Mining

Corps of Engineers extends Pebble scoping period

Stakeholders who want to weigh in on the potential impacts of the Pebble mine project will have two more months to do so. The U.S. Army Corps of Engineers Alaska District announced Friday morning that it will be extending the public scoping period to 90 days from the statutory minimum of 30 days for the project’s environmental impact statement, or EIS. The Pebble EIS scoping period, which began April 1, will now run until June 29 instead of the original April 30 closing date. Scoping, as the name implies, is when the public and cooperating government agencies are asked to submit the scope of potential environmental and socioeconomic impacts that should be studied in a proposed development’s EIS. The Corps of Engineers has also had an invitation out to 35 recognized Tribes for government-to-government consultation during the Pebble EIS process since Jan. 12, according to a March 30 press release. The extension comes after repeated calls for such an action from not only opponents to the project but also Sen. Lisa Murkowski and Gov. Bill Walker’s administration. Murkowski wrote to Corps of Engineers Alaska leaders April 3 in part requesting they consider the concerns of those who feel 30 days for scoping “may be insufficient for a project of this magnitude and potential impact.” Murkowski also emphasized that she remains neutral on Pebble, but she strongly objected to the Environmental Protection Agency’s move in 2014 to preemptively stop the project. Walker has repeatedly stated he is against the Pebble project, going back to his 2014 campaign for governor. When Pebble Limited Partnership unveiled its scaled-down mine plan in October Walker stopped short of wholly denouncing the plan, but said in an interview with Alaska Public Media that the company still has a exceedingly high burden to clear and he is very skeptical it can be developed responsibly. Murkowski additionally asked Corps officials to hold more scoping meetings in communities in the Nushagak River drainage where the mine would be located. The Corps originally scheduled one scoping meeting in Dillingham April 17, which is the regional hub community at the mouth of the Nushagak about 100 miles southwest of the mine site. However, a public meeting in New Stuyahok, a village along the middle reaches of the Nushagak, was recently added for April 13, according to the Corps’ website for the project. The other meetings are in communities near the project’s other proposed facilities — the gas pipeline, a deepwater port, an Iliamna Lake ferry and associated roads. Murkowski also asked that Alaska Native corporations be consulted on the project. Bristol Bay Native Corp., which is the regional Native corporation for the area, has long been an ardent opponent of Pebble. Department of Natural Resources Commissioner Andy Mack sent a similar letter to Corps Alaska leaders March 28 asking for 90 to 120 days of scoping for the Pebble EIS. Pebble spokesman Mike Heatwole wrote via email that the company supports the Corps’ decision to extend the scoping period “as we want a thorough, comprehensive, robust EIS. We remain confident that once all of the technical information has been subjected to this level of scrutiny and review we will secure permits for a responsible mine at Pebble.” Heatwole downplayed the importance of the public input period when the 30-day scoping plan was released. He suggested the public comment period following the release of the draft EIS is far more important, as it is when the public can critique the work the Corps’ has done evaluating the project and suggest changes for the final draft. When the Corps released its initial two-year schedule to reach a record of decision on the Pebble EIS with a 30-day scoping period March 20, it immediately drew sharp criticism from groups fighting the project. While the EIS schedule and drafting for each project is different because no two developments are the same, they noted the Corps has regularly taken upwards of five years to complete the EIS process on other large projects in the state; some with scoping periods in excess of 100 days. Shane McCoy, the Pebble Project Manager for the Corps, said in an interview after the Pebble timeline was released that it is a “straw man schedule” and stressed that the agency understands the strong emotions that surround the project. The Corps has taken more than five years to reach a final EIS on the Donlin Gold mine project, which is roughly similar to Pebble’s plans. Donlin Gold is an open-pit mine project in the Kuskokwim River drainage north of the Pebble deposits in Western Alaska. Both projects, as proposed, call for large surface mines in the upper reaches of large salmon-bearing watersheds with commercial and subsistence fisheries, as well as natural gas pipelines from Cook Inlet to power the operations. Mack noted in his letter that the Donlin scoping period lasted 105 days with 14 public meetings — at a rate of about one per week — and wrote that the state requests a similar process for Pebble. There are nine public meetings currently scheduled over 11 days in mid-April during Pebble’s scoping period. Donlin Gold applied to initiate an EIS in December 2012 and a final EIS is expected soon, according to the Corps’ schedule for the project. Elwood Brehmer can be reached at [email protected]

Corps of Engineers releases two-year schedule for Pebble EIS

The U.S. Army Corps of Engineers is looking to fast-track the environmental review of the proposed Pebble mine and the project’s opponents, to put it mildly, aren’t happy about it. The Corps released a schedule March 20 of roughly two years to complete the Pebble environmental impact statement, or EIS, and reach a record of decision on the project. A 30-day scoping period, in which the public can submit comments to the Corps regarding what they believe should be evaluated for potential impacts from the project, is set to start April 1. Alannah Hurley, executive director of United Tribes of Bristol Bay, called the Pebble timeline “outrageous.” UTBB is a consortium of 15 Alaska Native governments from the region. Hurley contends that while it is legal — 30 days is the minimum time for an EIS scoping public comment period — public scoping for a single month is well outside the bounds of precedent the Corps and other federal agencies have set for projects the size of what Pebble Limited Partnership is proposing. “There is no way you can get meaningful comment in 30 days,” Hurley said. A statement from Trout Unlimited Alaska notes the Corps of Engineers is currently leading the EIS for three other large projects in Alaska: the state-sponsored Alaska Standalone Pipeline, or ASAP, project, the Nanushuk North Slope oil development, and the Donlin Gold mine in the Kuskokwim River drainage to the north of Pebble. The scoping comment periods for those projects were from 75 to 106 days. The Corps’ Pebble Project Manager Shane McCoy in an interview called the EIS timeline “a strawman schedule.” He said the Corps is required to publish the schedule, but the agency will know much more about how long the Pebble review will actually take after scoping is complete and the comments are analyzed. McCoy acknowledged the two-year schedule is “aggressive” but said Pebble also has provided substantial baseline information to support the work. He added that agency leaders will also decide soon whether or not to extend the scoping period after receiving requests to do so. “We understand the emotions surrounding this project,” McCoy said. Hurley said a longer 60- or 90-day scoping comment period would run up against the annual time when countless area residents are busy prepping for the salmon season that starts in mid-June; however, that would also allow individuals who fish in the region but live elsewhere an opportunity to have their voices heard directly. Hurley also said it’s particularly concerning to her that the only public hearing in the Nushagak River watershed is in the local hub of Dillingham, with no meetings scheduled for upriver Nushagak villages closer to the mine site. The Nushagak is one of two large salmon-producing drainages the project straddles; the Kvichak River-Iliamna Lake system is the other. While fungible, the overall two-year EIS timeline, from March 2018 to early 2020, also comes as a surprise to those monitoring the project closely. When Pebble submitted its Clean Water Act Section 404 wetlands permit application in late December, Corps of Engineers Alaska regulatory officials noted the average EIS for a large project in the state usually takes four to five years. Pebble CEO Tom Collier said at the time he hoped the review could be done in three. According to the schedule, Corps officials hope to have a draft EIS finished by next January with the final EIS published late next year leading to the early 2020 record of decision, according to the project website. The Corps manages Clean Water Act wetlands activity permits for the Environmental Protection Agency and large wetlands fill applications such as Pebble’s usually trigger a full EIS. The mine site north of Iliamna Lake would fill 3,190 acres of wetlands, according to Pebble’s Section 404 application. In January, Pebble’s adversaries got a bit of welcomed but unexpected news from EPA Administrator Scott Pruitt, who declined to remove the Obama administration’s proposed prohibitions on developing a large mine in the Bristol Bay region. Pruitt indicated the agency is still highly skeptical the project can adequately coexist with the area’s fisheries, but also stressed his decision “neither deters nor derails” Pebble’s environmental permitting process because nothing has been finalized. The entire project stretches over 187 miles from the start of a natural gas pipeline near Anchor Point on the Kenai Peninsula, across Cook Inlet to a deepwater port that would be built on the edge of Kamishak Bay on the west side of the Inlet 53 miles of roads plus a ferry leading to the mine itself. Hurley noted that residents near the Donlin project — similarly a large open-pit mine proposal with a gas pipeline from Cook Inlet — were afforded 16 public scoping meetings by the Corps. The Donlin Gold EIS was initiated in December 2012; a draft EIS was published in November 2015 and a final EIS is expected soon. Pebble spokesman Mike Heatwole said the company is pleased with the schedule the Corps has put forth. “I think they’ve laid out a fairly comprehensive and transparent approach to what they’re hoping to accomplish,” Heatwole said in an interview. “We certainly hope, as we’ve said for quite a while, it’s an expeditious permitting review process for the project. There’s a lot of material to cover and we hope that we get a comprehensive review through that.” He also stressed that scoping is the time when the public can weigh in with what they feel the Corps should evaluate relating to Pebble — much of which have been aired for years — and those issues “are pretty well known.” “Once the draft EIS comes out, that’s when you really get into the comprehensive look at what the Corps has put forward,” Heatwole added. The minimum public-comment period after a draft EIS is published is 45 days. For Pebble, eight scoping meetings were originally planned: seven in Bristol Bay-area communities and one each in Homer and Anchorage. However, a March 22 release from the Corps’ Alaska District indicates a meeting planned for Igiugig, a community at the outlet of Iliamna Lake has been cancelled, leaving seven scoping meetings. Those meetings are set for the period from April 9 in King Salmon to April 19 in Anchorage. The Corps also translated a condensed version of the Donlin draft EIS into Yupik, which is the first language for many of the region’s Alaska Native residents, but no action has been set for Pebble, Hurley contended. “It’s the Corps’ mandate to make sure people can engage whether they’re English speaking or not,” she said. Donlin Gold translated additional project information on its website into Yupik on its own, according to a company spokesman. Heatwole said the Pebble Partnership is still evaluating the best ways for it to engage with communities near the project. Elwood Brehmer can be reached at [email protected]

