Decision Notice and Finding of No Significant. Blue Lake Hydroelectric Project Expansion

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1 .,,-=-- Decision Notice and Finding of No Significant Blue Lake Hydroelectric Special Use Authorization Sitka Ranger District Tongass National Forest Sitka, Alaska Project Expansion Issuance Impact Decision This documents my decision to issue a Special Use Authorization to the City and Borough of Sitka (City of Sitka or licensee) for the use of National Forest System (NFS) lands relevant to the Blue Lake Hydroelectric Project (Blue Lake Project or project) expansion. Based upon my review of the Blue Lake Hydroelectric Environmental Assessment (EA), I have decided to authorize use ofnfs land based on the Staff Alternative as described in the EA. The project is located within the Tongass National Forest, and currently occupies acres of federal land (including 25.1 acres for transmission line), administered by the U.S. Department of Agriculture, Forest Service (Forest Service). Under the City of Sitka's expansion proposal, 362 additional acres ofland around Blue Lake would be inundated, 25.1 acres of NFS lands would be needed for burying transmission line, and the project boundary would be extended to include an additional acres of lands administered by the Forest Service. Issuance of a Special Use Authorization is provided for by the Federal Land Policy and Management Act (FLPMA) of Under FLPMA, conditions in the Special Use Authorization must comply with existing laws, protect federal property, provide for efficient land management, and protect the public interest. The term ofthe Special Use Authorization will be for 26 years and will run concurrently with the remainder of the 30-year Federal Energy Regulatory Commission (FERC or Commission) license for this project. Decision Rationale Due to unprecedented load increase, the City of Sitka expects an increase of percent in annual load demands from , according to its September 2008 electrical load growth forecasts for the Sitka service area. The Blue Lake Project (FERC No. 2230) currently generates an average of 63,680 megawatt-hours (MWh) annually; any excess energy demand must be fulfilled by the use of diesel-fired generators. The Blue Lake Project expansion would increase installed hydroelectric capacity by 9.36 MW and average annual generation by approximately 32,000 MWh. It would therefore meet a significant proportion of the city's projected electricity demands, while also displacing diesel-fueled generation and thereby conserving nonrenewable fossil fuels and avoiding their associated emissions.

2 -::-=-- Background On November 23, 2010 the City and Borough of Sitka, Alaska, licensee for the Blue Lake Project No. 2230, filed an application to amend its license in order to raise the project's dam, expand the reservoir, replace several turbine/generator units, and modify other project features. May 2012, FERC published a Final Environmental Assessment (EA) for the project. Public notice of the EA was published in the Federal Register on May 30,2012. On May 30,2012, FERC issued an amending license for the project. Details of the license are located in Appendix 1, Order Amending License and Revising Annual charges (License). The Blue Lake Hydroelectric Project Expansion EA and the License document the environmental analysis and conclusions upon which this decision is based. The Forest Service participated in the preparation of these analyses, including providing mandatory conditions for licensing and a thorough review ofthe documents. I am, therefore, adopting this EA, as allowed by the CEQ Regulations for Implementing the National Environmental Policy Act (40 CFR ), to provide the supporting analysis for the decisions made in this Decision Notice. On July 7,2012 the Forest Service noticed the availability of this EA to solicit public comment and to provide an opportunity to gain standing for appeal per the regulations at 36CFR215. The legal notice was published in the Ketchikan Daily News, the newspaper of record for a decision made by the Forest Supervisor. A paid advertisement was also put in the Daily Sitka Sentinel to increase local awareness of the activity. No comments were received. The EA is available from the Tongass National Forest website at 1O/tongass/projects/nepa project.shtml?project= Project Description The existing Blue Lake project has three components: 1) the Blue Lake development itself; 2) the fish valve unit; and 3) the pulp mill feeder unit. The project will occupy federal and nonfederal lands. The main component of the license amendment is raising the dam at Blue Lake which will not take place on NFS lands. The City of Sitka's proposal includes the following modifications: The dam crest will be raised by 83 feet (non-national Forest System (NFS) lands). Equipment access and dam staging facilities will be created (NFS lands and non-nfs lands). Vegetation around the reservoir and in Blue Lake Creek Valley would be left in place prior to inundation, excepting the clearing of vegetation to create a 21-acre debris disposal area (NFS lands and non-nfs lands). Three debris containment booms would be installed on the reservoir (NFS lands). A 1400-foot long power distribution line installed underground from the fish valve unit along the tunnel alignment to Blue Lake Road and along the road to the dam site (NFS lands and non-nfs lands).

