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HomeMy WebLinkAbout120712-ADL 108047 Easement PD final signedALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF MINING, LAND AND WATER SOUTHEAST REGIONAL OFFICE Preliminary Decision to Grant Public Easement under AS 38.05.850 City of Tenakee Springs ADL 108047 Indian River Hydro PROPOSED ACTION: The City of Tenakee Springs (CTS) has submitted an easement application to the Alaska Department of Natural Resources, Division of Mining, Land and Water, Southeast Region (DMLW) to install a small run -of -river hydro electric project (installed capacity of about 120 to 250 kW) on Indian River. The facility will generate approximately 900 to 1,500 MWh of electricity per year. The electric utility that will use the electricity from this project is the City of Tenakee Springs dba Tenakee Springs Electric Utility Department. CTS operates its Electric Utility Department as a Public Utility under Certificate of Public Convenience and Necessity #363. The project components to be located and developed on State owned uplands are: 1) an access road from the existing United States Forest Service 7500 road (Indian River Road) to the power site area; 2) a 6-foot-high, 30-foot-wide instream diversion/ intake structure to divert water out of the Indian River; 3) a 40-inch-diameter, 1,550-foot-long penstock; 4) a 30-foot-wide by 40-foot- long powerhouse to house the 250 kW turbine -synchronous generator; 5) a 50-foot-long tailrace returning flows back into the river; 6) an estimated 4,500-foot-long transmission line to deliver the electricity; and (6) appurtenant facilities. The instream diversion structure is located at about river mile 0.85 and the powerhouse is located at about river mile 0.55. The power site facility is about one mile northeast of the City of Tenakee Springs. The entire project will affect portions of State land in sections 15, 21, and 22 of Township 47 South, Range 63 East Copper River Meridian. DMLW proposes to issue a public easement to CTS for this purpose. The recommended maximum easement width for the access road is 60 feet (11 AAC 51.015(d)(1)(D)) but shall conform to ❑NR Division of Forestry (DOF) standards for timber haul roads where the minimum width is 20 feet. The width for the transmission line is 30 feet (11 AAC 51.015(d)(1)(A)). The width of the hydro portion of the project will vary to accommodate the improvements as well as any additional area needed for the purposes of safe operation of the facility. Public easements are not subject to a term; instead the Grantor (DMLW) reserves the right to allow other like or compatible uses of the easement and the right to require such users to enter into an equitable maintenance agreement with the holder of this easement. The equitableness of any such agreement shall be determined by the Grantor. The proposed development plan diagram for the project is included in this preliminary decision as Attachment A. In order to issue this easement DMLW first requires an as -built survey that identifies where the improvements were put on State land. To do so DMLW will issue CTS an early entry authorization (Attachment B) to allow them to go onto State land to construct the project and then Preliminary Decision ADL 108047 Page 1 of 11 complete the As -Built survey of where the improvements are located and the final acreage required to incorporate them into the easement. Under the authority of 11 AAC 53 the as -built drawing shall represent a post construction survey showing the project as constructed and shall not be a pre -construction plan of proposed improvement locations. The issuance of an early entry authorization is the only affective means to do so. AUTHORITY: Alaska Statutes (AS) 38.05.020, Authority and Duties of the Commissioner; AS 38.05.035, Powers and Duties of the Director; and AS 38.05.850, Permits. Alaska Administrative Code (AAC) - 11 AAC 51 Public Easements; 11 AAC 55, Land Planning and Classification; and 11 AAC 96 Miscellaneous Land Use. ADMINISTRATIVE RECORD: Case file ADL 108047 is the administrative record for this case. Also incorporated by reference are the Northern Southeast Area Plan, adopted October 2002; National Community Grant State Selection 21; Public Domain Community Grant Selection 87; case file ADL 106536 Indian River Road - civil case no. A86-630; ADL 106204 - public easement to USFS for Indian River fish pass and access trail; and ADL 102323 (TPT 321). BACKGROUND: The high cost of diesel fuel is the principal motivator for many small communities in Alaska to seek alternatives to diesel generated electricity. Southeast Alaska is an ideal place to generate electricity by using hydro power. CTS is one of these communities investigating hydro power as an option and hired a consulting firm to conduct a feasibility study to determine if the Indian River could provide a suitable supply of electricity for the community. The recommendation was to develop a run -of -river