the lowlands and American beech/hemlock forests in
between (Michigan Natural Features Inventory, 1999). The Northern
Hardwood forest community is the northernmost deciduous forest
community in eastern North America. In general, this community is
dominated by three deciduous tree species: yellow birch, sugar maple,
and American beech. Two coniferous species, eastern hemlock and white
pine, are also typically found in abundance in this forest community.
    Wetland acreage within the project vicinity totals about 4,090
acres; of those, about 3,155 acres are classified as forested, 560
acres as emergent, and 376 as scrub-shrub. The Watershed Council
classifies many of the wetlands within the project vicinity as ``high
quality''. They define high quality wetlands as wetlands that are
large, contiguous wetlands on a major lake or stream, approximately 50
acres or greater in size, and identified on a USGS topographic map.
    The riparian zone in the project vicinity is about 80 percent
developed. Preliminary estimates indicate that the Skegemog Lake
shoreline is 80 percent developed, with patches of wetlands located on
74 percent of the shoreline parcels. Elk Lake is estimated to be 78
percent developed with patches of wetlands on 50 percent of the
shoreline parcels (Fuller, 2001). Over 80 percent of the Elk River's
shoreline has been armored with seawall and riprap.
Wildlife Resources
    The upland habitat supports a variety of bird species such as
songbirds and woodpeckers, raptors (hawks, bald eagle), and upland game
birds (wild turkey, ruffed grouse). Larger species such as black bear,
bobcat, coyotes, and white-tailed deer are also found in the uplands of
the project vicinity. Habitat for populations of songbirds, waterfowl,
shorebirds, muskrat, mink, and raccoon are provided by the wetlands and
lakeshores. The predominant small mammal species found near the project
are squirrel, fox, raccoon, mink, muskrat, skunk, and rabbit (Village
of Elk Rapids, 2013).
<IP_ADDRESS> Environmental Effects
    Antrim County does not propose any changes to project operation,
and does not propose any new construction.
Our Analysis
    Based on the fact there would be no changes to project operation,
and there would be no changes to seasonal water levels in the
reservoir, the project would not affect wildlife resources and their
habitats.
3.3.3 Threatened and Endangered Species
<IP_ADDRESS> Affected Environment
    FWS records indicate that that one federally listed endangered
species, the Kirtland's warbler (Setophaga kirtlandii), and 4 federally
listed threatened species: (1) The Northern long-eared bat (Myotis
septentrionalis); (2) Rufa red knot (Calidris canutus rufa); (3)
Pitcher's thistle (Cirsium pitcher); (4) and Houghton's goldenrod
(Oligoneuron houghtonii) are listed as occurring within one or more of
the counties where the Elk Rapids Project exists.\21\
---------------------------------------------------------------------------

    \21\ Except for the federally threatened Houghton's goldenrod,
which is only listed in Kalkaska County, all of the other federally
listed species are known to occur in Antrim, Grand Traverse, and
Kalkaska Counties.
---------------------------------------------------------------------------

Kirtland's Warbler
    The Kirtland's warbler is federally listed as endangered. The bird
species primarily breeds in Michigan's Upper and Lower Peninsulas, but
have also been documented nesting in Wisconsin and Canada since 2007
(FWS, 2012). The Kirtland's warbler nests only in young jack pine
forests of 80 acres or larger that grow on a special type of sandy soil
and contain numerous small, grassy openings (FWS, 2015a). The species
is also migratory, and winters throughout the Bahama Islands. Factors
limiting Kirtland's Warbler populations include their highly
specialized habitat requirements, narrow geographic range, and cowbird
nest parasitism.\22\ No critical habitat has been designated for the
Kirtland's warbler.
---------------------------------------------------------------------------

    \22\ Cowbirds lay one or more eggs in a Kirtland's warbler nest
and their young typically hatch first and overpower the smaller
Kirtland's nestlings (Mayfield, 1992).
---------------------------------------------------------------------------