3 Blue Lake Road would be adjusted to accommodate heavy equipment transport, and the construction facilities would include two spoil areas outside of the project boundary, one on Green Lake Road and the other at the Sawmill Creek Industrial Park (NFS lands and non-nfs lands). Use of National Forest System land would increase to 1,798 acres from 1,676.46, and usage of non-federal land would increase to 115 from acres. Total acreage would therefore increase to 1,913 acres from 1, Alternatives No Action Alternative - Under this alternative, FERC would not issue an amendment for the project, and the current Blue Lake hydroelectric installation would not be modified. The City of Sitka would be required to source its increased electricity generation from fossil fuels. No Forest Service permits would be required. Proposed Action - Applicant's original proposal as noted in the Project Description above. Proposed Operational Modifications - In this alternative seasonal drawdown would decrease to feet from the foot drawdown that is typical of the existing dam height. Proposed Environmental Measures - To mitigate effects ofthe license amendment, the City of Sitka would: Implement the final Erosion and Sediment Control Plan to avoid effects on water quality and aquatic resources during construction Implement the Reservoir Inundation Plan Implement the Water Quality Monitoring Plan Implement the final Fisheries Monitoring Plan Construct a new intake system to avoid impacts from colder water Comply with the City of Sitka's Watershed Management Plan to address concerns about increased access related to higher lake levels Prepare and implement a Wildlife Disturbance Avoidance Plan Implement the Environmental Compliance Monitor Plan Implement the Bear Safety Plan Implement the Reservoir Access Control Plan Implement the Cultural Resources Monitoring Plan Implement the Cultural Resources Protection Plan Modifications to Licensee's Proposal- Mandatory Conditions Portions of the project are located within the Tongass National Forest. As part of the earlier relicensing process, the Forest Service submitted 12 conditions pursuant to section 4(e) of the Federal Power Act (FPA) on February 7,2007. These conditions are summarized below and are Decision Notice and Finding of No Significant Impact

4 ,,--,...- available in the February 7,2007, Forest Service filing; in Appendix A of the relicensing EA issued by the Commission on April 7,2007; and the July 10, 2007, license order. Condition No.1 - Requirement of Forest Service approval on project design changes Condition No.2 - Requirement of yearly consultation with the Forest Service Condition No.3 - Requirement a hazardous substance plan prior to new construction or maintenance Condition No.4 - Requirement maintenance of facilities, improvements, or equipment Condition No.5 - Requirement restoring land prior to surrender of th6 license Condition No.6 - Restricts pesticide use Condition No.7 - Requirement of heritage (cultural) resource protection Condition No.8 - Requirement of seasonal minimum instream flow releases consistent with the City of Sitka's proposal Condition No.9 - Requirement of sampling rates consistent with the City of Sitka's proposal Condition No Requirement of Sawmill Creek Campground improvements consistent with the City of Sitka's proposal Condition No Requires Blue Lake Road improvements consistent with the City of Sitka's proposal Condition No Requires Blue Lake Road maintenance during the term of the license In response to the City of Sitka's proposal to amend its current project license, the Forest Service filed mandatory 4(e) conditions on June 7, 2011, and these conditions are evaluated as part of the City of Sitka's proposal. The Forest Service stated that this project does not conflict with any existing or proposed projects and is consistent with the purposes for which the Tongass National Forest was created and/or acquired. The Forest Service states that it does not have an objection to an issuance of a license amendment, subject to certain conditions necessary for the protection and use of National Forest System lands and resources affected by this project. The Forest Service said that it expects to issue a special use authorization for the project if it is licensed by the Commission. Condition No Requirement to Obtain a Forest Service Special-Use Authorization Condition No Forest Service Approval of Final Design Condition No Traffic Safety Condition No Safety During Project Construction Condition No Implementation and Modification of Forest Service Conditions Condition No Modifications of 4(e) Conditions after Biological Opinion or Certification Condition No Project Mitigation and Monitoring Plan Condition No Environmental Compliance Monitor