Cost estimate drops for Ambler mining prospect

The company that has led exploration in the Ambler mining district is now shifting to develop its primary prospect after many years of work. Trilogy Metals released a pre-feasibility study for its project at the Arctic prospect in Northwest Alaska with a higher initial capital estimates cost but a lower overall cost Feb. 20. Formerly NovaCopper Inc., Vancouver-based Trilogy Metals changed its name in 2016 to reflect the multi-metal deposits the company holds. Located in the middle of the large Ambler mining district that stretches along the southern face of the Brooks Range in Northwest Alaska, Trilogy leaders project the high-grade Arctic deposit to be the first of several mines in the area. The Arctic prospect holds an estimated 2.4 billion pounds of indicated copper resources at a 3.07 percent grade; 3.3 billion pounds of indicated zinc at 4.23 percent; and precious metal resources estimated at 55 million ounces of indicated silver and 730,000 ounces of gold, according to the Feb. 20 report. Estimated costs to develop Arctic have grown 9 percent since a 2013 preliminary economic assessment and are now pegged at $780 million. However, a 60 percent drop in expected annual operating and 20 percent decrease in closure and reclamation costs — to about $65 million each — cut the all-in cost for the mine by 5.5 percent from $964 million in 2013 to $911 million today. Trilogy executives said during a call with investors that the drastic drop in operating costs is due to changes in the plan for waste rock and tailings management, fuel and federal tax reform. The original high-level Arctic design called for potentially acid-generating waste rock to be comingled with mine tailings, which resulted in the need for a larger tailings facility and dam, according to Trilogy CEO Rick Van Nieuwenhuyse. The current revised design has mine tailings and wastewater behind a dam with waste rock and an associated collection pond directly in front of and below the tailings dam at the head of the Subarctic Creek valley that will hold the mine waste. Additionally, switching from diesel to LNG as a fuel source to power the mine facilities equates to a 41 percent reduction in the cost of power at Arctic, according to the pre-feasibility study. “We’ve worked hard over the last several years to confirm that we can use LNG that’s available in Alaska — and they’re trucking it up to Fairbanks now,” Van Nieuwenhuyse said, referencing Fairbanks Natural Gas’ use of LNG trucked north from Point MacKenzie in the Mat-Su Borough to supply its customers. “We can haul LNG just as easily as diesel.” Utilizing LNG should also make obtaining an air quality permit for the project from the state Department of Environmental Conservation much easier, he noted. The natural gas could be sourced from Cook Inlet as the Fairbanks utility currently does or from a large gasline off the North Slope if the state’s Alaska LNG Project materializes. Van Nieuwenhuyse also said Trilogy has settled on using enclosed cubed containers for trucking metal concentrates from the mine — with a higher upfront cost than open trailers — that should eventually pay for themselves through no lost concentrates during transport. “I think more importantly by not losing concentrate as fugitive dust you’re not contaminating the environment. This is a win-win for the overall project,” he said. Developing the Arctic mine — or any project in the Ambler district — is predicated on the state-owned Alaska Industrial Development and Export Authority being successful with its effort to permit, finance and construct a 220-mile road west from the Dalton Highway to access the region. The federal Bureau of Land Management is currently drafting the first version of the environmental impact statement for the $300 million-plus road. Van Nieuwenhuyse said Trilogy has tried with its work at Arctic to keep pace with AIDEA’s work on the Ambler access road. A permit decision on the road is expected in early 2020, according to AIDEA, with two subsequent years of construction. The state’s plan is to pay for the road through tolls from the companies mining and exploring the Ambler region. Accordingly, Trilogy hopes to start applying for its environmental permits in 2019 and embark on a full feasibility study in 2020, Van Nieuwenhuyse said in an interview. Ideally, it would all lead to a completed road and the start of Arctic construction in about five years, he said. This summer Trilogy will be doing $4 million to $5 million worth of water management studies and geotechnical evaluations of the tailings dam site. The company is also preparing for another $10 million exploration program at its Bornite prospect to the south of Arctic. Overall, Van Nieuwenhuyse said the company will be employing about 80 people at its projects during the summer work season as it has in recent years. Trilogy’s financials at Arctic are based on a minimum 12-year mine life. It’s a small but very prospective deposit. The company is estimating it can recover pre-tax development costs within two years of operations based on an average market price of copper at $3 per pound. Even at $2 per pound copper, Trilogy estimates after-tax payback within three years. Copper has traded in the $3 per pound range of late. Annual production from the mine is planned at about 160 million pounds of copper, 200 million pounds of zinc, 33 million pounds of lead, 30,600 ounces of gold and 3.3 million ounces of silver over its life. While Arctic holds and is expected to produce more zinc, copper generally sells for significantly more than zinc, which has traded between $1.20 and $1.60 per pound over the past year. Total costs for mine development, operations and access road tolls are pegged at 63 cents per pound of payable copper, according to Trilogy. “At current prices your cash flow is well over $500 million of free cash flow so this thing is really crunching out a lot of cash,” Van Nieuwenhuyse commented. As a result, Trilogy leaders aren’t nearly as worried about metal prices as the proponents of other remote mines— with extremely high costs — in Alaska. “If we’ve got the kinds of commodity prices that would shut down this mine we’ve got other things to worry about,” Van Nieuwenhuyse said in an interview. “We certainly envision here for the future a central milling facility at Arctic that is conveniently located smack dab in the middle of this 100-mile long (Ambler) belt.” Elwood Brehmer can be reached at [email protected]

Mallott, Sullivan meet with top Canadians on transboundary issues

Lt. Gov. Byron Mallott and Sen. Dan Sullivan watched Super Bowl LII together in Ottawa and spent time strategizing on their approach to the next day’s meetings. They were there to discuss issues as far-reaching as ocean debris, missile defense and the North American Free Trade Agreement with Canadian federal officials as well as provincial and First Nations leaders, according to Sullivan, but the priority topic brought up in every discussion was that of Canadian mines at the headwaters of rivers that terminate in Alaska. The state officials reviewed the meetings in a Feb. 5 call with Alaska press. From the outset, Sullivan said the fact that Mallott, a longtime Democrat leader in the state, and himself, a staunch conservative, were in lockstep on the transboundary rivers issue sent a “powerful message of unity and that this is a very important issue of concern for the people we represent.” At the heart of the matter are 10 mines in British Columbia that are either in operation or stages of exploration and development. Those mines or mineral prospects are mostly open pit projects focused on copper and gold recovery. The mine locations within the watersheds of the large Taku, Stikine and Unuk rivers that support large salmon fisheries are the primary cause for concern among Southeast Alaska commercial fishing and conservation groups that fear problems at the mines could damage or destroy the rivers’ fisheries. Mallott and Sullivan said they pushed four priorities they are seeking action on from Canadian officials — either at the federal or provincial levels. The Alaskans requested increased transparency in the permitting process for the mines and opportunities for Alaskan stakeholders to provide input when mine plans are being reviewed. They also asked for additional financial assurances or bonding requirements for the mine operating companies to protect Alaska fishing and tourism businesses that rely on robust fisheries in the rivers “if, God forbid, we had a Mt. Polley-type disaster that went into our waters,” Sullivan described. The 2014 Mt. Polley mine tailings dam breach spilled more than 6 billion gallons of wastewater into the upper Fraser River system in British Columbia. Mt. Polley mine operator Vancouver-based Imperial Metals Corp. opened the Red Chris copper-gold mine in the upper Stikine River watershed in 2015. Sullivan added that they also asked the Canadian government to join in funding baseline water quality studies and ongoing monitoring to track if the mines are impacting the rivers, a program which Congress started funding last year. Lastly, they insisted on immediate reclamation of the Tulsequah Chief mine that has been leaching acid rock drainage into the Taku River near Juneau since the mine was abandoned in 1957. A temporary water treatment plant was built in 2011 to deal with the leaching but it was quickly shut down in 2012, according to the Alaska Department of Natural Resources. Chieftain Metals Corp. is now proposing an underground mine at the Tulsequah site that is about 10 miles upriver from the Alaska border. The project received regulatory approval from British Columbia in 2012 but is awaiting financing. Sullivan said he thought the meetings were constructive but the transboundary issue is far from solved. “We put forward some specific requests and we’re going to press on those,” he said Feb. 5. “I think they’re legitimate requests; I think they’re reasonable requests but they’re requests for specific actions and we certainly hope our Canadian friends will work with us to follow up on it.” Mallott said the talks furthered the progress made by the Walker administration on the issue. In 2015, Gov. Bill Walker and British Columbia Premier Christy Clark signed a memorandum of understanding to promote economic development in concert with environmental protection. That led to a statement of cooperation signed by Mallott and British Columbia Environment and Mines ministers in Oct. 2016, which established a working group of state and provincial officials to discuss transboundary issues. Mallott said the meetings were important because the sides were able to discuss important policies that are outside of the nonbinding statement of cooperation. A possible referral of the issue to the International Joint Commission — strongly advocated for by Alaska Native and conservation groups — was not discussed in detail during the meetings but will be part of talks between the governments in the spring, according to Mallott. “The process involved for an IJC referral will continue to be discussed by the (federal) governments and we have asked them to do so,” he said. The International Joint Commission consists of five commissioners, two from Canada and three from the U.S., who review transboundary watershed issues. It was established after the 1909 Boundary Water Treaty, which at the time settled a battle between Montana and Alberta farmers who had dug competing canals to divert water from area rivers to their farms. According to its website, the commission has since settled more than 100 matters raised by the governments. An arbiter body, IJC can only get involved when called upon by both governments. In the U.S., the State Department makes that call. In November, Walker, Mallott and three members of the Alaska congressional delegation sent a joint letter to Secretary of State Rex Tillerson, urging him to help protect Alaska’s economic interests of fishing and tourism in Southeast by raising the transboundary mine issue in talks with his Canadian counterparts. Charles Faulkner, of the State Department’s Bureau of Legislative Affairs, responded with a letter Dec. 14, writing that the State Department and the Environmental Protection Agency have established a workgroup to coordinate actions and communicate concerns to Canadian officials. State Department officials in October also got a commitment from Global Affairs Canada to take up a bilateral review of potential gaps or shortcomings in cooperative agreements between the countries that deal with transboundary issues. “The Department of State will lead this review process with interagency and stakeholder input, with the goal of sharing its findings with Global Affairs Canada at the April 2018 IJC meetings,” Faulkner wrote. “We value your assistance and input in this effort. As Canadian support would be required for a joint IJC reference, we will continue to raise this issue in upcoming bilateral meetings.” The issue of mines in British Columbia potentially impacting fisheries in Alaska waters has been one Alaska officials have tried to tread lightly on despite calls for a much tougher stance by some Southeast groups. That’s because, for one, they do not want to strain what has historically been a strong relationship with British Columbia and Canada in general, as well as the facts that the state has little actual leverage in addition to a long history if mining and support for the industry. To the latter point, Sullivan said he emphasized that Alaska supports resource development in the meetings, but he believes the state has valid concerns given what could happen downriver from the mines. He and Mallott also said the issue of oil exploration in the Arctic National Wildlife Refuge coastal plain — one Canadian Embassy officials actively lobbied against in Congress during the tax reform debate — came up in the transboundary river meetings. Sullivan described it as “probably one of the more contentious issues of our meetings.” “There was a bit of an analogy between the Porcupine caribou herd and transboundary mining and I, at least in my response, said I rejected that completely,” Sullivan recalled. Canadian officials have opposed oil development in ANWR for the fear that it would impact the calving grounds of the caribou herd that migrates into the Yukon Territory and is relied on by there by First Nations people as it is by some Alaska Natives. In a December interview with the Journal, Sullivan contended that the only reason Canada opposes development in ANWR is because the country didn’t find any oil on its side of the border when exploratory drilling was done in the Yukon Arctic decades ago. In that interview, Sullivan said he told the Canadian ambassador to the U.S. to “stand down” or he was going to “do everything I can to screw your country.” The delegation in an October letter to the Canadian ambassador to the U.S. said British Columbia to that point had done “remarkably little” to consider their transboundary concerns and pointed to the Mt. Polley and the Tulsequah Chief mine as demonstrable indicators that “Canadian mining is not always carried out to the same safety standards as in the U.S.” Mallott said the state will follow through with consultation that is required under a 1987 treaty with Canada meant to ensure a healthy Porcupine caribou herd. The state is also working to develop an accord with the Yukon Territory to address climate change and economic development matters, according to Mallott. “We were very clear to say we’re supportive of the exploration that is now authorized in the 1002 area of ANWR but that we also wanted to work closely with particularly the indigenous people on both sides of the border as we proceed ahead,” Mallott said. Elwood Brehmer can be reached at [email protected]