Rufa Red Knot
    The Rufa red knot is federally listed as threatened. The bird
species is a regular, low-density spring migrant that uses the shores
of the Great Lakes as stopover areas to rest and forage between
wintering and breeding areas (FWS, 2013 and 2014a). Some Rufa red knots
fly more than 9,300 miles from south to north every spring and repeat
the trip in reverse every autumn, making this bird one of the longest-
distance migrants (FWS, 2013). The Rufa red knot is imperiled due to
losses of both breeding and nonbreeding habitat, as well as a reduction
in its primary prey, horseshoe crab eggs. No critical habitat has been
designated for the Rufa red knot.
Northern Long-Eared Bat
    The northern long-eared bat is federally listed as threatened. The
range of the northern long-eared bat includes much of the eastern and
north central United States, as well as the southern and central
provinces of Canada. The species hibernates in caves and mines during
winter months, and typically prefers those with large passages and
entrances, constant temperatures, and high humidity. In the summer,
northern long-eared bats roost singularly or in colonies underneath
bark, in cavities, or in crevices of both live and dead trees (FWS,
2015b). Males and non-reproductive females may also roost in cooler
places, like caves and mines, and foraging primarily occurs within
forested hillsides and ridgelines with moths, flies, and other insects
serving as the main food source. White-nose syndrome, a fungal disease
known to affect only bats, is the largest threat to the northern long-
eared bat, and according to the FWS (2015c), the species would likely
not be imperiled were it not for this disease. No critical habitat has
been designated for the northern long-eared bat.
Houghton's Goldenrod
    The Houghton's goldenrod is federally listed as threatened. The
plant species occurs primarily in the northernmost regions of Lakes
Huron and Michigan. Habitat of the Houghton's goldenrod is restricted
to calcareous beach sands, cobble and rocky shores, beach flats, and
most commonly the shallow, trough-like interdunal wetlands that
parallel shoreline areas (Penskar et al., 2000). Fluctuating water
levels of the

Great Lakes play a role in maintaining the species. During high water
years, colonies of Houghton's Goldenrod may be submerged; when water
levels recede some plants survive the inundation and new seedlings
establish on the moist sand (Michigan DNR, 2015). The species is
threatened by habitat loss or modification caused by residential
development and recreational activities, particularly off-road
vehicles. No critical habitat has been designated for the Houghton's
goldenrod.
Pitcher's Thistle
    Pitcher's thistle is federally listed as threatened. The range of
the plant species is primarily within Michigan's borders, occurring
along the entire shoreline of Lake Michigan, with localities along the
more limited dunes of Lake Huron and a few sites along the shores of
Lake Superior. Pitcher's thistle is most commonly found on large,
intact, active dunes of the Great Lakes; the species requires sand dune
habitat that is subject to natural disturbance processes to maintain
its early successional habitat (Higman and Penskar, 2000). The plant's
survival is threatened by shoreline development, dune stabilization,
recreation, and invasive non-native plants and insects. No critical
habitat has been designated for Pitcher's thistle.
<IP_ADDRESS>.1 Environmental Effects
    Antrim County does not propose any changes to project operation,
and does not propose any new construction. No comments regarding these
species were provided by any resource agency or interested party.
Our Analysis
    The Kirtland's warbler nests only in young jack pine forests
growing on a special type of sandy soil that are about 80 acres or
larger with numerous small, grassy openings. Because this type of
habitat is not present at the project, we conclude that continued
operation of the project would have no effect on this species.
    The Rufa red knot and Pitcher's thistle each require specialized
coastal shoreline habitat of the Great Lakes that does not exist within
the project boundary and are not affected by project operations.
Furthermore, no new construction is proposed for the project.
Therefore, we conclude that continued operation of the project would
have no effect on these species.
    The Houghton's goldenrod is restricted to specialized coastal
habitat primarily consisting of interdunal wetlands and its ability to
reproduce is dependent on the natural fluctuating water levels of the
Great Lakes. There are no interdunal wetlands within the project
boundary. Furthermore, because outflow from the project has no effect
on water levels in Lake Michigan, continued operation of the project
would have no effect on this species.
    Northern long-eared bats could potentially occur in any area with
forested habitat in any county in Michigan; however, the project
boundary is highly developed. According to the FWS (2014b),\23\ trees
found in developed urban areas, such as the lands located around the
project powerhouse, are extremely unlikely to be suitable habitat for
northern long-ear bats. Additionally, the project is not located in an
area that contains kart geologic features (Gillespie et al., 2008),
which can support cave and mine habitat needed for hibernation and
roosting. Although a limited amount of dispersed riparian and wetland
habitat in the project area could be used for foraging, roosting, and
breeding by northern long-eared bats, this habitat would not be
affected because there would be no changes to project operation and
therefore no changes to seasonal water levels. Moreover, Antrim County
does not propose any new construction and no trees would be removed as
part of the proposed relicensing of the project. Also, maintenance
activities would be restricted to areas around the powerhouse and
transmission lines, which do not contain habitat or trees at or nearby
the facilities. Therefore, we conclude that continuing to operate the
project would have no effect on this species.
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    \23\ [Online] URL: http://www.fws.gov/northeast/virginiafield/pdf/NLEBinterimGuidance6Jan2014.pdf. Accessed May 7, 2015.
---------------------------------------------------------------------------