hydroelectric project with an estimated annual energy generation of 900 to 1,500 MWh. This generation would supply approximately 90% of the current electrical demands to the residents of CTS and displace about 44,400 gallons of diesel fuel per year. The funding for this project is being pursued through the Alaska Energy Authority (AEA). In the next phase, which is the construction phase, AEA will not provide funding for it until all final project designs and all permits are in place. CTS has until August 2012 to do this and apply for the funding. The issuance of our Early Entry Authorization is one of the authorizations that CTS will need to have in order to receive this construction funding. SCOPE OF DECISION: Under AS 38.05.035(e)(1)-(2), the scope of this administrative review for the proposed easement is limited to (1) reasonably foreseeable, significant effects of the uses proposed to be authorized, (2) applicable statutes and regulations, (3) the facts pertaining to the land or resources, and (4) to issues that are material to the determination that the proposed easement will best serve the interests of the State. The scope of this review is limited to the sections of State uplands identified in this decision that were obtained under National Forest Community Grant State Selection 21 and Public Community Grant Selection 87. This easement will require that trees be removed from State land. The DNR Division of Forestry (DOF) manages this resource on State land and DMLW defers to them in regards to the disposition of merchantable timber. It is recommended that there be a condition in the Early Preliminary Decision ADL 108047 Page 2 of 11 Entry Authorization that requires the applicant to contact the DOF for what they will be required to do for the disposition of merchantable timber. Regarding the construction of the new access road, DMLW does not have a minimum set of criteria for standards to construct road on State land. We defer to the DOF standards for roads that are built to access their timber sales (Attachment C). It is recommended that a condition is included in the EEA that the roads are built to these minimum standards. LOCATION/LEGAL DESCRIPTION: Those State lands between river mile 0.55 and 0.85 of the Indian River about one mile northeast of the townsite of the City of Tenakee Springs. Leal Description: Copper River Meridian Township 47 South Range 63 East sections 15, 21, and Munici all : City of Tenakee Springs incorporated as a 2nd class city in 1971. WATER BODIES: Indian River TITLE / LAND STATUS: Acquisition Authority: NFCG 21 and GS-87. Title Report: Title Report RPT #3285 current as of 3-16-2012 Title Status: The State of Alaska holds fee title to the land and mineral estates for the Title Report Project Area. Title Restrictions: Subject to valid existing rights, including reservations, easements, and exceptions in the U.S. Patent or other state or federal conveyance. Mineral Status: The proposed project will not affect the subsurface estate. Navigability:.A navigability determination was not requested for this section of Indian River because the adjoining uplands are State owned managed by DMLW. In the future if the uplands are conveyed to another entity it is recommended that before the conveyance is made that there is an evaluation on if such a determination of navigability would be necessary. ECONOMIC BENEFIT AND DEVELOPMENT OF STATE RESOURCES: Per AS 38.05.850(a), DMLW must consider whether this project will provide direct and/or indirect economic benefits to the State, and whether it will encourage development of the State's resources. Dependable affordable electricity is a cornerstone for both residential and commercial development in communities. In Southeast Alaska that dependable source is hydroelectricity. In small communities if the source is in reasonable proximity to the community the economics to develop that source are such that it becomes a less expensive source of electricity compared to other alternative sources such as diesel. The State often subsidizes the cost of diesel fuel for the generation of the electricity in smaller communities. In the case of CTS, the direct benefit to the State, at an assumed value of $5.00 per gallon for diesel fuel and a savings of about 44,400 gallons of diesel per year equates to a savings value of about $220,000.00. For example if this was money that the State was providing to CTS through their Preliminary Decision ADL 108047 Page 3 of 11 power cost equalization program this money could now be directed to another community. An indirect benefit to the State is that for people looking for a remote greener type living style to live in and/or develop a business is that a remote community with this type of energy source would be attractive. EASEMENT REVOCABILITY: Per AS 38.05.850(c), DMLW is directed for purposes of public notice to determine by evaluation of the nature and duration of the intended use of this easement whether it is