EPA’s unexpected decision welcomed by Pebble opponents

Environmental Protection Agency Administrator Scott Pruitt’s unexpected Jan. 26 comments expressing his environmental concerns about the Pebble mine were welcomed by mine opponents and reflected in the stock price of Northern Dynasty Minerals Ltd., which is the sole owner of the prospective copper and gold project. Pruitt announced Jan. 26 that the EPA would not finalize the proposed withdrawal of the 2014 proposed determination to prohibit a large mine in the Bristol Bay region through its Clean Water Act Section 404(c) authority. The agency said in a statement that it has “serious concerns” about the impacts of mining activity in the Bristol Bay watershed and public comments in stakeholder meetings stressed the importance of the world’s largest wild salmon fishery. Pruitt said it would be disingenuous for the agency to not to offer an environmental position at this stage of the project. Vancouver-based Northern Dynasty’s stock opened trading on domestic markets down 19 percent Jan. 29 from its closing price of $1.52 per share Jan. 26. The EPA’s statement on the project was issued after East Coast markets had closed that day. Northern Dynasty’s stock price stabilized at about $1.18 per share, or down about 22 percent after several hours of trading Jan. 29. Northern Dynasty is also traded on the Toronto Stock Exchange. Pebble Limited Partnership filed its wetlands fill permit application with the U.S. Army Corps of Engineers Dec. 22. The application outlines plans to fill 3,190 acres of wetlands at the mine site. While not specific to any mine plan — a point Pebble and parent company Northern Dynasty minerals have stressed — the Bristol Bay Watershed assessment published by EPA in 2014 concludes a mine that would fill more than about 1,100 acres would be too damaging to fish habitat to allow. Pruitt emphasized in his statement that his decision “neither deters nor derails” the Pebble environmental permit application process now underway while at the same time he has heard from stakeholders on whether to withdraw the proposed 404(c) restrictions. “Based on that review, it is my judgment at this time that any mining projects in the region likely pose a risk to the abundant natural resources that exist there,” Pruitt said Friday. “Until we know the full extent of that risk, those natural resources and world-class fisheries deserve the utmost protection. Today’s action allows the EPA to get the information needed to determine what specific impacts the proposed mining project will have on those critical resources.” According to the Federal Register docket, just more than 1 million public comments have been submitted to the EPA on the proposal to withdraw the proposed 404(c) restriction, but it is currently unclear how many favor or oppose the action. With that in mind, Bristol Bay-area Native groups, lawmakers and fishing organizations considered Pruitt’s position — largely surprising given the Trump administration’s push to promote mining and infrastructure projects — a step in the right direction. United Tribes of Bristol Bay Executive Director Alannah Hurley said the group is happy Pruitt left the proposed veto “on the table,” but it will be several years before the EPA could invoke it under the terms of a May 2017 settlement of a lawsuit filed by the Pebble Partnership. Pebble sued the agency in 2014 alleging the EPA was biased in its proposed action after improperly colluding with anti-Pebble groups to reach its conclusion. A federal judge issued an injunction in late 2014 that stopped the EPA from finalizing the proposed restrictions against mining in the Bristol Bay watershed; settlement talks between the EPA and Pebble started late in the Obama administration and were ultimately concluded under Trump’s. Pebble CEO Tom Collier highlighted in the company’s response that the agreement the EPA reached with Pebble last year gives the company the assurance it can go through the federal permitting process without the worry of the agency finalizing the proposed preemptive prohibition on Pebble. “The (Corps of Engineers) has determined we have a complete application and has initiated a thorough, objective review of the Pebble project,” Collier said. “We intend to participate fully in the process and encourage al project stakeholders to do the same. “We believe we can demonstrate that we can responsibly construct and operate a mine at the Pebble deposit that meets Alaska’s high environmental standards. We will also demonstrate that we can successfully operate a mine without compromising the fish and water resources around the project. We look forward to having all of our detailed information fairly reviewed by the Corps of Engineers and other participating regulatory agencies through the longstanding, lawful permitting process.” Specifically, the EPA-Pebble settlement called for the agency to start the process of withdrawing the proposed mining restriction, which it did in July, but it does not require that process be finalized and because it is a proposal to remove a proposal with nothing final, Pruitt’s action set a tone but did not change anything formally. The settlement also does not allow for the EPA to resume restricting the development until a final environmental impact statement is published for the project or four years after the May 2017 settlement, whichever comes first. UTBB President Robert Heyano said Pruitt’s decision shows the power of a unified local voice even in times of highly partisan politics. “The United Tribes of Bristol Bay would like thank EPA Administrator Scott Pruitt, (Region 10) Administrator Chris Hladick and the staff at EPA for their work. The fight to protect our watershed from Pebble is far from finished. But today’s decision, and all those who worked tirelessly to get us here, will be celebrated,” Heyano said. Hladick, a former city manager of Dillingham, where the project is widely opposed, transitioned from heading the Commerce Department in Gov. Bill Walker’s administration to leading the Alaska-Pacific Northwest region of the EPA in December. Walker said told the Journal while campaigning in 2014 that he opposed development of Pebble but also was worried about the precedent the EPA’s preemptive push to prevent the mine could have on other development projects in the state. The governor told Alaska Public Media in October that he had not been convinced Pebble should move forward and the company had a high bar to clear to had taken appropriate steps to prevent potential damage to the fish and wildlife habitat — a stance Pebble deemed appropriate at that time. “I have spoken to Administrator Pruitt about the Pebble Mine Project many times in the past year, and I have shared with him my belief that in the Bristol Bay region we should prioritize the resource that has sustained generations and must continue to do so in perpetuity. I thank the Environmental Protection Agency and the Trump administration for listening to my input, as well as the input of thousands of Alaskans who oppose rescinding the EPA’s Bristol Bay (restrictions),” Walker said Jan. 26. California treasurer weighs in Meanwhile, California Treasurer John Chiang sent a letter Jan. 29 to leaders of First Quantum Minerals Ltd. urging them to stay out of the Pebble project. Chiang is also a trustee to the California Public Employees’ Retirement and California State Teachers’ Retirement systems. He wrote that the California pension funds believe sustainable business practices are fundamentally important to long-term value growth for sharheolders and therefore, First Quantum, a Canadian mining firm investigating whether or not to invest in Pebble, should not. “As a fiduciary of these funds, I cannot ignore the far-reaching economic implications and sustainability risks at play here,” Chiang wrote to First Quantum CEO Philip Pascall and President Clive Newall. “In my view, investment in the Pebble project presents undue risk not only to the long-term sustainability to the Bristol Bay region, but also to the value of our long-term investments in First Quantum Minerals, Ltd.” CalPERs, with a total market value of $362 billion, holds nearly 4.3 million shares of First Quantum as well as bonds in the mining company with a maturity value of $2.3 million, the fund’s latest annual report states. There are more than 689 million outstanding shares of First Quantum stock, according to the company’s 2017 annual report. First Quantum and Northern Dynasty announced a framework investment agreement Dec. 18 under which the former could invest up to $1.35 billion in Pebble to buy a 50 percent interest in Pebble Limited Partnership, the project operating company. First Quantum made an initial $37.5 million option payment to Northern Dynasty to support permitting costs shortly after the deal outline was announced, according to Northern Dynasty officials. The company is expected to make a decision on the overall agreement in the second quarter of this year. Chiang noted that he and then-City of New York Comptroller John Liu in 2013 expressed their concerns about Pebble to Northern Dynasty’s then-partner Rio Tinto, a mining major, and Rio Tinto divested its share of Pebble in April 2014. Northern Dynasty has said it will need a large investment partner to help fund mine permitting and development. Elwood Brehmer can be reached at [email protected]

Initiative sponsors turn in signatures as BBNC shifts to neutral

Advocates of strengthening Alaska’s salmon habitat protection took a big step forward when they dumped roughly 49,500 signatures on the front desk of the Division of Elections Anchorage office Jan. 16. The signatures from Alaskans statewide were collected by Stand for Salmon, the nonprofit aimed at reforming anadromous fish habitat permitting requirements via the ballot initiative they’ve dubbed “Yes for Salmon.” Early morning drizzle and icy roads didn’t damper the spirits of about 20 initiative backers that gathered outside the Division of Elections to be ready to submit the signatures for certification as soon as the state offices opened at 8 a.m. Jan. 16, the start of the legislative session, was the last day to hand the petition booklets in and get the initiative on the 2018 ballot. It was also the day that Bristol Bay Native Corp., a major opponent of the Pebble mine, revised its stance on the initiative from against to neutral. While the signature hurdle is a big one, the initiative still faces stiff opposition from industry groups and the State of Alaska. Lt. Gov. Byron Mallott first rejected the initiative on the advice of the Department of Law because the state’s lawyers deemed it would appropriate Alaska’s water resources for salmon habitat — the state Constitution requires resource allocation be left to the Legislature — and therefore be unconstitutional. After Mallott’s ruling was appealed and overturned in Superior Court, the state took its turn to appeal to the Supreme Court in October. Oral Arguments in the case are now set for April 26. “This is a promising moment for all Alaskans. Tens of thousands of Alaskans from Nome to Ketchikan, from every single legislative district, have said that we want the opportunity to reflect a true balance between responsible development and protection of salmon,” said Stephanie Quinn-Davidson, an initiative sponsor and director of the Yukon River Inter-Tribal Fish Commission. Quinn-Davidson replaced Bristol Bay lodge owner Brian Kraft, an original sponsor, after Kraft stepped away from the campaign in November for personal reasons, according to Stand for Salmon representatives. Sponsors are required to gather signatures from registered voters equal to at least 10 percent of number of voters in the previous election from 32 of the 40 House districts in the state. For 2018 initiatives that meant getting 32,127 signatures, according to the Division of Elections. Campaign workers said they set a goal of 45,000 to account for unqualified signatures and were proud to have gathered the required amount in all 40 districts. Specifically, the initiative seeks to overhaul Title 16, the Department of Fish and Game’s statutory directive on how to evaluate development projects in salmon habitat. Current law directs the Fish and Game commissioner to issue a development permit as long as a project provides “proper protection of fish and game.” The sponsors contend that is far too vague and an update is needed to just define what “proper protection” means. The initiative would, among other things, establish two tiers of development permits that could be issued by the Department of Fish and Game. “Minor” habitat permits could be issued quickly and generally for projects deemed to have an insignificant impact on salmon waters. “Major” permits for larger projects such as mines, dams and anything determined to potentially have a significant impact on salmon-bearing waters would require the project sponsor to prove the project would not damage salmon habitat. Mitigation measures would be acceptable as long as they are implemented on the impacted stream or wetland area. Additionally, the project sponsor would have to prove that impacted waters are not salmon habitat during any stage of the fish life cycle if the waters are connected to proven salmon habitat in any way but not yet listed in the state’s Anadromous Waters Catalog. The sponsors insist it is not aimed to stop development projects; rather, it would set high but transparent permitting standards that are necessary to protect salmon resources that are already being stressed by multiple factors, they contend. Even if it wins at the Supreme Court, a laundry list of resource development, unions and trade groups, along with the Alaska Native Claims Settlement Act Regional Association (made up of the 12 Native regional corporations) and the Alaska Chamber have formed an opposition group called Stand for Alaska. That group has already received contributions totaling $147,000 according to an Alaska Public Offices Commission report. Stand for Salmon has collected $271,000 as of Jan. 7 according to APOC with the biggest donor the Alaska Conservation Foundation at $60,000. Opponents contend the initiative would decimate the state’s economy and make even the smallest projects — down to road repairs — extremely difficult if not impossible to permit. SFA co-chair Joey Merrick of the Laborers’ Local 341, who is also a member of the Alaska Gasline Development Corp. board of directors, said in a press release that the initiative poses a risk to his members’ jobs. “Alaska already is in a serious recession with one of the nation’s highest unemployment rates. The last thing we need is more expensive, time consuming, and unnecessary policies that cost Alaskans their livelihoods,” Merrick said. AGDC President Keith Meyer has argued that the initiative would prevent the construction of the Alaska LNG Project, and Gov. Bill Walker has also expressed opposition to the measure. Walker said the initiative is too broad in its scope and it could hamper nearly every area of project development in the state. “I think when you’re making definitions that impact development of projects in Alaska and you do that through the initiative process — I was very concerned about that,” he said in a Dec. 22 interview with the Journal. “I would like there to be a discussion back and forth; hearings in the appropriate hearing rooms in Juneau and various folks being able to weigh in.” BBNC changes stance on initiative The Jan. 16 press release from Stand for Alaska lists Bristol Bay Native Corp. among the dozens of corporations, trade groups and chambers of commerce opposing the initiative, but that list may need to be revised. BBNC is no longer against the initiative, but is not for it, either. CEO Jason Metrokin said in a Jan. 16 statement to the Journal that “BBNC has been and continues to be neutral on the initiative; neither opposing it nor supporting it. The ANCSA Regional Association as a body took its own action in opposing the initiative. BBNC and other ANCSA regional corporations are discussing ways to improve Title 16; changes that would improve salmon habitat protection but not preclude responsible development projects.” Metrokin, in an October statement to the Journal, reemphasized the corporation’s longstanding opposition to the Pebble mine project, but also said that BBNC “did not support (House Bill) 199 last legislative session and cannot support the Stand for Salmon ballot initiative. Each would unnecessarily and negatively impact resource development projects and potentially the subsistence activities upon which our shareholders rely depend.” Metrokin continued to note in October that the Native corporation wants to work with the Walker administration and the Legislature to “appropriately update Title 16’s anadromous fish habitat provisions.” The ANCSA Regional Association, with a board comprised of the 12 regional corporation leaders and Alaska Federation of Natives head Julie Kitka, voted unanimously to oppose the initiative in July, according to an October op-ed penned by CIRI CEO Sophie Minich and Arctic Slope Regional Corp. CEO Rex Rock. Other media outlets subsequently reported in November that BBNC opposed the proposed ballot measure as well. BBNC issued a press release Jan. 5 urging the Legislature to revise Title 16 and stressing the company’s positions on salmon habitat and other resource issues are grounded in a belief that decisions about how to balance uses of competing resources should always start with putting “fish first.” “The protections in Title 16 help ensure that development projects do not threaten Alaska’s anadromous fisheries. It is imperative that Alaska periodically review and update those statutes. This has not been done in nearly 60 years. It is time for the Legislature to do so,” the Jan. 5 release concludes. Shortly thereafter, BBNC board of directors member H. Robin Samuelsen Jr. told the Journal there was a “misunderstanding” between Metrokin and board members regarding the corporation’s stance on the initiative, but referred further questions to BBNC executives. Those questions led to the Jan. 16 statement. Democrat House Speaker Bryce Edgmon of Dillingham has said the House Majority will hold hearings on House Bill 199 this session to gather information on how Title 16 can be improved with input from those that oppose the initiative and the current version of HB 199. The bill language largely mirrors that found in the initiative and Edgmon has said he does not expect it to pass this session because of the consternation the initiative has caused. Elwood Brehmer can be reached at [email protected]