5 Condition No Noxious Weed Management Plan Condition No Erosion Control Plan Staff Alternative - The staff alternative includes the City of Sitka's proposed action and staffrecommended modifications and additional measures. Staff-recommended modifications to the City of Sitka's measures are: (1) developing and implementing a detailed long-term Water Quality Monitoring Plan and a Construction Water Quality Monitoring Plan; (2) complying with Forest Service 4(e) Condition No.3 of the current license, which requires preparation ofa Hazardous Substance Plan; (3) developing and implementing a detailed Fisheries Monitoring Plan; (4) developing and implementing a Revegetation Plan; (5) including as a component of Forest Service 4(e) Condition No. 19 a grassland mitigation measure and a monitoring plan to measure natural generation of wetlands around the new high water elevation; and (6) developing and implementing a Rehabilitation Plan for the removal or partial removal of decommissioned infrastructure. The staff alternative includes all the 4(e) conditions specified by the Forest Service. Staff Alternative with Mandatory Conditions -Incorporation of these mandatory conditions into an amended license would not cause modification or elimination of any of the environmental measures included in the staff alternative. Other Alternatives - Commenting entities and Commission staff did not identify any other reasonable alternatives. Public Involvement The City of Sitka carried out pre-filing consultations with stakeholder organizations using the Commission's Alternative Licensing Process. On April 16 and 17, 2008, the City of Sitka conducted initial consultation meetings in Juneau and Sitka respectively, as well as a site review on April 17,2008. Scoping Document 1 was filed on November 11, 2008, and a follow-up meeting was held on December 11, Following comments received by the Forest Service and Sitka Conservation Society, Scoping Document 2 was filed on June 29,2009. Study plans were developed to address various issues of concern, and a draft amendment application was filed along with a preliminary draft environmental assessment on March 9, The final amendment application and the final draft environmental assessment were filed on November 23, 2010 after receipt of comments. Supplemental information was added on March 10 and April 6, 7, and 14,2011. On April 8, 2011 the Commission issued public notice that the amendment application was accepted for filing, that the project was ready for environmental analysis, and soliciting comments, recommendations, terms and conditions, and prescriptions. In response, timely notices of intervention were filed by the Forest Service, which also filed 4( e) terms and conditions, and the Alaska DF&G, which filed recommendations as well. A comment was also filed by a member of the public who did not identify himself or herself. On January 12, 2012, Commission staff issued an Environmental Assessment (EA) for the proposed action. Comments related to the EA were filed by the Forest Service, Alaska DF&G, the Department of the Interior, and the licensee. These comments are discussed in the final EA