functionally irrevocable. To determine if the easement is functionally irrevocable DMLW bases this on a two test analysis as directed by the Supreme Court of the State of Alaska in opinion number 5279 dated June 2, 2000. The two tests are:1) the likelihood of revocation, i.e. the revocation would result in the destruction of the grantee's sizable investments and 2) the long- term and harmful character of the environmental impact. The likelihood of revocation test: This is a project that is seeking and requires public funding from the Alaska Energy Authority. The estimated direct construction cost is $1,752,000.00 and the estimated installed cost is $2,590,000.00.1 Once in place the cost savings to the rate payers based on an estimated annual displaced diesel fuel of 44,400 gallons and a conservative value of $5.00/gallon would result in an annual savings of about $220,000.00. Adjudicator Assessment: In the court decision it was identified that "This permit is not a property right. It is a temporary authorization, revocable by the state with or without cause." In assessing the "revocable without cause' section DMLW will not revoke this authorization without cause. One reason for this is that DMLW may be subject to repaying AEA that portion of the public funds already spent on the project. Under the "with cause" section of the condition DMLW would only do so for a very significant reason. Adjudicator Conclusion: Under this test the easement is functionally irrevocable and would only revoke if no longer needed for this purpose. Since this project provides a direct community benefit, it is considered to be irrevocable. The long-term and harmful character of the environmental impact test: There are no large structural components to this project. The powerhouse is the largest at about 1200 square feet. The actual acreage affected by the project is conservatively less then 10 acres. If the hydro project for whatever reason could no longer serve the purpose of providing electricity to the community or was replaced by a different source of electricity the projects improvements could be removed from State land. The components of the project and the scope of the project are not large enough that they could not reasonably be removed. Adjudicator Assessment: There is no past evidence that DMLW is aware of for similar type easement improvements that have caused a long-term harmful environmental impact. Past field inspections of sites that are similar in nature such as logging roads or structures similar to the powerhouse that have been removed or rehabilitated show that revegetation actively occurs to reclaim the sites. Indian River Hydroelectric project Pre -Application Meeting March 10, 2010 Preliminary Decision ADL 108047 Page 4 of 11 Adjudicator's conclusion: Under this test the easement is functionally revocable. When DMLW concludes differently for each test, then it is a matter of which test is of a greater significance on the proposed project if DMLW were to take an action. In this case the action to revoke in test one would be significant versus in the second test if the improvements were left in place and not removed_ Based on this conclusion DMLW has determined that the easement is functionally irrevocable. Therefore for purposes of identifying what the adjudication process from this point forward will be in order to comply with the direction of the court order, DMLW has determined that the "best interest finding" process will be followed. The significance of this is that:1) a two step decision process will be used, this document is the first step or preliminary decision; 2) public notice of this decision will be done and will conform with the public notice requirements under AS 38.05.945; 3) any comments received during the notice period will be addressed in the final decision; 4) the rights to appeal the final decision will be limited to only those who commented during the comment period; and 5) any appeal of the decision will stay any further action by DMLW until a Commissioner decision is made. DMLW's decision will not take affect immediately. PLANNING AND LAND USE CLASSIFICATION: The State land in the vicinity of the proposed easement is subject to the Northern Southeast Area Plan dated October 2002. The proposed project is within the Chichagof Island Area, Tenakee unit parcels C-30, 31, 32 and 33. Parcel C-30: This parcel is to be managed consistent with the requirements of the court order dated March 9,1981 that designates the area of this parcel as a "public facility reserve." Lands within this parcel are to be retained by the state and are to be (only) used for public facilities or uses. This parcel is greatly affected by this court order, specifically paragraph 1.4 which designates it as a "public facilities reserve." The improvement associated with this hydro facility that are within the parcel is the underground transmission line that will transfer the electricity produced from the Indian River to