Permit application reveals size of scaled-down Pebble project

The official Pebble mine plan released Jan. 5 by federal regulators describes a scaled-back project relative to prior concepts, but opponents contend it is a way for the company to get its foot in the door for future expansion. Published by the Alaska District of the U.S. Army Corps of Engineers, the plan details a project that is much more than a mine. According to Pebble’s plan documents, its reach would stretch 187 miles from the mine site north of Iliamna Lake to the edge of the Sterling Highway on the southern Kenai Peninsula. In between would be a natural gas pipeline up to 12 inches wide traversing the Cook Inlet sea floor for 95 miles from the Anchor Point area to a deepwater port at Amakdedori west of Augustine Island. From there, a two-lane, private road would run 35 miles northwest to a ferry terminal on the south shore of Iliamna Lake. An ice-breaking ferry would then shuttle materials 18 miles across roughly the midpoint of the massive Iliamna Lake, which is the largest in Alaska. Another 30 miles of industrial road would connect the north ferry terminal near the village of Newhalen with the mine site. The gas pipeline would follow the rest of the transportation corridor to the mine. In early October, Pebble CEO Tom Collier unveiled a rough outline to the company’s plans. Collier said then the mine the company intends to construct is smaller than what has long been speculated and incorporates stakeholder concerns both in the footprint of the mine and broader project designs. The ferry, for instance, would be employed to reduce road construction and associated impacts to wetlands, according to Collier. He reiterated as much in a Jan. 5 statement issued by Pebble. “We believe that as Alaskans become more familiar with our proposed project design and the environmental safeguards it incorporates, there will (be) an increasing degree of support for the project, and the significant economic potential it represents for the State of Alaska,” Collier said. Pebble estimates the project will generate about 2,000 jobs during its four-year construction and about 850 full-time positions over its 20-year life. The now-public Pebble project plans were submitted to the Corps Dec. 22 in Pebble’s wetlands discharge permit application, required under Section 404 of the Clean Water Act. The Army Corps of Engineers first reviews wetlands permit applications and if deemed complete issues a public notice announcing the proposal within 15 days of the application and makes it available to the public. The Corps also issues a determination on what level of environmental review an application necessitates and, unsurprisingly in this case, deemed Pebble worthy of a full environmental impact statement. Corps Alaska regulatory officials have said the average EIS for a large project takes four to five years, while Collier has said he hopes the project can be approved in three. The next step is for the Corps to select a third-party contractor to develop the EIS. Ron Thiessen, CEO of Pebble’s parent company Northern Dynasty Minerals Ltd. said Pebble expects to sign a memorandum of agreement with the Corps “in the very near term” and subsequently issue a request for proposals from which the Corps will select the EIS drafter. At the end of the road but the center of controversy, the mine site would include a suite of facilities over several square miles. The heart of the operation would be the mine pit: 6,500 feet long; 5,500 feet wide and up to 1,750 feet deep. A large bulk tailings storage facility capable of holding 950 million tons of waste rock would collect most of the milled ore. A smaller, lined tailings storage cell designed to hold 135 million tons of potentially acid generating mine waste would be segregated from the bulk tailings but be behind the same series of tailings dams. The storage facilities are designed to handle mine waste generated over 20 years of operations, according to Pebble’s documents. The primary tailings embankment would be 600 feet tall and three others would be between 60 and 420 feet tall. Each would have a 2.6-to-1 slope, according to Pebble. The natural gas pipeline would terminate at and feed a 230-megawatt power plant, which would provide electricity to the mine and drastically reduce the need for diesel fuel storage, the application notes. For comparison, the power plant would be large enough to supply Golden Valley Electric Association, the electric utility for Fairbanks and surrounding areas, with enough electricity to meet its historical peak demand of 223 megawatts. The onsite facilities would all be in the Koktuli River watershed and avoid Upper Talarik Creek. Avoiding the Talarik drainage, which feeds Iliamna Lake and the Kvichak River, would seemingly avoid any potential damage to the Kvichak’s immense sockeye salmon runs, a point Collier has emphasized as proof of the company’s efforts to minimize its impacts to salmon habitat. Pebble will not use leaching processes that require cyanide to extract gold, which will lower recovery by 15 percent, according to Collier. However, mine opponents have noted the north and south branches of the Koktuli River are primary spawning habitat for the large run of chinook salmon that return to the Nushugak River system. Overall, the mine site would fill 3,190 acres of wetlands and water bodies, according to Pebble. The Environmental Protection Agency determined in 2014 — based on the conclusions of its Bristol Bay Watershed Assessment — that any project resulting in the loss of more than 1,100 acres of wetlands and water bodies in the area would be an unacceptable impact. How Pebble will, or can, sufficiently mitigate the wetlands losses is unclear. The environmental offsets will be established as the lengthy permitting process plays out, according to the application. Active mining from the pit would occur for 14 years and the final six years of operation would focus on mineral recovery from a stockpile of low-grade ore. As planned, the Pebble mine would produce 600,000 tons of copper-gold concentrate and 15,000 tons of molybdenum per year from 58 million tons of processed ore. Statements from several groups fighting the proposed mine said the tempered plan changes little. “The plan released (Jan. 5) includes only a fraction of the ore within the Pebble deposit, indicating that the impacts could be vastly greater than what’s indicated on the application we see today,” Trout Unlimited Alaska Director Nelli Williams said. “It is clear that Pebble is continuing to deceive and mislead Alaskans and Americans, and their ‘new’ plan is nothing more than the same old threat wrapped in a package they hope is more digestible. Don’t be fooled by this incomplete proposal.” While Pebble’s application is for a 20-year mine with a single pit to reduce its impact, opponents note investor pitches and statements from leaders of Northern Dynasty Minerals highlighting the immense size of the Pebble deposit. A November Northern Dynasty investor presentation stresses Pebble as “the world’s largest undeveloped copper and gold resource.” In its Section 404 application, Pebble notes the total deposit is estimated to hold 80.6 billion pounds of copper, 5.5 billion pounds of molybdenum and 107 million ounces of gold. However, the single pit would allow for recovery of just 6.7 billion pounds of cooper, 353 million pounds of molybdenum and 10.7 million ounces of gold. Collier has acknowledged the company might look to expand after initial production commences but contends growing the project would require additional rounds of environmental reviews and permitting that would be independent from any approvals Pebble already had. He said in a December interview that the company does not have a definitive cost estimate on its massive undertaking, but he did say Pebble is confident in the project’s economics at current metal prices. Elwood Brehmer can be reached at [email protected]

Pebble finally files for permits

The Pebble Limited Partnership has long been criticized for many things, but as of Dec. 22 that list no longer includes failure to file for environmental permits. Pebble and its Vancouver-based parent company Northern Dynasty Minerals filed for a Clean Water Act Section 404 wetlands fill permit with the U.S. Army Corps of Engineers. Alaska Army Corps officials said Dec. 21 that the wetlands fill permit application detailing the types and volumes of fill material the project will use and the area of wetlands it is expected to cover would first be subject to a 15-day completeness review. If the wetlands application is deemed complete the Corps will then issue a public notice saying as much and — given the size of the project — issue a subsequent determination that the project needs to go through the full, multi-year environmental impact statement process. Northern Dynasty leaders said early in 2017 they planned to start permitting for the wildly controversial project by the end of the year, a promise that was met with understandable skepticism. They made good on it with nine days to spare. Pebble Partnership and its ownership groups, which have varied over the years, had consistently been faulted for making numerous claims dating back to 2005 that they would soon start the environmental reviews. The permitting process is also seen as one way to eventually provide closure for those on each side of the contentious debate over whether the world-scale mine proposed at the headwaters of a world-scale salmon fishery is appropriate. “For the Pebble team, this day has been a long time in the making and is the result of a tremendous amount of hard work,” Pebble CEO Tom Collier said. “We have listened to our stakeholders, supporters and skeptics, and are presenting a much smaller mine with enhanced environmental safeguards. Since I have been with the project, my main focus has been to initiate the permitting process so that Pebble can be fairly and objectively evaluated by the independent experts hired by the Corp of Engineers.” In 2014, the Environmental Protection Agency proposed blocking Pebble based on a larger mine concept outlined in financial disclosure filings by Northern Dynasty. Shortly thereafter Pebble Partnership sued the EPA, claiming the agency’s actions were made on a biased, anti-mine premise and that it illegally colluded with opponents of the project. That suit was settled in May and because the EPA is currently evaluating public comments on whether to lift the proposed determination that would prohibit the project. With a total mine facilities footprint of 5.4 square miles, the new plan is less than half the overall size contemplated by the EPA but still larger than the 4.2-square mile footprint the agency said could be acceptable. In statements issued shortly after Pebble’s announcement, opposition groups said the permit filing changes little, other than renewing determination to stop the project. “It took Pebble Limited Partnership 12 years just to file the paperwork asking the Army Corps to look at this project,” Bristol Bay Economic Development Corp. CEO Norm Van Vactor said. “The bar is set very low, indeed, if merely filing an application is cause for celebration. Bristol Bay fishermen file paperwork for their permits every single year, without fanfare. And here in Bristol Bay, we will choose our sustainable commercial fishery that generates thousands of jobs over a short-term development project.” A few days earlier on Dec. 18, Northern Dynasty issued a statement saying it is close to finalizing a deal with fellow Canadian mining firm First Quantum Minerals for investment in Pebble. Northern Dynasty is the sole owner of Pebble after previous partners Anglo American and Rio Tinto walked away from the controversial copper and gold project several years ago. In the case of Anglo American, the company ended its partnership on the project in 2013 after spending $541 million on exploration. Since then, company officials have acknowledged the need for a large investment partner to fund Pebble’s development. Under the terms released of the preliminary deal, First Quantum would contribute $150 million to Pebble over up to six years with a $1.35 billion option to buy a 50 percent stake in the project. In a Dec. 21 interview Collier said he expects to have the partnership finalized by the middle of next year. Collier said his company doesn’t yet have a solid cost estimate for the scaled-back mine plan he unveiled in October, but that would materialize as permitting plays out. Elwood Brehmer can be reached at [email protected]