6 -::-= issued concurrently with the Order Amending License. FERC concluded that the proposed amendment for the Blue Lake Project, with the mitigation measures required by the order, would not constitute a major federal action significantly affecting the quality ofthe human environment. This action was listed as a proposal on the Tongass National Forest Schedule of Proposed Actions beginning July The project status was updated periodically during the analysis. Findings Required by Other Laws and Regulations Many federal laws and Executive Orders pertain to project-specific planning and environmental analysis on federal lands. While most of the laws and Executive Orders listed below pertain to all federal lands, some of the laws are specific to Alaska Tongass Land and Resource Management Plan This decision is consistent with the 2008 Tongass Land and Resource Management Plan (Forest Plan). The project was designed to be consistent with the Forest Plan Land Use Designation (LUD) of Municipal Watershed and Semi-Remote Recreation. Direction for the management of these LUDs is located in the Forest Plan on pages 3-51 through 3-56 and pages 3-63 through 3-68 respectively. The desired condition of Municipal Watershed LUD is for land to be managed generally in a natural condition. Facilities or structures to provide municipal water supplies may be present. Uses or activities that could adversely affect water quality or supply do not occur. These watersheds provide municipal water that meets State of Alaska Drinking Water Regulations and Water Quality Standards. Areas in the Semi-Remote Recreation LUD are characterized by generally unmodified natural environments. Ecological processes and natural conditions are only minimally affected by past or current human uses or activities. Users have the opportunity to experience a moderate degree of independence, closeness to nature, solitude, and remoteness, with some areas offering motorized opportunities and others non-motorized opportunities. Interactions between users are infrequent. Facilities and structures may be minimal or occasionally may be larger in scale, but will be rustic in appearance, or in harmony with the natural setting. While Lands standards and guidelines for Semi-Remote Recreation LUD are to represent a Transportation and Utility System (TUS) "window" and provide opportunities for future designation and location oftus sites, the Municipal Watershed LUD represents a TUS "avoidance" area. The dam was constructed prior to the existence of a Tongass Forest Plan. The City is the municipal interest in both the public drinking water supplies and the hydropower utility. During the application process they consulted with Alaska Department of Environmental Conservation. Alaska National Interest Lands Conservation Act of 1980; Section 810 and 811 The effects of this project have been evaluated to determine potential effects on subsistence opportunities and resources. Because there would be a potential reduction in abundance and distribution of subsistence resources in the Blue Lake Watershed, while there would be no overall change of access to and competition for subsistence resources in the Sitka area or Game Management Unit 4; the proposed project would not substantially affect subsistence uses or access. Decision Notice and Finding of No Significant Impact

7 -::-= ;;;;; rim." ~ Bald and Golden Eagle Protection Act of 1940 (as amended) The project complies with the Bald and Golden Eagle Protection Act. National Bald Eagle Management Guidelines issued in May 2007 by the U.S. Fish and Wildlife Service (USFWS) restrict management activities near active bald eagle nest sites. Surveys were conducted but no nests were found. An adult pair was spotted during surveying. It is suspected that temporary displacement might occur if the adult pair has a nest in the inundation area. However, this displacement is expected to have a minor effect on overall populations and it is expected that the adult pair would be able to relocate. Clean Air Act of 1970 (as amended) Emissions from the implementation of the project will be of short duration and are not expected to exceed State of Alaska ambient air quality standards (18 AAC 50). The project would displace diesel-fueled electric power generation and, thereby conserve nonrenewable fossil fuels and reduce the emission of noxious byproducts caused by the combustion of fossil fuels. Clean Water Act (1977, as amended) Congress intended the Clean Water Act to protect and improve the quality of water resources and maintain their beneficial uses. Section 313 of the Clean Water Act and Executive Order of January 23, 1987 addresses federal agency compliance and consistency with water pollution control mandates. Sections 208 and 319 address nonpoint source pollution caused by activities such as land clearing and construction. The site-specific application of best management practices (BMPs), with a monitoring and feedback mechanism, is the approved strategy for controlling nonpoint source pollution as defined by Alaska's Nonpoint Source Pollution Control Strategy (2007). The Blue Lake Hydropower Expansion project includes BMPs that are consistent with the Alaska Region Soil and Water Conservation Handbook (FSH ), and are incorporated into the Tongass Forest Plan. The Forest Service recently issued National Core BMPs (USFS 2012). Directive for using these BMPs are currently being developed. This project will implement the most up-to-date BMP guidance. Land clearing activities associated with this project have the potential to affect water quality in Blue Lake and downstream in Sawmill Creek. In addition, the potential exists for fuel, oil, and other contaminants to be spilled into project waters during construction. Because of the exceptional water quality of Blue Lake and its use as a drinking water source for the community of Sitka, minimizing adverse effects on water quality during construction is a major concern. To minimize these effects, the City of Sitka developed an Erosion and Sediment Control Plan that specifies BMPs for minimizing soil erosion and contamination of Blue Lake and Sawmill Creek. Forest Service 4(e) conditions also require the City of Sitka to develop an Erosion Control Measures Plan prior to any new construction or non-routine maintenance and a Hazardous Substances Plan for oil and hazardous substances storage and spill prevention and cleanup. Some aspects of the Blue Lake Hydropower Expansion project may result in point source pollution regulated through permitting programs under Clean Water Act sections 401, 402, and 404. The City of Sitka will be responsible for all applicable permits, which must be obtained Decision Notice and Finding of No Significant Impact