3.3.4 Recreation, Land Use, and Aesthetic Resources
<IP_ADDRESS> Affected Environment
Regional Recreation Resources
    Regional recreation resources in Antrim County include
opportunities for camping, hiking, biking, hunting, fishing, boating,
swimming, picnicking, wildlife viewing and nature photography, ice
skating, skiing, snowmobiling, and parks and fields for a variety of
playground and sport activities. Within the county, outdoor recreation
abounds with the availability of parks, trails, ponds, lakes, trails,
natural areas, and nature preserves. Battle Creek and Kewadin Wetlands
natural areas, along with Palustra-Holm Nature Preserve surround Elk
Lake. Around Lake Skegemog are North Skegemog Nature Preserve and
Skegemog Lake Wildlife Area. Cumulatively, these sites provide 3,300
acres of habitat and wildlife view surrounding both lakes.
    Elk River, Elk Lake, and Lake Skegemog constitute the project's
water bodies. Together, the lakes have a surface area of 16 square
miles and a shoreline length of 37 miles. Elk River is less than a half
mile long. There are 38 public access points and three marinas around
the reservoir or downstream of the project. The public access points
consist of paved boat launches, street ends, beaches, parks, overlooks,
and walking trails. Table 5 identifies all public water access sites
and marinas around Elk Lake and Lake Skegemog, while figure 4 provides
a map of marinas and water access sites around Elk Lake and Lake
Skegemog, and figure 5 provides a detailed map of the same facilities
near the powerhouse.

      Table 5--Public Water Access Sites at the Elk Rapids Project
                             [Source: Staff]
------------------------------------------------------------------------
          Access site                Manager             Facilities
------------------------------------------------------------------------
                                Elk Lake
------------------------------------------------------------------------
Bussa Road Extension..........  Antrim County....  Launch, beach.
Chippewa Trail Extension......  Antrim County....  Launch, beach,
                                                    swimming.
Easly Road Extension..........  Antrim County....  Launch, parking.
East Elk Lake Drive/Schweitzer  Antrim County....  Launch, parking.
 Lane Addition.