the City of Tenakee Springs transformer station. The hydro project is a public facility and the improvements will not interfere with other public facilities or uses and DMLW has deemed it compatible with the area plan designation of "public facility reserve." Parcel C-31 USS 2459 & Parcel C-32 USS 6855 : These two parcels are designated as "public facilities -retain" and as such are to be retained by the state and managed to accommodate the current recreational uses associated with a trail in the northern half of the parcel and potential development related to marine support activities adjacent to the waterfront. Other than uses related to the boat harbor or other public uses, further development of this parcel is not considered appropriate. There is an existing power line that provides power to the harbor and this transmission line will connect into this line. The line is to be buried. This activity is considered to support development that is compatible with the management intent for these two parcels. Preliminary Decision ADL 108047 Page 5 of 11 Parcel C-33: Again this parcel is to be managed consistent with the requirements of the court order dated March 9,1981 that designates the area of this parcel as a'public recreation area'. Lands within this parcel are to be retained by the state and are to be (only) used for dispersed recreation or public facilities associated with recreation. This parcel is also greatly affected by this court order, specifically paragraph 1.1, which designates this parcel as a'public recreation area'. The major portion of the project components are in this parcel: the outtake structure, the pen stock, the powerhouse, and the access road. This is not a recreational public facility therefore DMLW would deem it incompatible with this parcel's designation. But further review of this same court order in paragraph 5 states, "The state will grant pipeline rights -of -way to the City according to normal procedures. The state recognizes that the City is considering a hydroelectric and domestic water supply project near Indian River; the state acknowledges that the purpose of its retention of land in the public recreation area at Indian River does not preclude a pipeline right-of-way." In conclusion this court order clearly identifies that the hydro facility is an allowable use within this designation and that the state will grant the right-of-way now identified as an easement. Mineral Orders: None. Local Planning: Portions of the proposed easement may be subject to local planning and zoning ordinances. The applicant is the local planning and zoning authority, they will ensure that the proposed easement is consistent with their local planning requirements. ENVIRONMENT: The proposed project is not expected to have any significant impact on topography and marine sediments, water resources, minerals, oil and gas resources, or heritage resources. HAZARDOUS MATERIALS AND POTENTIAL CONTAMINATION: It is DMLW's management responsibility to protect the overall public interest if there is a reasonable expectation that a hazardous condition, or hazardous, toxic or radiological material or contamination from such material exist or is known to exist on the land being disposed of. No hazardous material or contamination from hazardous material is known to exist on the land proposed for easement. Environmental risk associated with this proposed easement should be minimal. STATE AGENCY REVIEW AND PUBLIC NOTICE: State Agencv Review: Agency review will be conducted during the public notice period for this application for easement. Comments will be addressed in the final decision. If comments are significant to where they warrant a substantive change to this preliminary decision; then DMLW will determine if these changes warrant a second public notice of the revised decision. Agencies that will be provided notice are ADFG Division of Habitat -- Juneau, ADNR Division of Parks & Outdoor Recreation Office of History & Archaeology Alaska Historical Commission, ADNR Division of Forestry, and ADNR Water section of DMLW. Per SERO email dated 10-6-11 notice is to be provided to ADFG Division of Sport Fish/ HQ/ Access and Defense Program. Preliminary Decision ADL 108047 Page 6 of 11 Public Notice: This easement is decisioned as an irrevocable easement therefore a AS 38.05.945 level notice is required. This project requires access through a United States Forest Service access reservation and it also affects the authorization we have issued to the FS for a fish bypass structure so they will be given notice. Notice will be posted on the State of Alaska On-line public notice system. Additional parties/ entities to which notice will be given are identified in the filet. ACCESS: The physical access to the proposed easement is via the former log transfer facility (LTF) in Sunny Cove and the associated mainline logging road to the LTF. The portion of the LTF on tide and submerged land where the construction barge and