8 -::-=- In terms of long-term operation, water temperatures in Blue Lake are expected to remain unchanged with stratification continuing to occur during the summer and uniform temperatures continuing throughout the water column in winter. Warmer water temperatures in Sawmill Creek are expected from raising the intake from invert elevation 204 to invert elevation 313. Raising the intake elevation may increase summer intake water temperatures by 1 C to 3 C with an average annual increase in water temperatures ofo.5 C. The greatest increases would be expected in July or August, with concurrent warmer air temperatures. Effects on winter temperatures are expected to be minimal «1 C) because water temperatures would be consistent throughout the water column during that time. Given the small change expected (l C to 3 C), no significant long-term water quality effects are expected to occur. The City of Sitka will develop a detailed Water Quality Monitoring Plan for Forest Service approval prior to the start of land-clearing activities. The Plan will identify the exact locations of monitoring sites, the parameters to be monitored, and the frequency of monitoring during all phases of construction and long term operation. The plan will also identify specific measures to be taken in the event that monitoring identifies unacceptable water quality conditions. Safe Drinking Water Act of 1974 (as amended). This Act provides for the safety of public drinking water supplies. The Blue Lake watershed provides drinking water for the City of Sitka. Implementing Forest Service mandatory conditions for erosion control and hazardous substances would minimize any temporary short-term adverse effects on water quality. These measures, together with implementation of the Water Quality Monitoring Plan, would assure that the Blue Lake Hydropower Expansion project will not create or maintain a condition that has a significant potential to cause or allow the pollution or contamination of the public water supply. Endangered Species Act (ESA) of 1973 (as amended) A Biological Assessment / Biological Evaluation has been completed for this action, which indicates that no federally listed threatened, endangered, or proposed species exist within the project area. Federal Cave Resource Protection Act of 1988 There are no occurrences of carbonate rock and associated cave resources in the project area. The activities of the project will not have a direct, indirect, or cumulative effect on any significant cave in the project area. Magnuson-Stevens Fishery Conservation and Management Act The primary effect on fisheries from construction would be the potential for increased sediments that could settle out and reduce or eliminate fish habitat and temporarily decrease water quality in Blue Lake and Sawmill Creek. As discussed above, increased turbidity is a major concern during construction, as well as accidental spills of oil and other contaminants from construction equipment. These effects would be minimized by mandatory conditions described above. In the long term, the primary concern in Blue Lake is the effect of raising the dam on the existing rainbow trout population and possible changes to spawning habitat in the major tributaries to