Elk Lake Access...............  Antrim County....  Launch, swimming,
                                                    picnic area,
                                                    seasonal floating
                                                    pier and slip,
                                                    parking.
Elk Lake Access--East 3rd.....  Village of Elk     Launch, parking.
                                 Rapids.
Elk Rest Drive................  Milton Township..  Beach, parking.
Hoopfer Road Extension........  Antrim County....  Overlook.
Kewadin Access................  Milton Township..  Paved launch,
                                                    parking.
Milton Township Beach.........  Milton Township..  Beach, swimming,
                                                    volleyball, nature
                                                    trail, parking.
Milton Township Park Annex--    Milton Township..  Pavilions, picnic
 East Elk Lake Drive.                               area, parking.
Quail Street Extension........  Antrim County....  Paved launch,
                                                    parking.
Rex Terrace Extension.........  Antrim County....  Launch, parking.
Ringler Road Park--Site #38...  Milton Township..  Beach, parking.
Rotary Park...................  Village of Elk     Pavilions, picnic
                                 Rapids.            area, parking.
Schweitzer Lane...............  Michigan DNR.....  Launch, beach,
                                                    restrooms, parking.
Terrace Avenue Extension......  Antrim County....  Launch.
Townline Road Extension.......  Antrim County....  Beach, picnic area,
                                                    swimming,
                                                    volleyball, parking.
Wahboos Road Extension........  Antrim County....  Launch, parking.
Whitewater Township Park......  Whitewater         Paved launch, beach,
                                 Township.          fishing, swimming,
                                                    pavilions, picnic
                                                    area, electric
                                                    campsites, restrooms
                                                    and showers,
                                                    volleyball, parking.
Williams Drive................  Milton Township..  Launch, beach,
                                                    fishing, swimming,
                                                    parking.
------------------------------------------------------------------------
                                Elk River
------------------------------------------------------------------------
Bridge Street Access..........  Village of Elk     Paved launch,
                                 Rapids.            parking.
Dexter Street Walkway.........  Village of Elk     Walkway, picnic area.
                                 Rapids.
Elk Rapids Dam Fishing Park...  Village of Elk     Fishing, restrooms,
                                 Rapids.            parking.
Elk Rapids Upper Harbor.......  Village of Elk     Marina, slips and
                                 Rapids.            docks, picnic area,
                                                    restrooms, parking.
Elk River Access--East 3rd....  Village of Elk     Launch, parking.
                                 Rapids.
Elk River Access--US31........  Village of Elk     Paved launch,
                                 Rapids.            parking.
Elk River Boardwalk...........  Village of Elk     Boardwalk, seasonal
                                 Rapids.            floating slips.
Elk River Marina..............  Private..........  Marina, slips,
                                                    seasonal boat
                                                    storage and dry
                                                    docks, restrooms,
                                                    boat rentals,
                                                    customer parking.
4th Street....................  Village of Elk     Launch, parking.
                                 Rapids.
Millers Park Road North.......  Village of Elk     Access.
                                 Rapids.
Millers Park Road South.......  Village of Elk     Access, parking.
                                 Rapids.
West Meguzee Point Road.......  Village of Elk     Launch.
                                 Rapids.
------------------------------------------------------------------------
                           Elk River Spillway
------------------------------------------------------------------------
Kids' Fishing Pond............  Village of Elk     Fishing, picnic area,
                                 Rapids.            parking.
------------------------------------------------------------------------
                           Grand Traverse Bay
------------------------------------------------------------------------
Dam Beach.....................  Village of Elk     Beach, swimming,
                                 Rapids.            picnic area,
                                                    restrooms,
                                                    volleyball, parking.
Elk Rapids Lower Harbor.......  Village of Elk     Marina, paved launch,
                                 Rapids.            slips, beach,
                                                    fishing, pavilions,
                                                    picnic area,
                                                    restrooms, parking.
------------------------------------------------------------------------
                              Lake Skegemog
------------------------------------------------------------------------
Baggs Landing.................  Michigan DNR.....  Paved launch,
                                                    restrooms, parking.
Fairmont Drive--Site #48......  Milton Township..  Launch.
Hoiles Drive NW...............  Clearwater         Launch, parking.
                                 Township.
Skegemog Lake Wildlife Area     Michigan DNR.....  Viewing platform,
 Viewing Platform.                                  nature trail,
                                                    parking.
Skegemog Swamp Pathway........  Michigan DNR.....  Nature trail,
                                                    parking.
------------------------------------------------------------------------

BILLING CODE 6717-01-P

[GRAPHIC] [TIFF OMITTED] TN22MY15.003

[GRAPHIC] [TIFF OMITTED] TN22MY15.004

BILLING CODE 6717-01-C
Existing Project Recreation Facilities
    Within the project boundary, Antrim County owns and maintains an
angler's walkway, attached to the tailrace side of the powerhouse,
which anglers use to access the tailrace for fishing. Antrim County
also owns and maintains the project's parking lot, located adjacent to
the powerhouse, which is where anglers can park their vehicles to
access the walkway.
Recreation Use
    The reservoir is located in the Village of Elk Rapids and the Elk
Rapids, Milton, Clearwater, and Whitewater Townships. These communities
all have small residential populations that nearly double during the
summer when seasonal residents and tourists arrive. Many of the area's
seasonal homes are converting to permanent homes as people retire, and
there is a general demographic shift towards an older permanent
population. A site inventory and field survey were conducted on August
28, 2011, and reported all marinas, access sites, and recreation sites
to be in good to excellent condition.
Land Use
    Land use on the reservoir's shorelines is 80 percent developed,
with primary uses being residential, commercial, and parks/open space.
Seawall and riprap cover over 80 percent of the Elk River's shoreline
to protect the lawns of restaurants, condominiums, and other
residential development along the river.
<IP_ADDRESS> Environmental Effects
    Antrim County does not propose any construction or changes to
current project operation or recreation enhancements. Antrim County
proposes to continue operation and maintenance of angler's walkway,
attached to the tailrace side of the powerhouse, and the project's
adjacent parking lot, which is where anglers can park their vehicles.
Our Analysis
    The continued operation of the angler's walkway and the adjacent
parking lot would ensure that anglers have access to fishing in the
tailrace of the project. In addition, the project's proposed operation
would not change; therefore, the existing recreational access sites
would remain accessible at current water elevations.
    Numerous opportunities for public recreation and access to the
project reservoir exist, which are owned, operated, and maintained by
either Antrim County; the Village of Elk Rapids; the Elk Rapids,
Milton, Clearwater, or Whitewater townships; or the Michigan DNR.
    Antrim County reviewed the most current relevant state, county, and
local planning documents to assess whether the existing recreation
along the reservoir are sufficient to meet current and future needs.
Following document review, Antrim County conducted interviews with
county and local officials to determine: (1) Whether county and local
plans and priorities had changed since the publication of the most
recent plan; (2) whether additional recreational needs had since been
identified; and (3) if the local officials anticipated any changes in
recreational access needs in the future.
    Based on the aforementioned document review and interviews, Antrim
County determined that existing water access to the reservoir would be
sufficient to meet current and future recreational needs. No
quantitative information was used to aid in this determination;
however, local jurisdictions stated that the facilities are adequate,
and no additional recreation or access points are needed to accommodate
current and future recreation needs.
    By 2020, the population for the towns and villages adjacent to the
project is estimated to grow between 3 to 6 percent. The existing
recreational access and facilities around the project's reservoir
should be sufficient for future recreation needs. However, if existing
recreation access or facilities were to reach or exceed capacity, the
FERC Form 80--Licensed Hydropower Development Recreation Report, which
requires a licensee to collect recreation