other marine vessels will need to land is authorized to the City of Tenakee Springs under casefile, ADL 102323 (TPT 321), and is to be used for public purposes. The road from the LTF to where the road needs to be built is owned by the FS and is commonly known as the Indian River Road. The hydro site is about 1/¢ mile off of this road. A new road will need to be built from Indian River Road and will be a part of this easement. EARLY ENTRY AUTHORIZATION: An early entry authorization (Attachment B) will be required to be issued in order to allow the CTS to go onto State land, build the project; and after it is constructed complete the as -built survey of it. After this as -built survey is approved by DNR's CadastraI Section and recorded as an engineering plat file, DMLW will then be in a position to issue this public easement. PERFORMANCE GUARANTIES AND INSURANCE: CTS is a 2nd Class City therefore a performance guaranty and insurance are not required by DMLW. AS -BUILT SURVEY: The applicant will be required to complete an easement diagram (As -Built Survey) prepared by a registered land surveyor to Division standards prior to issuance of the easement. All survey costs shall be borne by the applicant. The area shown on Attachment A is the basis for the survey. At a minimum this boundary of the easement area will be drawn so that all constructed improvements will be located within the easement area and/or according to widths as defined by regulation under the standards for public easements. In this case the Southeast Regional Office (SERA) of DMLW does not have the expertise to determine if the "General Survey Instructions Easements" for minor projects are appropriate or if the project will require "Special Survey Instructions" issued by the Division. The project leaves State land at two points and enters State land at one point which requires a Class III level survey. The appropriate entity within DNR to make this determination is the Survey Section located in the DMLW office in Anchorage. SERO will send with the Early Entry Authorization a "Request for As -Built Survey Instructions." The applicant will retain a qualified surveyor to do the work and who will be '- Checklist for 945 Public Notice dated 7-9-12. Note — During the last legislative session section (6) of AS 38.05.945 was revised. Preliminary Decision ADL 108047 Page 7 of 11 identified on this request. The request will be returned to SERA; they will then attach a copy of this decision to the request and forward it to DNR's Survey Section. It is this section of DNR that will determine the level of survey instructions for this project and then provide them to the applicant's surveyor with the appropriate instructions to complete the As -Built survey of this public easement. After completion and appropriate approvals the survey will be recorded as an engineering plat file. After recording of the plat DMLW will then be in a position to issue this easement. DISCUSSION AND ALTERNATIVES: The proposed project is intended to provide greater energy security to the City of Tenakee Springs by providing the community with dependable locally generated electricity from this run of the river hydro project. It is projected to displace about 44,400 gallons of diesel fuel per year, this equates to a benefit -cost ratio of 1.333. Alternatives Considered: 1. Authorize the proposed use. 2. Deny the proposed use. Alternative I (Preferred): Alternative No.1 is the preferred alternative. Hydro projects, such as this one, provide for clean affordable electricity to those small communities that can take advantage of such hydro sites as Indian River. It lessens the community's dependence on expensive diesel fuel to produce electricity. Alternative 2: This alternative is not preferred. Electricity produce by diesel fueled generators is a reliable back up, but if a community can provide alternative means of providing electricity to what is becoming an expensive means of producing electricity, then it is in the best interest of the State to approve those alternatives. In southeast Alaska, electricity produced by hydro power is a proven reliable economic alternative to diesel fuel. RECOMMENDATION DMLW recommends issuance of the easement described herein to the City of Tenakee Springs, subject to the following conditions: 1. The easement shall be subject to the standard DMLW Division of Mining, Land and Water Public Easement, revised May 2009 (Attachment D) and special stipulations. 2. The easement and early entry authorization (EEA) shall contain modifications and/or provisions that are justified by public comment. 