9 .,,--:=7- Blue Lake. No federal- or State-listed or proposed threatened and endangered fish species or federal candidate species occur in the project area and no State species of special concern occur in the project area. The Magnuson-Stevens Fishery Conservation and Management Act requires federal agencies to consult with NMFS on all actions that may adversely affect Essential Fish Habitat. Essential fish habitat has been designated for pink, chum, and coho salmon including spawning and rearing habitat in Sawmill Creek. By letter dated April 1, 2011, NMFS stated that, with the adoption of Alaska DF&G recommendations, the licensee's proposal would not adversely affect essential fish habitat in Sawmill Creek. Marine Mammal Protection Act of 1972 (as amended) This project area is not located in or accessed by marine waters and therefore actions authorized in this project will not have a direct, indirect, or cumulative effect on marine mammals. National Historic Preservation Act (NHPA) of 1966 (as amended) Section 106 of the National Historic Preservation Act (NHP A) 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). The City of Sitka has consulted with the Alaska SHPO, the Forest Service, and the Sitka Tribe under the requirements of Section 106 of the National Historic Preservation Act (NHPA). By a letter dated April 6, 2012, the Alaska SHPO concurred with the agency determination that the proposed project would have no effect on historic properties. Executive Order (Floodplains) Executive Order directs federal agencies to take action to avoid, to the extent possible, the long- and short-term adverse effects associated with the occupancy and modification of floodplains. This activity will not impact the functional value of any floodplain as defined by Executive Order Executive Order (Wetlands) Executive Order requires federal agencies to avoid, to the extent possible, the long- and short-term adverse effects associated with the destruction or modification of wetlands. The City filed its Final Functional Analysis for Wetlands and Related Resources on April 17, This report presents the results of the wetland delineation study conducted in 2011 by the City. Based on the results of the delineation, there are a total of 15.2 acres of wetlands around the perimeter of Blue Lake within the proposed inundation area. The City conducted a functional analysis of these wetlands, rating each wetland class based on potential for sediment retention, nutrient retention, erosion control, water storage, organic matter content, vertical structure complexity, and species diversity. The staff alternative requires the City in consultation with the Forest Service and as a component of Forest Service 4(e) Condition No. 19, to develop a grassland (wetland) mitigation measure to mitigate for reductions in grasslands (wetlands) caused by the proposed project and develop a

10 -;:-=monitoring plan to measure natural generation of wetlands around the new high water elevation and develop mitigation measures to ensure wetland function is restored and the effects on wetlands are minimized. Executive Order directs federal agencies to state clearly whether a disproportionately high and adverse human health or environmental impact on minority populations, low-income populations, or Indian tribes is likely to result from the proposed action and any alternatives. The Executive Order specifically directs agencies to consider patterns of subsistence hunting and fishing when an agency action may affect fish or wildlife. In accordance with Executive Order 12898, this project does not have disproportionately high and adverse human health or environmental effects on minority populations and low income populations. Executive Order (Aquatic Systems, Recreational Fisheries) Federal agencies are required, to the extent permitted by law and where practicable, and in cooperation with States and Tribes, to improve the quantity, function, sustainable productivity, and distribution of U.S. aquatic resources for increased recreational fishing opportunities. As required by this Order, I have evaluated the effects of this action on aquatic systems and recreational fisheries and documented those effects relative to the purpose of this order. Since the effects to fisheries resources within the project area are negligible or minor due to the limited scope of the project and the application of Forest Plan standards and guidelines, there will be no direct, indirect or cumulative impacts related to this Order. Recreational fishing would not be impacted by the Selected Alternative. Executive Order (Indian Sacred Sites) Executive Order 13007, Indian Sacred Sites, provides presidential direction to federal agencies to give consideration to the protection of American Indian sacred sites and allow access, where feasible. In a government-to-government relationship, the tribal government is responsible for notifying the agency of the existence of a sacred site. A sacred site is defined as a site that has sacred significance due to established religious beliefs or ceremonial uses, and which has a specific, discrete, and delineated location that has been identified by the tribe. Tribal governments or their authorized representatives have been consulted and have not identified any specific sacred site locations in the project area. Executive Order (Invasive Species) Executive Order directs federal agencies to identify actions which may affect the status of invasive species; prevent the introduction of invasive species; detect and respond rapidly to and control populations of such species; monitor invasive species populations; and provide for restoration of native species and habitat conditions in ecosystems that have been invaded. Condition No. 21, Noxious Weed Management Plan identifies methods for prevention and control of noxious weeds; develops a monitoring program to evaluate the effectiveness of noxious weed control measures; and develops procedures for identification of additional measures that the licensee shall implement if monitoring reveals that noxious weed control is not Decision Notice and Finding of No Significant Impact