use data every 6 years, would provide a forum for adding additional
recreation facilities.
3.3.5 Cultural Resources
<IP_ADDRESS> Affected Environment
Area of Potential Effect
    Under section 106 of the NHPA of 1966, as amended, the Commission
must take into account whether any historic property within project's
APE could be affected by the project and allow the Advisory Council on
Historic Preservation a reasonable opportunity to comment if any
adverse effects on historic properties \24\ are identified within the
project's APE. The APE is defined as the geographic area or areas in
which an undertaking may directly or indirectly cause alterations in
the character or use of historic properties, if any such properties
exist. In this case, the APE for the project is the lands enclosed by
the project boundary.
---------------------------------------------------------------------------

    \24\ Historic properties are defined as any district, site,
building, structure, or object that is included in or eligible for
inclusion in the National Register.
---------------------------------------------------------------------------

Regional History
    The Village of Elk Rapids was established in the 1850s, among many
other ``boom towns,'' that sprang up along the mouths of northern
Michigan's rivers to ship the area's natural resources, like semi-
finished iron and lumber, to larger cities further south. The Dexter-
Noble Company, later known as the Elk Rapids Iron Company, bought land
and timber rights in the area and merged with the Elk Rapids Iron
Company, monopolizing all commerce and industry within the village. The
Elk Rapids Iron Company set up an industrial park on the east side of
Elk River, which consisted of a chemical works, charcoal kilns, and a
pig iron blast furnace. Today, the only surviving evidence is part of
the furnace's brick hearth and a Michigan State Historic Marker stating
that the furnace was ``one of the nation's greatest producers of
charcoal iron.''
    The first water-powered sawmill was installed in the early 1850s on
the site of the project's current spillway, but by 1871, the Elk Rapids
Iron Company had also constructed a water-powered, 4-story gristmill
and wooden powerhouse at the site. The saw mill went through a number
of renovations and upgrades before being relocated to the site of the
current powerhouse. During its period of operation, the sawmill
produced 15 million board feet of lumber annually until the facility
was razed in 1915, along with the powerhouse and gristmill, as a result
of the depletion of Northern Michigan white pine.
    The project's powerhouse was constructed in 1916 with a brick
superstructure and housed two generation units in the two south bays.
Equipment for Bay #2 was installed in 1918 and, in 1920, the turbine
from the Elk Rapids Iron Company's old wooden powerhouse was installed
in Bay #1. Bay #3 received a wooden superstructure and a turbine-
generating unit in 1923. Between 1929 and 1930, the brick and wood
superstructure was removed and the current building was built to cover
all four bays. In preparation for the project's 1981 license
application, the Michigan SHPO determined that the building was not
eligible for the National Register.
<IP_ADDRESS> Environmental Effects
    Antrim County does not propose any changes to project operation or
any new construction. In a letter dated October 28, 2010, and filed
with the license application, the Michigan SHPO stated that based on
the information provided for their review, no known historic properties
would be affected by the project.
Our Analysis
    The Elk Rapids Project would not affect any known historic
properties; however, there is always a possibility that unknown
archaeological resources may be discovered in the future as a result of
the project's operation or project-related activities. To ensure the
proper treatment of any archaeological resource that may be discovered,
a provision should be included in any license issued to notify the
Michigan SHPO of any such unanticipated discovery, follow the Michigan
SHPO's guidance regarding an evaluation of the discovery, and, if the
resource would be eligible for the National Register and adversely
affected, implement ways to avoid, lessen, or mitigate for any adverse
effects.