3. The term of the easement shall be in perpetuity. The term of the early entry authorization shall be five years but can be extended for a period of up to one year at a time if needed. s Indian River Hydroelectric Project Pre -Application Meeting March 10, 2010 Preliminary Decision ADL 108047 Page 8 of 11 4. The applicant shall complete during the period of the early entry authorization an approved easement diagram (As -Built survey) as specified in this decision and as depicted in Attachment A. 5. This EEA grants non-exclusive use for the purpose of entry, site development, as -built survey and for use of authorized temporary improvements placed in the proposed easement corridor until the easement is granted. This EEA does not grant an interest in the land and as such is revocable immediately, with or without cause. Development shall be limited in form and scope to those improvements, and the general alignment shown on Attachment A_ Land use shall not exceed the easement dimensions explicitly approved on Page 1, unless approved in writing by the regional office prior to installation or construction. Only those improvements as shown on Attachment A are authorized to be constructed and maintained by this EEA. Use of the land for any other purpose is prohibited. 6. The Grantee may not transfer or assign this EEA to another individual, corporation, agency or other entity. 7. To address the disposition of merchantable timber within the easement corridor the permittee is required to contact the Department of Natural Resources, Division of Forestry (DOF) - Northern Southeast Area Office on the manner in which this merchantable wood will be disposed. All merchantable timber cut from within the easement corridor shall be decked at a location acceptable to the DOF. DMLW will defer to DOF on if merchantable timber can be used in the construction of any of the easement improvements. Merchantable timber is defined as having a minimum 6 inch diameter with a 12 foot length and a 1/3 sound Scribner volume. 8. For hazard trees that are outside the easement corridor and are required to be cut, the permittee will first need to contact DOF for permission to do so. 9. The minimum standards for construction of the access roads shall be those identified in Attachment C - Road Construction and Maintenance Requirements. PRELIMINARY DECISION Prepared by: i" Jim Anderson Natural Resource Specialist I r L / — lcf),_ Date Preliminary Decision ADL 108047 Page 9 of 11 The preliminary decision presented above has been reviewed and considered. I find that the recommended action may be in the State's best interest and is hereby approved to proceed to public notice. David L. Kelley Date Regional Manager PUBLIC NOTICE, FINAL DECISION AND APPEAL PROCESS: A public notice seeking comments on the preliminary decision will be posted on the Alaska Online Public Notice System available at www.state.ak.us (click on "Notices" at top of page). Notice will be given to those parties having an interest in the adjacent land. In this case the adjacent upland owner is the United States Forest Service. The post office in the City of Tenakee Springs will be requested to post the notice in a conspicuous location. In addition notices will be sent to the City of Tenakee Springs to post, the City is also the applicant. State Agency Notice: Notice will be given to the Alaska Department of Fish & Game and to DNR's Divisions of Forestry, Parks and Outdoor Recreation, and the Water section of Mining Land and Water to solicit their comments on the proposed action. The public is invited to comment on this preliminary decision to issue this public easement. Comments must be received in writing by the Division of Mining, Land & Water at 400 Willoughby Ave., Suite 400, P.O. Box 111020 Juneau, Alaska 99811-1020, by fax at 907-586-2954, or by electronic mail to �m.anderson@)alaska. ov by c.c u f 3I cin order to ensure consideration (please include postal mailing address and a telephone contact). All persons interested in this decision and in establishing their appeal rights, are required by law to meaningfully participate in the decision process by commenting on the decision, in writing by the above deadline. Following the comment deadline, all written responses will be considered and this decision may be modified to incorporate public comment. Accommodations for disability are provided on request. Persons with audio impairment may call between 10am and 5pm, M-F at TDD (907) 269-8411. If public comment in response to this notice indicates the need for significant changes in the decision, additional public notice will be given at a later date. If no significant change is required, the preliminary decision, including any minor changes, will be issued as the final decision. A copy of the final decision including instructions on filing an appeal will be sent to any person who comments on the preliminary decision. Persons who do not submit written comment during the comment period will have no legal right to appeal the final decision. Preliminary Decision AFL 108047 Page 10 of 11 ATTACHMENTS: Attachment A: Attachment B: Attachment C: Attachment D: Proposed Development and Operations Plan Proposed Early Entry Authorization Road Construction and Maintenance Requirements Proposed Public Easement Preliminary Decision ADL 108047 Page 11 of 11