Major Alaska resource projects face crucial year in 2018

The upcoming year will be a telling year for several of Alaska’s prospective development projects, starting with the biggest: the $40 billion-plus Alaska LNG Project. That’s not to say the state-owned Alaska Gasline Development Corp. did not produce any accomplishments in 2017. After taking control of the LNG export effort to start the year, AGDC promptly submitted its environmental impact statement application — nearly 60,000 pages of scientific and socioeconomic information — in April. Agency officials believe it to be the largest single EIS filing in the history of the National Environmental Policy Act review process. AGDC leaders have stressed their desire for Federal Energy Regulatory Commission, or FERC, to have a final EIS published by the end of the year, with a record of decision following shortly thereafter. Getting the EIS done in the next year would go a long way towards keeping AGDC on schedule for the early 2019 final investment decision that corporation President Keith Meyer says is critical to hitting the available Asian market window for LNG deliveries to start in 2024 or 2025. Meyer and his team point to the size of the filing as evidence of its thoroughness, which should help the federal regulators expedite their evaluation. AGDC officials and Gov. Bill Walker also note the Trump administration’s support of the project and several actions the administration has taken to speed federal permitting for infrastructure development. While FERC is known to process permit applications quicker than most other regulatory agencies, the EIS schedule that AGDC had requested be published by Dec. 15 at the latest still isn’t public; FERC continues asking the corporation for additional information, or follow-up questions, on its application. As a result, it’s still anyone’s guess as to when the first draft EIS, which comes with a 45-day public review and comment period, will be published. Similar timing questions remain on the commercial side of the Alaska LNG Project as well. The highly publicized, touted and critiqued joint development agreement Meyer and Walker signed with three giant Chinese corporations interested in partnering on Alaska LNG Nov. 9 in Beijing calls for the sides to have a framework agreement in place by the end of May 2018. The concept is that AGDC would essentially trade 75 percent of the project’s capacity, up to 20 million tons of LNG per year, to Sinopec in exchange for 75 percent of the project’s financing from the Bank of China and the China Investment Corp. That outline would then be turned into a firm contract in the second half of the year. The nonbinding joint development agreement expires Dec. 31, 2018. Sinopec is one of the world’s largest oil and gas companies. It, and the financial firms are nationalized companies owned by the Chinese government. The status of other nonbinding Alaska LNG memorandums of understanding signed in 2017 with Korea Gas Corp., Tokyo Gas Corp. and PetroVietnam Gas Corp. is less clear because AGDC, citing commercial sensitivity, has kept their contents confidential. The Alaska LNG Project will also undoubtedly play a leading role in the 2018 gubernatorial election. Walker will highlight the state’s stewardship of the project — the regulatory achievements and customer interest. If it appears to be moving well his opponents will acknowledge his progress but claim to alternative or cheaper development plans that will return more money for the state. And if the project struggles in the coming months they will call for its stoppage or outright demise, repeating in some form the question: “Why is the state still spending the gasline when BP, ConocoPhillips and ExxonMobil decided not to?” To that end, AGDC has not asked for any new state money in fiscal year 2019. The governor’s 2020 state budget proposal will be out on Dec. 15 of next year. Oil projects North Slope production is expected to keep climbing in 2018, with state officials estimating an average of 533,000 barrels per day for the fiscal year that runs through June 30. Additionally, the status of the two biggest oil projects on the North Slope should become clearer in the coming year. Armstrong Energy’s 1.2 billion-plus barrels Nanushuk prospect will be handed over to Australian-based Oil Search, as part of an up to $850 million buyout announced last fall. The companies’ leaders said in an interview following the announcement that the deal is a way to continue expeditious development of Nanushuk, estimated to be upwards of $5 billion, which is too large for the exploration-focused Armstrong to manage. The Army Corps of Engineers released its draft EIS for the project in September and a final evaluation is forthcoming. First oil from Nanushuk is expected in the early 2020s. Similarly, a final EIS is the next big step for the long-discussed Liberty offshore oil project. Designed as a manmade island development in the near shore federal waters of the Beaufort Sea, Hilcorp Energy estimates Liberty could produce up to 70,000 barrels of oil per day, following in the path of other successful North Slope artificial island projects currently in production. Nearby and onshore, Hilcorp is continuing to build out Milne Point, one of the fields it bought into as part of a $1.25 billion deal with BP in 2014. The company recently drilled 10 wells at Milne Point that are just starting to come online, according to Hilcorp Alaska leaders, and plans to start drilling another 50 to 70 wells next fall and try a polymer flood project to ultimately produce between 30 million and 50 million barrels of oil from Milne Point. In Cook Inlet, Hilcorp is also in the midst of spending $75 million to convert a cross-Inlet natural gas pipeline to an oil carrier, a project it plans to finish in about a year, company officials have said. With other requisite work to adjust gas and oil flow on the west side of the Inlet, the project will allow Hilcorp to close the Drift River oil tank farm, which has been a lingering environmental concern to many because of its location at the base of Mt. Redoubt, an active volcano that most recently erupted in 2009 and caused flooding at the facility. The oil transport line will also reduce oil tanker traffic in the Inlet. Mining While each of Pebble Limited Partnership’s activities will continue to dominate headlines, the fate of another massive mine proposal to the north should be known a lot sooner. A final EIS for the Donlin Gold megaproject in the upper Kuskokwim River valley is expected early in 2018. As planned by the company, Donlin would produce about 1.1 million ounces of gold per year over a 27-year mine life for a total of about 33 million ounces of the precious metal. The mine site, on lands owned by The Kuskokwim Corp. and Calista Corp., the area village and regional Native corporations, respectively, would also include a fully lined, 2,300-acre tailings facility to store the processed ore. Support infrastructure would include a 315-mile, 14-inch diameter natural gas pipeline originating on the west side of Cook Inlet needed to supply fuel to the 227-megawatt capacity power plant at the mine site. The pipeline has also been viewed as a first, indirect step to getting lower cost natural gas to numerous villages in Western Alaska that currently rely on fuel oil their primary heat and electricity sources. A 30-mile road would connect the mine to a new barge port on the Kuskokwim. Further down the Kuskokwim, port cargo facilities would be expanded in Bethel, and new diesel storage tanks would be needed Dutch Harbor to supply fuel for equipment at the mine. Regardless of Donlin’s fortunes in permitting, Donlin Gold leaders acknowledge the project is more sensitive to gold prices than even other Alaska prospects simply because of its associated infrastructure costs. Company officials have said the project would not be economic at gold prices of about $1,100 per ounce. Gold currently sells for about $1,280 per ounce in spot trading. On Pebble, 2018 is likely to be largely a wait-and-see year. Folks on all sides of the mine debate will see if Pebble’s owner, Northern Dynasty Minerals, can finalize the framework investment deal it announced with fellow Canadian mining firm First Quantum Minerals. First Quantum said in a release it is doing its due diligence to review the project and its potential investments — $150 million to support permitting or $1.35 billion for 50 percent of Pebble — while Northern Dynasty admits it can’t develop the project itself. On the permitting side, Pebble’s Dec. 22 wetlands fill permit application with the Corps of Engineers, which will trigger an EIS, kicked off what is sure to be a three to five-year, or more, review. Pebble CEO Tom Collier said in an interview that the company believes its thorough background study work means the EIS can be done in three years, but Corps officials note the average EIS time for a project the size of Pebble is four to five years. Pebble would undoubtedly like to get the EIS done before the next presidential election in the event a new administration might try to put more restrictions on development. As for revoking its prior proposed Clean Water Act Section 404(c) prohibition on Pebble, the Environmental Protection Agency is reviewing the mountains of comments it received on the policy change, spurred by its court settlement with the Pebble Partnership. The EPA’s tally is not yet known, but Pebble opponents claim more than 750,000 comments were submitted in support of stopping the project. What the EPA will do with the proposed reversal of its original proposal is also unknown. The agency could make a political statement and finalize its move to revoke the Obama administration’s proposed mine veto or, since no substantive action was taken against Pebble, simply leave it in limbo and let the permitting process play out. Salmon habitat initiative The Stand for Salmon citizen-driven ballot initiative to significantly tighten the state’s salmon habitat permitting laws is sure to be 2018’s version of Alaska’s omnipresent development versus conservation debate. That is, if the state Supreme Court allows it to be. The state Department of Law, at the behest of Lt. Gov. Byron Mallott, appealed an October Superior Court ruling to uphold the initiative and that appeal is currently before the Supreme Court. There is no indication as to when the court may or may not hear and rule on the case. Mallott originally rejected the proposed initiative based on Law’s opinion that it would direct state water resources to fish habitat, taking that resource allocation authority away from the Legislature and thus violate the state constitution. The petitioners are currently hustling to gather the roughly 32,000 signatures they need from voters by mid-January to get it on the 2018 ballot while everyone waits to hear from the Supreme Court. If the initiative is upheld in court, it is likely to galvanize Alaska’s development proponent groups, which have already formed their own counter-measure campaign, Stand for Alaska, to raise money to fight the initiative. Opponents contend the proposal, aimed to give the Department of Fish and Game more authority in permitting large projects, would make even many small developments unworkable and cost-prohibitive. Stand for Salmon leaders counter that they are just pushing the reforms requested by the Board of Fish in January 2017 to update the state’s vague and decades-old salmon habitat protection statute. Gov. Bill Walker opposes the initiative, saying its scope is far too broad, and if upheld in court it will be another topic amongst gubernatorial candidates. And even if the petitioners don’t gather the signatures they need in time for the 2018 ballots, that just means it could resurface in 2020 — again, assuming the Supreme Court stays with the lower court ruling. Elwood Brehmer can be reached at [email protected]

Pebble Partnership to finally file permit application

The Pebble Limited Partnership has long been criticized for many things, but as of Friday that list will no longer include failure to file for environmental permits. Pebble and its Vancouver-based parent company Northern Dynasty Minerals announced Thursday their plans to file for a Clean Water Act Section 404 wetlands fill permit with the U.S. Army Corps of Engineers on Friday, Dec. 22. Northern Dynasty leaders said early in the year they planned to start permitting for the wildly controversial project by the end of the year, a promise that was met with understandable skepticism. They will have made good on it with nine days to spare. Pebble Partnership and its ownership groups, which have varied over the years, had consistently been faulted for making numerous claims dating back to 2005 that they would soon start the environmental reviews. The permitting process is also seen as one way to eventually provide closure for those on each side of the contentious debate over whether the world-scale mine proposed at the headwaters of a world-scale salmon fishery is appropriate. “For the Pebble team, this day has been a long time in the making and is the result of a tremendous amount of hard work,” Pebble CEO Tom Collier said. “We have listened to our stakeholders, supporters and skeptics, and are presenting a much smaller mine with enhanced environmental safeguards. Since I have been with the project, my main focus has been to initiate the permitting process so that Pebble can be fairly and objectively evaluated by the independent experts hired by the Corp of Engineers.” In 2014, the Environmental Protection Agency proposed blocking Pebble based on a larger mine concept outlined in financial disclosure filings by Northern Dynasty. Shortly thereafter Pebble Partnership sued the EPA, claiming the agency’s actions were made on a biased, anti-mine premise and that it illegally colluded with opponents of the project. That suit was settled in May and since the EPA is currently evaluating public comments on whether to lift the proposed determination that would prohibit the project. With a total mine facilities footprint of 5.4 square miles, the new plan is less than half the overall size contemplated by the EPA but still larger than the 4.2-square mile footprint the agency said could be acceptable. In statements issued shortly after Pebble’s announcement, opposition groups said the permit filing changes little, other than renewing determination to stop the project. “It took Pebble Limited Partnership 12 years just to file the paperwork asking the Army Corps to look at this project,” Bristol Bay Economic Development Corp. CEO Norm Van Vactor said. “The bar is set very low, indeed, if merely filing an application is cause for celebration. Bristol Bay fishermen file paperwork for their permits every single year, without fanfare. And here in Bristol Bay, we will choose our sustainable commercial fishery that generates thousands of jobs over a short-term development project.” Earlier in the week on Tuesday, Northern Dynasty issued a statement saying it is close to finalizing a deal with fellow Canadian mining firm First Quantum Minerals for investment in Pebble. Northern Dynasty is the sole owner of Pebble after previous partners Anglo American and Rio Tinto walked away from the controversial copper and gold project several years ago. In the case of Anglo American, the company ended its partnership on the project in 2013 after spending $541 million on exploration. Since then, company officials have acknowledged the need for a large investment partner to fund Pebble’s development. Under the terms released of the preliminary deal, First Quantum would contribute $150 million to Pebble over up to six years with a $1.35 billion option to buy a 50 percent stake in the project. In a Thursday interview Collier said he expects to have the partnership finalized by the middle of next year. Collier said his company doesn’t yet have a solid cost estimate for the scaled-back mine plan he unveiled in October, but that would materialize as permitting plays out. Alaska Army Corps officials said Thursday that the wetlands fill permit application detailing the types and volumes of fill material the project will use and the area of wetlands it is expected to cover would first be subject to a 15-day completeness review. If the wetlands application is deemed complete the Corps will then issue a public notice saying as much and — given the size of the project — issue a subsequent determination that the project needs to go through the full, multi-year environmental impact statement process. Look for updates to this story in an upcoming issue of the Journal. Elwood Brehmer can be reached at [email protected]