3.4 NO-ACTION ALTERNATIVE

    Under the no-action alternative, the project would continue to
operate as it has in the past. None of the applicant's proposed
measures or the resource agencies' recommendations would be required.
No new environmental protection, mitigation, or enhancement measures
would be implemented.

4.0 DEVELOPMENTAL ANALYSIS

    In this section, we look at the project's use of the Elk River for
hydropower purposes to see what effect various environmental measures
would have on the project's costs and power generation. Under the
Commission's approach to evaluating the economics of hydropower
projects, as articulated in Mead Corp.,\25\ the Commission compares the
current project cost to an estimate of the cost of obtaining the same
amount of energy and capacity using a likely alternative source of
power for the region (cost of alternative power). In keeping with
Commission policy as described in Mead Corp, our economic analysis is
based on current electric power cost conditions and does not consider
future escalation of fuel prices in valuing the hydropower project's
power benefits.
---------------------------------------------------------------------------

    \25\ See Mead Corporation, Publishing Paper Division, 72 FERC ]
61,027 (July 13, 1995). In most cases, electricity from hydropower
would displace some form of fossil-fueled generation, in which fuel
cost is the largest component of the cost of electricity production.
---------------------------------------------------------------------------

    For each of the licensing alternatives, our analysis includes an
estimate of: (1) The cost of individual measures considered in the EA
for the protection, mitigation, and enhancement of environmental
resources affected by the project; (2) the cost of alternative power;
(3) the total project cost (i.e., for continued operation of the
project and environmental measures); and (4) the difference between the
cost of alternative power and total project cost. If the difference
between the cost of alternative power and total project cost is
positive, the project produces power for less than the cost of
alternative power. If the difference between the cost of alternative
power and total project cost is negative, the project produces power
for more than the cost of alternative power. This estimate helps to
support an informed decision concerning what is in the public interest
with respect to a proposed license. However, project economics is only
one of many public interest factors the Commission considers in
determining whether, and under what conditions, to issue a license.

4.1 POWER AND ECONOMIC BENEFITS OF THE PROJECT

    Table 6 summarizes the assumptions and economic information we use
in our analysis. This information, except as noted, was provided by
Antrim County in its license application filed with the Commission on
December 21, 2012, and in deficiency and additional information request
responses filed on October 16, 2013. We find that the values provided
are reasonable for the purposes of our analysis. Cost items common to
all alternatives include: (1) Taxes and insurance costs; (2) estimated
future capital investment required to maintain and extend the life of
plant

equipment and facilities; (3) licensing costs; and (4) normal operation
and maintenance cost. Because the project is operated by a
municipality, no federal or local taxes were considered. Pursuant to 18
Code of Federal Regulations 11.1 (a)(1) a hydropower project's
authorized installed capacity must be above 1.5 MW to be assessed
annual charges. Therefore, no Commission fees are assessed. All dollars
are year 2015.

                     Table 6--Parameters for the Economic Analysis of the Elk Rapids Project
                               [Source: Antrim County, 2012; as modified by staff]
----------------------------------------------------------------------------------------------------------------
            Economic parameter                              Value                              Source
----------------------------------------------------------------------------------------------------------------
Installed capacity (MW)..................  0.700.................................  Applicant.
Average annual generation (MWh)..........  2,422.................................  Applicant.
Annual O&M cost..........................  $110,497 \a\..........................  Applicant.
Cost to prepare license application......  $179,046 \a\..........................  Applicant.
Undepreciated net investment.............  $511,560 \a\..........................  Applicant.
Period of economic analysis..............  30 years..............................  Staff.
Term of financing........................  20 years..............................  Staff.
Cost of capital (Long-term interest rate)  8.00..................................  Staff.
 (%).
Short-term interest rate (during           8.00..................................  Staff.
 construction) (%).
Insurance rate (%).......................  0.25..................................  Staff.
Energy rate ($/MWh) \b\..................  32.37.................................  Staff.
Capacity rate ($/kilowatt-year)..........  162.00................................  Staff.