11 ---=- Executive Order (Consultation and Coordination with Indian Tribal Governments) Executive order directs federal agencies to respect tribal self-government, sovereignty, and tribal rights, and to engage in regular and meaningful government-to-government consultation with tribes on prosed actions with tribal implications. This project was developed in consultation with Sitka Tribe of Alaska, a federally recognized tribal government. Executive Order (Migratory Birds) The Migratory Bird Treaty Act of 1918 (as amended) prohibits the taking of migratory birds, unless authorized by the Secretary of Interior. The law provides the primary mechanism to regulate waterfowl hunting seasons and bag limits, but its scope is not just limited to waterfowl. Federal agencies are required to analyze actions that have, or are likely to have, a measurable negative effect on migratory bird populations and avoid or minimize, to the extent practicable, adverse impacts on migratory bird resources. Additional objectives are to restore and enhance the habitat of migratory birds. While some individuals or nests could be affected by the inundation of an additional 362 acres ofnfs lands or by the disturbance caused during construction and operation activities, no measurable effects on migratory bird populations are anticipated. Executive Order (Facilitation of Hunting Heritage and Wildlife Conservation) Executive Order directs federal agencies to facilitate the expansion and enhancement of hunting opportunities and the management of game species and their habitat. The analysis considered and disclosed the effects on game species. There will be limited habitat alteration as a result of this project and effects on game species would be minimal. The significance of environmental impacts must be considered in terms of context and intensity. This means that the significance of an action must be analyzed in several contexts such as society as a whole (human and national), the affected region, the affected interests, and the locality. Significance varies with the setting of the proposed action. In the case of a site-specific action, significance usually depends upon the effects in the locale rather than in the world as a whole. Intensity refers to the severity or degree of impact (40 CFR ). I have reviewed the Environmental Assessment, license, development plan, and safety and environmental plans for this project using criteria identified in implementing regulations for the National Environmental Policy Act (40 CFR ). Based on the review, I have determined that issuing a Special Use Authorization for the construction, operation, and maintenance ofthe is not a major federal action that would have a significant effect on the human environment, and therefore does not require the preparation of an environmental impact statement. 1. Impacts may be both beneficial and adverse. A significant effect may exist even if the Federal agency believes that, on balance, the effect will be beneficial. Consideration of the intensity of environmental effects is not biased by beneficial effects of the action. After review of the Environmental Assessment and associated project record, I have determined that the construction, operation, and maintenance of Decision Notice and Finding of No Significant Impact