YEAR IN REVIEW: Pebble promises permit application after hurdles fall

This was the first good year in a long time for Pebble Limited Partnership and its owner Northern Dynasty Minerals and equally as bad a year for those trying to stop the massive mining project. After months of talks, the Environmental Protection Agency and Pebble Partnership settled a lawsuit in May that the company filed against the agency in 2014. The suit claimed the EPA, under the Obama administration, was biased in its drafting of the Bristol Bay Watershed Assessment and colluded with anti-mine scientists to reach the conclusion that a large, open-pit mine would cause too much damage to the region’s fisheries. The 1,000-plus page assessment was the basis for the EPA’s 2014 attempt to use its Clean Water Act authority to ostensibly prohibit development of Pebble. Per the settlement, the EPA is in the process of withdrawing its Clean Water Act 404(c) proposed determination and Pebble has 30 months and counting from the time of the May 12 agreement to file for the project’s federal permits. However, Pebble also agreed that the watershed assessment, the only official scientific document examining the potential impacts of the project, would remain valid. The EPA under the Trump administration is just not invoking it any longer. In early October Pebble released a new, smaller mine plan than original concepts that entails a reduced overall footprint and fewer roads to reach it by way of a ferry across giant Iliamna Lake. Pebble executives left open the possibility of expanding the mine after initial development and noted that would require a separate permitting process of its own. They also proposed setting up a corporation to distribute revenue from the mine to local Native village corporations and directly to area residents once it is in production. Most recently on Dec. 18, Northern Dynasty and fellow Canadian mining company First Quantum Minerals announced the framework of an investment deal in which First Quantum could put $150 million into the project over up to six years. The first $37.5 million would go towards permitting costs but First Quantum is still evaluating whether or not to finalize the potential investment, according to its press release about the deal. It could also buy a 50 percent stake in the project for $1.35 billion, according to Northern Dynasty. The parent company to Pebble has said it will need a large investment partner to help fund development and wants to secure one by the end of the year. Additionally, Pebble leaders have said they plan to file environmental permit applications by the end of 2017, which is coming soon. (Editor's note: This story has been changed to correctly state that the EPA is in the process of withdrawing its 404(c) proposal, but has not done so yet.) No. 2: Habitat initiative heads to Supreme Court Three Alaskans from Bristol Bay and Talkeetna filed a proposed ballot initiative to overhaul the state’s anadromous fish habitat permitting requirements and another fight over what are acceptable rules for development in and around salmon habitat has predictably followed. Proponents contend the “Stand for Salmon” initiative would give the Department of Fish and Game much-needed enforcement authority over unlawful salmon habitat disruption, which they say it currently lacks. They further note the state actually has no formal permitting structure for development in salmon habitat; rather, just a couple vague lines of statute that direct the department to authorize projects that provide “proper protection of fish and game.” In a June 30 letter to the sponsors, the Department of Law deemed the first iteration of the initiative an unconstitutional allocation of resources and would prohibit projects such as the Pebble and Chuitna mines and Susitna-Watana dam, which the initiative sponsors have opposed. After the sponsors revised the initiative, Lt. Gov. Byron Mallott still rejected it based on the opinion of Law Department attorneys and wrote that the measure “essentially usurps the Legislature’s resource allocation role.” He has insisted the state’s position is based on the constitutional implications and has nothing to do with the politics. In an interesting twist, Elizabeth Bakalar, the assistant attorney general assigned to the matter, said the June 30 letter was in large part a response to industry concerns about the initiative that the department heard. It is the same type of opinion state attorneys issue on any ballot measure, except earlier, she said. She commented that the department isn’t likely to issue “courtesy” opinions in the future because this one has been incorrectly perceived as the state helping the petitioners. However, it could just as easily be seen as a way to calm development industry concerns by clarifying ahead of time that the initiative would not be certified. The petitioners appealed to the Superior Court and Oct. 9 Judge Mark Rindner overturned Mallott’s decision, meaning the initiative could be put on the 2018 ballot. The state Supreme Court has instructed lower courts interpret initiatives broadly to give voters a say whenever possible, Rindner noted in his order. The state appealed Rindner’s ruling to the Supreme Court Oct. 25. The high court has since been quiet about its path forward and in the meantime the sponsors are gathering the required signatures to place it on the 2018 general election ballot. No. 3: NANA rebound High zinc prices made it a much better year for NANA Regional Corp. NANA, the Native regional corporation for Northwest Alaska, owns the Red Dog Mine — one of the largest zinc mines on Earth — that is operated by Vancouver-based Teck Resources Ltd. In September, Teck said it expects production from Red Dog to be between 525,000 and 550,000 metric tonnes this year. Output in that range would be about 10 percent above prior production forecasts. Zinc sold on spot markets for between 80 cents and about $1 per pound for several years before dipping to 70 cents per pound in early 2016. Since, the corrosion-resistant metal commonly used in steel coatings has steadily increased in value to its current spot price of about $1.45 per pound. NANA CEO Wayne Westlake said Red Dog’s increased revenue of late has largely made up for the recent decline in 7(i) distributions brought on by $50 oil. He noted that the resource development payments — required to be shared among the 12 Native regional corporations, with NANA a major contributor for its mineral royalties — are often one of few private cash flows going into rural Alaska communities. While the oil price depression hit Native corporations through revenue sharing, NANA is also among the group of corporations that is heavily invested in the business side of Alaska’s oil and gas, with seven subsidiary firms working on the support services side of the industry in Alaska, Colorado and the Gulf Coast. About 40 percent of NANA’s revenues come from the oil and gas sector in some fashion, according to company leaders. That led to NANA absorbing a $109 million loss in 2016 and its business operations company, NANA Development Corp., also had its credit rating downgraded last year as a result of its oil business struggles. No. 4: Ambler Road permitting begins with AIDEA in lead Development of the Ambler Mining District road project is now in federal hands. The Bureau of Land Management issued a Federal Register notice Feb. 28 requesting public input regarding what topics the agency should consider in drafting the environmental impact statement, or EIS, for the mining access road. Early environmental and financial study work for the proposed gravel road running west from the Dalton Highway for 211 miles to the remote Ambler Mining District has to this point been led by the state Department of Transportation and more recently the Alaska Industrial Development and Export Authority. The Ambler Mining District stretches for about 75 miles along the southern flank of the Brooks Range in the upper Kobuk River drainage. It has long been identified as an area of great potential for copper, zinc and precious metals but access issues have largely inhibited development. Vancouver-based Trilogy Metals Inc., formerly NovaCopper, is one company that has been busy exploring multiple prospects in the region. According to Trilogy, its well-defined Arctic deposit in the Ambler district likely holds about 2.3 billion pounds of zinc, more than 1.7 billion pounds of copper, 40 million ounces of silver and a small amount of gold. No. 5: Southeast exploration Alaska Mental Health Trust Land Office officials keep plugging away at their heavy mineral prospect on the Gulf Coast near Yakutat. In October, the Mental Health Trust Authority Board of Trustees approved $3 million more for exploration at the Icy Cape prospect in 2018. The prospect is a long stretch of coastline about 75 miles northwest of Yakutat in Southeast Alaska owned by the trust at the entrance of Icy Bay that appears to hold world-class deposits of several heavy minerals. The entirety of the area is roughly 48,000 acres and stretches for more than 30 miles along the Gulf of Alaska coast. Trust Land Office leaders have stressed that they are still in the preliminary exploration phase of evaluating the prospect but early drilling samples from the broad delta at the point of the cape indicate the ore there could be up to 40 percent heavy minerals. Overall, an average of 26 percent of the sands are heavy minerals, according to the Trust Land Office reports. The minerals of value in the “ore” — which is mostly old beach sands — are roughly equal portions of epidote and garnet in the areas of highest concentration with small amounts of zircon and even gold. Epidote and zircon are semiprecious gemstones. Garnet has also been used as a gemstone for hundreds of years, but more recently the hard mineral has been put to use as an industrial abrasive on sandpapers and in sandblasting applications. It is also used in water filtration; garnet’s small pores allow for the passage of liquid while catching some contaminants. If developed, the Trust property would be the only source for garnets on the West Coast, Land Office officials have said.

Pebble prospect owners might have new investor

The owners of the Pebble project are one step closer to securing the investment partner that will be key to advancing the contentious mine, according to Dec. 18 announcements. Vancouver-based Northern Dynasty Minerals Ltd. has inked what a company press release characterizes as a “framework agreement” with fellow Canadian mining company First Quantum Minerals Ltd. “The option agreement contemplates an option payment of $150 million (U.S.) staged over four years which option will entitle First Quantum to acquire the right to earn a 50 percent interest in the Pebble Limited Partnership for $1.35 billion,” a Northern Dynasty release stated. First Quantum can also extend the option and make the payments over an additional two years, according to the company. Northern Dynasty is the sole owner of Pebble after previous partners, Anglo American and Rio Tinto walked away from the controversial copper and gold project several years ago. Northern Dynasty leaders have said they will start filing environmental permit applications for Pebble by the end of the year. At the same time, they have acknowledged the company needs a new partner to help fund permitting and development. “We have made good progress in the partnering process and are very pleased to be in advanced-stage discussions with First Quantum, an industry leader in mine development and management,” Northern Dynasty CEO Ron Thiessen said in a formal statement. As soon as the agreement is finalized, First Quantum will make a $37.5 million payment to Northern Dynasty to fund permitting, according to a company release. First Quantum operates six mines worldwide primarily producing gold, copper and zinc. Thiessen added that Northern Dynasty will initiate state and federal permitting “in the very near term.” According to a release from First Quantum the company is still conducting a due diligence review of the potential partnership and will finalize the agreement contingent upon a favorable review. First Quantum CEO Philip Pascall said his company remains primarily focused on advancing a copper project in Panama, but Pebble could provide long-term growth for the mine developer. “We are well aware of the environmental and social sensitivity of (the Pebble) project and will utilize the lengthy option period to apply our extensive project development and operating expertise to ensure that this project can be developed with the support of stakeholders,” Pascall said further. Opposition stakeholders from the Bristol Bay region quickly responded with statements that they will continue to fight Pebble development and First Quantum should follow Northern Dynasty’s ex-partners and stay out of the project. “An overwhelming majority of Bristol Bay residents — fearful of the threat large-scale mining poses to their livelihoods and their way of life — are strongly against the Pebble project,” House Speaker Bryce Edgmon, D-Dillingham, said. “As their representative in the state House, it is my clear responsibility to oppose development of the proposed Pebble mine and the unacceptable risks it represents for the Bristol Bay watershed and the many communities I serve. A new investor in Northern Dynasty’s venture does nothing to change that.” The Pebble Limited Partnership unveiled high-level plans in early October for a smaller Pebble mine aimed at lessening the project’s environmental impacts and appeasing skeptics. Pebble CEO Tom Collier said the company might eventually look to expand the project but noted that would require another thorough permitting examination. A Northern Dynasty investor presentation from earlier this year states the company estimates the Pebble prospect holds 1.9 percent of all the gold ever mined in recorded history. Elwood Brehmer can be reached at [email protected]

More exploration approved at Icy Cape

Alaska Mental Health Trust Land Office officials are spending the winter reviewing the results of last year’s drilling campaign and preparing for another at their Icy Cape heavy mineral prospect. Those results were promising enough for the Alaska Mental Health Trust Authority Board of Trustees to approve $3 million in October to spend on more exploratory drilling next year, according to Trust Land Office Executive Director Wyn Menefee. The Icy Cape prospect is a long stretch of coastline about 75 miles northwest of Yakutat in Southeast Alaska owned by the trust at the entrance of Icy Bay that appears to hold world-class deposits of several heavy minerals. The entirety of the area is roughly 48,000 acres and stretches for more than 30 miles along the Gulf of Alaska coast. “We have a lot more to do in the sense that we didn’t cover any of the western portion of the property,” Menefee said in an interview. “We also need to do some more on the eastern side of the property. There’s just more to do before you have a better picture of where everything’s located.” Trust Land Office leaders have stressed that they are still in the preliminary exploration phase of evaluating the prospect but early drilling samples from the broad delta at the point of the cape indicate the ore there could be up to 40 percent heavy minerals. Overall, an average of 26 percent of the sands are heavy minerals, according to the Trust Land Office’s 2016 annual report. The minerals of value in the “ore” — which is mostly old beach sands — are roughly equal portions of epidote and garnet in the areas of highest concentration with small amounts of zircon and even gold. Epidote and zircon are semiprecious gemstones. Garnet has also been used as a gemstone for hundreds of years, but more recently the hard mineral has been put to use as an industrial abrasive on sandpapers and in sandblasting applications. It is also used in water filtration; garnet’s small pores allow for the passage of liquid while catching some contaminants. If developed, the Trust property would be the only source for garnets on the West Coast, Land Office officials have said. The Trust Land Office manages roughly 1 million acres of land across Alaska for real estate and resource development purposes, the proceeds of which go to fund the Alaska Mental Health Trust Authority’s work to benefit Alaskans with mental health and addiction challenges. Menefee said there is a misconception about the project that mining Icy Cape heavy minerals would literally mean digging up the beach. Much of the area is forested, he added, and portions of it have been logged. “It’s the course of time that creates these sandy forelands; so even though they are considered beach sands, it’s not the beach,” he said. The sands that comprise the substrate are the result of two sediment patterns coming from opposite directions, those materials that have eroded and washed down from the steep mountain faces above and sediments that tidal and wave action have pushed up to the shoreline. Most of that drilling has been done right from the logging roads that are already there, Menefee said. The area also has an airstrip. The drilling activity — and any future mine — doesn’t and won’t resemble the hard rock mines many people associate with the industry. Most of the drilling is to less than 100 feet down and it’s done with a sonic drill rig that uses vibration, not water, to make its way down. “It just vibrates its way down. We may go 75 to 100 feet, something like that, and then we take out the sand core samples,” Menefee described. “It’s a pretty low-intensity drilling program.” Because it’s a placer deposit, the mine would be “much more akin to gravel operations,” he added. Accordingly, the minerals would be sorted either using water, gravity, vibration, magnets or a combination of the processes, Menefee said, noting there is no need for chemical leaching. Trust Land Office revenues have varied greatly over its 22 years of existence, as money from timber and land sales and other resource projects has come and gone. Since 2011, its annual revenue has been between about $9 million and $16 million. Income from an Icy Cape mine — either as a royalty-collecting passive landowner or an active partner — could multiply the Trust Land Office’s annual revenue several times over and continue for decades, leaders have said. Menefee also emphasized that development is still a long ways off, saying it’s “way too preliminary” to even forecast a development or partnership structure and what role the trust would play in that. “I think that likely we are going to have anything from a few to several more years (of exploration) and a lot depends on the results of our drilling, the distribution of what we find,” he said. “It’s hard to tell right at the moment how long that (drilling) program will last before we would move towards an actual mine.” Between exploration and development the Trust Land Office might also demonstrate the viability of the prospect with prototype sorting equipment, depending on what potential mining company partners want to see, Menefee said as well. The simplicity of the operation and the fact that it’s all on trust, or state, land means federal permits and the often lengthy and costly environmental impact statement review process won’t be needed, according to Menefee. However, he again noted that permitting a full mine operation is a long ways off. “We are attempting to keep the communities and the public informed of where we’re going. We just held public meetings in Cordova and Yakutat and we intend to keep doing that after each field season to let people know where we’re at,” Menefee said. Elwood Brehmer can be reached at [email protected]