12 .,,-=facilities and improvements on NFS lands associated with the Blue Lake Hydroelectric Project Expansion would have beneficial effects as the City of Sitka would meet its growing electricity demands while power generated by diesel-fuel would be displaced with hydroelectric power. The project meets Forest Plan Standards and Guidelines. 2. The degree to which the proposed action affects public health or safety. Based on the analysis conducted in the EA, the Selected Alternative would have no significant effects on public health or safety. Potential impacts to water quality, including public water supplies, during construction and operation have been identified and mitigation monitoring plans required to minimize those effects. Air quality will be improved. The project would displace diesel-fueled electric power generation and, thereby conserve nonrenewable fossil fuels and reduce the emission of noxious byproducts caused by the combustion of fossil fuels. 3. Unique characteristics of the geographic area, such as proximity to historic or cultural resources, park lands, prime farmlands, wetlands, wild and scenic rivers, or ecologically critical areas. I have determined that there would be no significant effects on unique characteristics on NFS lands. The Alaska SHPO has concurred with the agency determination that the three segments of a potentially historic corduroy road (site SIT-733) is not eligible for listing and that the proposed project would have no effect on historic properties. There are a total of 15.2 acres of wetlands within the proposed inundation area. The City has proposed compensatory mitigation to the u.s. Army Corps of Engineers by donating land located within the West Chi chago f-yakobi Wilderness to the United States for inclusion into the Wilderness. There are no park lands, prime farmlands, wild and scenic rivers, or other ecologically critical areas in the project area; therefore, there is no potential to affect these resources. 4. The degree to which the effects on the quality of the human environment are likely to be highly controversial. The effects on the quality of the human environment are not likely to be highly controversial. There is no known credible scientific controversy over the impacts of the proposed action. Shareholders have been included in the consultation process from the beginning. This project has received very few public comments and inquiries, and most of those have been supportive of the project. 5. The degree to which the possible effects on the human environment are highly uncertain or involve unique or unknown risks. The effects ofthe project have a reasonable degree of certainty. The City of Sitka has maintained and is generating hydroelectric power from the current Blue Lake Project. They also operate and maintain another hydroelectric project at Green Lake. Therefore, the degree to which effects to the human environment are expected is minimal. 6. The degree to which the action may establish a precedent for future actions with significant effects, or represents a decision in principle about a future consideration. I have determined that the proposed project would not establish a precedent for future

13 ."..-=-- actions with significant effects, nor represent a decision about a future consideration. The decision to authorize a special use authorization to the City of Sitka for construction, operation, and maintenance of facilities on NFS lands associated with the Blue Lake Project Expansion is based on an environmental assessment of the potential effects of specific actions at a specific location. Any future actions would be similarly evaluated to determine whether significant environmental effects could occur. 7. Whether the action is related to other actions with individually insignificant but cumulatively significant impacts. The cumulative effects of the project in conjunction with other activities in the area were described and analyzed in the EA. I have determined that the cumulative impact of these activities is not significant to the environment because none of the resource analyses revealed significant effects. Implementation of best management practices, Forest Plan Standards and Guidelines, and mitigation measures minimizes or prevents impacts to the natural resources in the project area. Mitigation measures and monitoring plans are included as either Forest Service 4(e) conditions or other additional articles to the FERC license. 8. The degree to which the action may adversely affect districts, sites, highways, structures, or objects listed, or eligible for listing, in the National Register of Historic Places or may cause loss or destruction of significant scientific, cultural, or historical resources. The action will not affect any of these resources. 9. The degree to which the action may adversely affect an endangered or threatened species or its habitat that has been determined to be critical under the Endangered Species Act of No federally listed threatened or endangered species or their habitat is present in the project area. All federally listed species near the project area use marine habitat. The project area does not contain marine waters nor is access to the project via saltwater. A Biological Assessment / Biological Evaluation has been completed for this decision and is on file with the Sitka Ranger District. 10. Whether the action threatens to violate Federal, State, or local law or requirements imposed for the protection of the environment. The findings section which precedes show that the proposed project does not violate federal, State or local law or requirements imposed for the protection of the environment. The EA has been reviewed by federal, State, and local agencies. The public involvement section of this Decision Notice includes information on agency coordination. Implementation Date The 30-day comment period ended on August 7,2012 and no comments expressing interest were received. Pursuant to Forest Service appeal regulations at 36 CFR 215 this decision is therefore not subject to appeal. Decision Notice and Finding of No Significant Impact

14 ".-= -- Contact For additional information contact: Carol A. Gou1arte, District Ranger Sitka Ranger District 204 Siginaka Way Sitka, AK FORREST COLE Forest Supervisor Tongass National Forest

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16 ",-".::- The U.S. Department of Agriculture () prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual's income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact 's TARGET Center at (202) (voice and TOO). To file a complaint of discrimination, write to, Director, Office of Civil Rights, 1400 Independence Avenue, SW., Washington, D.C , or call (800) (voice) or (202) (TOO). is an equal opportunity provider and employer. Decision Notice and Finding of No Significant Impact