State appeals habitat initiative ruling

The ballot initiative proposed to strengthen laws protecting salmon habitat is headed for a supreme resolution, which doesn’t bother the initiative’s primary sponsor. On Oct. 20 the state Department of Law appealed to the Alaska Supreme Court to have a Superior Court ruling upholding the initiative on constitutional grounds overturned. Subsequent to that, Lt. Gov. Byron Mallott wrote a letter to lead sponsor and Cook Inlet commercial fishermen Mike Wood informing him of the administration’s decision to appeal the Oct. 9 Superior Court decision. Mallott stressed in his one-page letter that the appeal is meant to settle a legal issue, not a political one. “Although I believe an appeal was the right thing to do, I want to make it abundantly clear that this decision is based solely on the Alaska Department of Law’s unbiased analysis of the constitutionality of your proposed initiative,” Mallott wrote in the second sentence of the letter. The lieutenant governor — whose primary responsibility is to oversee state elections — also noted the Law Department has requested expedited consideration of the time-sensitive issue to ensure it is resolved in time for next year’s elections if the initiative ultimately succeeds. “Despite the spurious claims that my stance is solely political in nature, I want to remind you and all Alaskans that when I became lieutenant governor in 2014 I took an oath of office and swore to ‘support and defend the Constitution of the United States and the Constitution of the State of Alaska,’” Mallott wrote further. “I do not take those words for granted. I also believe this is an important issue that our highest court should ultimately decide.” Attorney General Jahna Lindemuth echoed Mallott in a formal statement issued by the Department of Law. “We take no position on whether (the initiative) is good policy. This is about the Superior Court’s legal conclusion and our duty to defend the Alaska Constitution, and we believe the Superior Court got it wrong,” Lindemuth said. Wood said in an interview that he understands the public perception bind the issue has put Mallott and Gov. Bill Walker in. “They have to do this. This isn’t a surprise,” Wood said of the appeal. “In many ways, I’m like, ‘go for it,’ let them push it that far. I think we’ll come out on top in the end, which will just strengthen our position.” Mallott refused to certify the “Stand for Salmon” ballot initiative Sept. 12 based on a Law Department opinion that concluded the changes to state law in the language of the measure would constitute prioritizing using state waters as salmon habitat above all other uses, such as in industrial or infrastructure developments. The Alaska Constitution prohibits citizen initiatives from prescribing such resource allocations; that power is reserved for the Legislature. However, Superior Court Judge Mark Rindner overturned Mallott’s rejection Oct. 9, ruling the initiative, which aims to prevent projects that would have “significant adverse effects” on salmon waters as a resource regulation, not an allocation. Wood also chairs the nonprofit group Stand for Salmon. He and other supporters of the law change contend the current language in Title 16, the state’s fish and game habitat permitting statute, which state’s the Fish and Game commissioner shall approve projects that “provide for the proper protection of fish and game,” is too ambiguous and has been eroded over time. Industry groups including the Resource Development Council for Alaska and the Alaska Chamber insist enacting the initiative would kill any meaningful development right down to local infrastructure projects, such as roads, bridges and utility projects. In July, the heads of the 12 Alaska Native regional corporations signed a joint letter opposing the ballot measure. Jason Metrokin, CEO of Bristol Bay Native Corp., which has led the fight against the proposed Pebble mine — a project the initiative sponsors have said they also hope to stop — wrote in a statement for the Journal that notwithstanding BBNC’s position on Pebble, the corporation believes developments that align with local opinion and don’t threaten fisheries should be allowed to proceed. BBNC also opposes House Bill 199, which largely mirrors the initiative language, and the Stand for Salmon initiative. “Each would unnecessarily and negatively impact resource development projects and potentially the subsistence activities upon which our shareholders depend,” Metrokin wrote. “Accordingly, BBNC is interested in working with the Walker administration, the Legislature and all stakeholders to appropriately update Title 16’s anadromous fish habitat provisions.” House Bill 199, sponsored by Rep. Louise Stutes, R-Kodiak, and the initiative were spurred in large part by an open-ended January request by the Board of Fisheries to update Title 16 at the behest of fishing groups. Similarly, the Kenai Peninsula Borough Assembly unanimously passed a resolution last year asking for further habitat protections in Title 16, which hasn’t been changed since statehood. Cook Inlet Region Inc. CEO Sophie Minich co-authored an op-ed opposing the initiative while the Eklutna and Chickaloon Native village councils — comprised of CIRI shareholders — have supported HB 199 in written testimony to the Legislature. CIRI spokesman Jason Moore said the regional corporation respects the rights and motivations of the Tribal organizations on this issue, but added that the initiative could restrict economic development opportunities on CIRI land that would ultimately benefit its shareholders. “We just think this measure is trying to solve a problem that doesn’t exist,” Moore said. On Oct. 18, RDC Executive Director Marleanna Hall, Alaska Chamber CEO Curtis Thayer and Doyon Ltd. CEO Aaron Schutt and Joey Merrick, a manager for the Laborers’ Union Local 341 filed with the Alaska Public Offices Commission to form Stand for Alaska, a group aimed at campaigning against the initiative. Hall said in an interview that the language in the measure “would leave too much speculation and uncertainty” for developers regarding what would be allowable disruption and mostly ignores accepted mitigation practices to improve habitat in one area of another is damaged. She also questioned why the sponsors are not being asked to prove why the initiative is necessary, saying that goes back to her belief that it is “seeking an answer to a problem that doesn’t exist.” “This initiative goes way beyond what the original request was from the Board of Fish to the Legislature in January. It goes way beyond our existing regulations that are already protecting fish habitat,” Hall said. “I think people get really excited about something that they get emotional about instead of looking at the facts.” Supporters insist the measure allows for habitat disruption if corresponding mitigation and recovery efforts are made to the same water body. A court affidavit submitted prior to the Oct. 9 Superior Court ruling by Alvin Ott, a fisheries biologist and manager in Fish and Game’s Habitat Division states that Ott believes the current plan for the massive Donlin gold mine proposed for the Upper Kuskokwim River drainage would not be permissible under the initiative because it calls for destroying American and Anaconda creeks. As an offset, Donlin is planning to enhance coho salmon rearing habitat in nearby Crooked Creek; however, such mitigation to an offsite stream would not be sufficient under the initiative, which requires that the impacted waters eventually be restored, according to Ott. Wood contends the initiative would provide industry interests clarity around about what activities are allowable, instead of relying on the open-ended “proper protection” phrase. He and other initiative backers have also said the only reason Alaska’s premier salmon fisheries have not been damaged so far is the state’s large mines are in the Interior and other areas away from large salmon runs. “We’re trying to make sure that industry can continue with assurances on both sides that it won’t affect fish. This is not designed to stop development at all. This raises the bar again,” he said. ^ Elwood Brehmer can be reached at [email protected]

Zinc prices help NANA rebound from oil crash

Strong returns from the Red Dog mine are helping NANA Regional Corp. overcome oil and gas industry losses. NANA CEO Wayne Westlake said in an interview that the Northwest Alaska zinc mine is outpacing production forecasts at a time when zinc prices are high. The open-pit Red Dog mine sits about 90 miles north of Kotzebue, the largest community in the region. NANA, the Alaska Native regional corporation for the area, owns the mine that is operated by Vancouver-based Teck Resources Ltd. Teck expects production from Red Dog to be between 525,000 and 550,000 metric tonnes this year, according to a September release from the company. Output in that range would be about 10 percent above prior production forecasts. The uptick in production is the result of changes to mine sequencing and advancements in metallurgical recoveries, Teck states. It also comes at a time when zinc prices are more than double what they were less than two years ago. Zinc sold on spot markets for between 80 cents and about $1 per pound for several years before dipping to 70 cents per pound in early 2016. Since, the corrosion-resistant metal commonly used in steel coatings has steadily increased in value to its current spot price of about $1.45 per pound. For an owner of one of the largest zinc mines on Earth, like NANA, the production bump and price spike add up to a big deal. It’s also a positive equation for the other 11 Alaska Native regional corporations and the roughly 200 Native village corporations that share in the mine’s revenues. The Alaska Native Claims Settlement Act mandates Native regional corporations share 70 percent of their timber and subsurface resource revenues with their fellow Native corporations in the state in a system known as 7(i) resource revenue payments. Much of the 7(i) revenue dispersed amongst the Native corporations has historically come via oil and gas royalties from production on Arctic Slope Regional Corp. holdings on the North Slope and Cook Inlet Region Inc. lands in Southcentral Alaska. NANA also became a significant 7(i) contributor when Red Dog opened in 1989. However, when oil prices started to drop by roughly half in late 2014, 7(i) revenues fell accordingly as well. Westlake said Red Dog’s increased revenue of late has largely made up for the recent decline in 7(i) distributions brought on by $50 oil. He noted that the resource development payments are often one of few private cash flows going into rural Alaska communities. “It’s not coming from the state; it’s not coming from the federal government. It’s coming from another Alaska Native corporation,” Westlake said of the 7(i) funds. “It’s been very important to the state especially with the price of oil down.” While the oil price depression hit Native corporations through revenue sharing, NANA is among the group of corporations that is heavily invested in the business side of Alaska’s oil and gas, with seven subsidiary firms working on the support services side of the industry in Alaska, Colorado and the Gulf Coast. About 40 percent of NANA’s revenues come from the oil and gas sector in some fashion, according to company leaders. That led to NANA absorbing a $109 million loss in 2016 and its business operations company, NANA Development Corp., also had its credit rating downgraded last year as a result of its oil business struggles. “The good news is that we’re doing better than last year; we’ve taken a number of steps to make that happen,” Westlake said. NANA shuttered two of its challenged subsidiaries doing work outside Alaska — NANA Pacific and NANA Australia — and has sold other companies working Outside to refocus on its strong federal contracting businesses and in-state operations, according to Westlake. Which companies NANA has divested are still confidential at this point, he added. “You just got to keep cutting and trimming,” he said, given oil prices and Alaska’s associated recession. Another positive for NANA on the mining side this year came in April when Teck agreed to a 10-year payment in-lieu of taxes, or PILT, deal with the Northwest Arctic Borough for the severance tax the borough levies on mineral production. The previous PILT agreement expired in 2015 and when a new deal couldn’t be reached the borough moved to impose a tax that would have increased Teck’s severance payments from $12 million in 2015 to somewhere between $30 million and $40 million. Teck sued, contending the borough was singling out the mine operation, which is a primary economic driver in the region. The new PILT is about 30 percent larger than the prior agreement, according to Teck. Westlake said the 10-year deal provides NANA and Teck with greater business stability versus the PILT arrangements that had been made previously. “We can at least now have some ability to plan, to understand what the tax would be and in the past it was over five years and its seemed like in a few years you had to be thinking about planning for the next round of negotiations,” he said. Westlake further described the successful PILT negotiations as a “win-win,” not only because it settles a contentious issue for the companies and the local government, but also because the PILT payments go directly to fund services used by NANA shareholders. “It’s something that we look at as a cooperative exercise because of where the (PILT) benefits go,” he said. Teck focused long-term While Red Dog is a current bright spot for NANA, its future is looking equally as positive. Teck is in the midst of a $110 million upgrade to the mine’s mill, which should increase its production capacity by about 15 percent. That ultimately will help keep zinc production steady despite the declining grade and harder ore in the existing deposit. Red Dog’s current life is expected to expire in 2031, but with Teck describing the mill upgrade as having “robust economics” in a September release, the company is clearly looking further out with its investment. Teck also announced in September that the Aktigiruq deposit it has been exploring for several years on state land about 7 miles northwest of the mine could hold up to 150 million tonnes of 16 percent zinc ore with smaller amounts of lead as well. If the estimates prove out, the Aktigiruq deposit is another world-class zinc discovery near what is already a world-scale zinc mine. Westlake said the new find could potentially support Red Dog many decades to come. To date, Red Dog has milled 78 million tonnes of ore of 19 percent zinc and 5 percent lead, according to Teck. Elwood Brehmer can be reached at [email protected]

Judge overturns Mallott on salmon habitat proposal

Alaskans seeking more protections for the state’s salmon notched a victory Oct. 9 when a Superior Court ruling overturned Lt. Gov. Byron Mallott’s denial of a ballot initiative to overhaul permitting laws for projects in and around salmon-bearing waters. Judge Mark Rindner wrote in a 20-page order that the salmon habitat initiative does not prescribe how countless miles of state rivers and wetlands be used, but rather simply regulates the quality of that water while it is in use. In September the Department of Law deemed the initiative, pushed by the conservation group Stand for Salmon, as an unconstitutional appropriation of state assets and thus recommended Mallott reject its inclusion on the 2018 statewide ballot. He did so Sept. 12. The Alaska Constitution prohibits voter initiatives from appropriating state assets; that power is reserved for the Legislature. In June, Assistant Attorney General Elizabeth Bakalar wrote a letter to initiative sponsors Mike Wood, a commercial fisherman, Bristol Bay lodge owner Brian Kraft and Gayla Hoseth of Dillingham, informing them that a prior version of the initiative would likely be denied because it was deemed to appropriate state resources. At the same time, the state Supreme Court has instructed lower courts interpret initiatives broadly to give voters a say whenever possible, Rindner noted in his order. “We need to have clear rules for projects proposed in sensitive salmon habitat to ensure they’re being done responsibly — as well as provide more certainty in the permitting process for the industry that is proposing the project. That’s exactly what this measure calls for. It works to ensure a prosperous economy for all Alaskans by bringing balance to our approach for permitting,” said Wood, who chairs Stand for Salmon. The decision comes just six days after Bakalar and Trustees for Alaska argued the case in front of Rindner. The mining group Council of Alaska Producers also argued in support of the state’s position. Trustees for Alaska is a nonprofit environmental advocacy law firm, which is representing Stand for Salmon in its appeal. Bakalar contended in oral arguments that a plain-language reading of the eight-page initiative leads to the conclusion that fish habitat is prioritized above all other uses, namely any type of meaningful development. And she said Rindner needed to rule based on how voters would interpret the initiative in the voting booth. Bakalar said, and Rindner similarly wrote, that the dispute is not over whether or not the initiative is good policy, but whether or not it ties the Legislature’s hands when deciding how to appropriate state resources. History suggests the case is headed for the Supreme Court, as a high court ruling is the only way it is truly settled, but Bakalar wrote in an email to the Journal that evaluating whether or not to appeal will take several weeks. Valerie Brown, legal director for Trustees for Alaska and the attorney who argued on behalf of Stand for Salmon, centered her argument on language in the initiative that mirrors what was in a 2008 ballot initiative attempting to restrict mine waste from being discharged into state waters. Voters ultimately shot down that initiative but the Supreme Court upheld its constitutionality after a challenge by Pebble Ltd. Partnership, which similarly claimed it amounted to an unconstitutional appropriation of state water. The habitat initiative aims to restrict developments that, even after attempts at mitigation, would inflict “significant adverse effects” on salmon streams. The 2008 “Pebble” initiative looked to prohibit operations that “could adversely affect water that is used by humans or salmon.” The current initiative would allow for developments that could restore damaged habitat in a “reasonable period.” Council of Alaska Producers attorney James Leik told Rindner during the Oct. 3 hearing that Stand for Salmon just scattered the words “adverse effect” into the revised initiative to align it with the Pebble case. If so, it worked. Rindner concluded there is leeway in the language for it to be a permissible regulation and not prescriptive appropriation in favor of fish. “(The initiative’s) definition of ‘substantial damage’ leaves the Legislature the discretion to determine ‘accepted mitigation measures,’ what level of impact ‘adversely affects’ the habitat, the acceptable probability of recovery for fish habitat to ‘likely recover,’ and what timeframe constitutes recovery within a ‘reasonable period,’” he wrote. If the Pebble initiative was constitutional, the one in question today is too because it also “leaves the Legislature discretion in its implementation through the use of a plethora of undefined terms,” Rindner continued. Opponents argue the language ostensibly prohibits any large development that could result in such impacts, but the issue at hand is a matter of law and no one has been able to provide any evidence supporting that claim, according to Rindner. “The impact of the initiative at this time is pure speculation,” he wrote. He wrote further that the Legislature would still have enough room that it “could implement” the initiative in a way that allows development projects. The state’s current salmon habitat law, Title 16, directs the Fish and Game commissioner to issue a development permit as long as a project provides “proper protection of fish and game.” The petitioners contend that is far too vague and an update is needed to just define what “proper protection” means. Rindner added that the argument purported by the Council of Alaska Producers that the initiative favors water for fish habitat mischaracterizes the basis of what the proposed law change is. That argument concludes that water is a public asset and fish habitat is how that asset is used, which is wrong, according to Rindner. “The correct taxonomy is that water is a genus of public asset, and anadromous fish habitat is a particular species of public asset within the water genus,” he described. “(The initiative) does not explicitly favor any particular use of anadromous fish habitat between recreational fishing, kayaking, commercial fishing, hatcheries, mining, pipeline, or dams; it only concerns itself with the condition of the water,” Rindner continued. He ordered the Division of Elections to immediately begin printing petition booklets for the initiative and have them ready by Oct. 17. Bakalar said that while the state obviously disagrees with the decision, officials have been working with Stand for Salmon during the litigation process to make sure the booklets were ready if need be. Even a favorable court ruling does not mean the initiative will surely reach the 2018 ballot. The sponsors still need to get more than 30,000 signatures supporting it statewide before it can be fully certified. Elwood Brehmer can be reached at [email protected]

CEO unveils Pebble 2.0

Pebble Limited Partnership has finally done one of the things it has long been criticized for not doing: the company released an actual mine plan. CEO Tom Collier discussed the major points of the plan Oct. 5 at a Resource Development Council for Alaska meeting in Anchorage. Long a topic of ample speculation, Collier said the mine plan the company plans to submit for environmental review to the U.S. Army Corps of Engineers in December has a footprint that is 60 percent smaller than the concept the Environmental Protection Agency used to determine Pebble’s prospective impacts in the 2014 Bristol Bay Watershed Assessment. He noted that the 1,000-plus page assessment, which Pebble contends was a biased document from its genesis aimed at stopping the project, determined a much smaller mine could pass permitting muster. Pebble’s plan is for a mine pit, waste rock and tailings storage facility to cover 5.4 square miles, which Collier described as “in the ballpark” of the 4.2 square mile project the EPA then deemed acceptable. The EPA used a concept operation covering 13.5 square miles when it concluded in the Bristol Bay Watershed Assessment that what was believed to be the company’s plan was unacceptable. In May, the company settled a lawsuit it filed in 2014 against the EPA over the process behind the watershed assessment and the agency’s subsequent proposal to preemptively prohibit the project, which put intense criticism on the Trump administration by Pebble’s opponents. However, Collier said the company also had a deal with the Obama administration that fell apart. “Few people know this — we actually negotiated a settlement with the Obama team before they left the White House and at the very last minute the administrator of the EPA (Gina McCarthy) refused to sign the document that we’d been told for a week had been approved,” he revealed. The EPA is currently taking public comments on whether it should reverse the process started in 2014 to ban a large mine in the Bristol Bay region, despite the fact that as a condition of the Pebble settlement the assessment remains valid and on which the Pebble “veto” was based. In late 2014, Alaska U.S. District Court Judge H. Russel Holland issued an injunction stopping the EPA from completing the Pebble veto until that suit was resolved. Three-quarters of Pebble’s proposed footprint would be the tailings storage facility. Shrinking the size of the project allowed Pebble to move it out of the Upper Talarik Creek drainage that feeds Iliamna Lake and the Kvichak River. The Kvichak River has one of the two largest sockeye returns in Bristol Bay most years. The smaller mine plan also eliminates waste rock piles, as the company will start mining where the copper and gold ore is closest to the surface, according to Collier. Waste rock that is removed will be used in the tailings dam. Additionally, Collier said Pebble acquiesced to opponents over one of their biggest concerns with the project and will not be leaching gold out of the ore. The secondary recovery process would otherwise recover about 15 percent of the available gold, he said. “We’re going to leave that 15 percent of gold in the rock at the mine site and there won’t be any cyanide at Pebble,” Collier said. A redesigned tailings facility with improved buttresses and a more gradual slope increases protection against earthquakes, according to Collier. He said the tailings dam would be built to withstand ground acceleration more than twice what the U.S. Geological Survey believes there is a 2 percent chance to exceed every 50 years at the project site. He also noted the nearest fault line — the Lake Clark fault northwest of the project site — has not been active since the last ice age. “We believe that our mine has been designed to withstand the greatest possible seismicity predicted by science, period,” Collier asserted. Tailings with acid generating potential would be stored in a separate, lined containment facility. Leading up the expected release of Pebble’s new plan, many mine opponents, including state House Speaker Rep. Bryce Edgmon, D-Dillingham, who represents the Bristol Bay region, said there is nothing Pebble can do to change their minds about the project they feel will unnecessarily put the region’s world-class salmon fisheries — and the jobs linked to those fisheries — at risk. Alannah Hurley, executive director of United Tribes of Bristol Bay, an organization that has been at the forefront of the fight against Pebble, said the revised vision for the mine was met with skepticism from Bristol Bay tribes in a release from the group and would still be one of the world’s largest mines. “This is just a wolf in sheep’s clothing. For more than a decade, the Pebble Limited Partnership has tried to convince Alaskans that it should build a mine in Bristol Bay, at the headwaters of the world’s last great salmon runs,” Hurley said. “In that time, opposition has only increased, and Bristol Bay has been crystal clear on its feelings towards Pebble.” If the worst were to happen and the tailings dam failed — a scenario Collier said many inside Pebble did not want him to discuss — the smaller project would now impact only the North Fork of the Koktuli River, he said, as it is no longer in the Upper Talarik drainage. He added that based on the Bristol Bay Watershed Assessment, about 20 miles of the North Fork of the Koktuli would be severely damaged for about a decade from turbidity in the water. After that the river would eventually return to being viable fish habitat. The North Fork of the Koktuli, which feeds the Mulchatna River and eventually the famed Nushagak River, produces approximately 0.02 percent of the sockeye salmon that return to Bristol Bay each year, according to Pebble. “I can’t tell you how many times I’ve spoken to people and asked them why are they against the Pebble project and the answer they tell me is that if we have an accident we’ll kill all the fish in Bristol Bay,” Collier said. “The Obama administration EPA says we’re only going to kill two one-hundredths of one percent if we have a catastrophic incident that we don’t think is even possible to have.” Finally, Pebble has scrapped plans for a road around giant Iliamna Lake in favor of employing an ice-breaking ferry to traverse the lake to supply the mine via a shorter road from a new port that would be built on Cook Inlet near Augustine Island. Cutting out miles of roads removes much of the project’s impacts to wetlands, Collier said. The EPA’s Pebble concept had 86 miles of new roads; the new plan needs 42 miles, according to the company. “Is this project worth building given all the other benefits, given all the risks of it? Damn straight it is and these numbers I think show that,” he said. He continued: “The key, though, is that all this stuff I talked to you about today has to go into the environmental impact statement process and it will be tested. And if the calculations we’ve done are correct we’re going to get a permit. If they’re not correct, if they’re not reliable, we’ll have to change them; we’re going to have to modify our proposal so that it will be correct. “We’re not going to build a project that’s going to damage that fishery. We’re not going to build a project that’s going to have significant environmental damage to that region. But we’re confident that we can build the one that we’re talking about now without any of those consequences and we’re going to move it forward aggressively.” Gov. Bill Walker said that he doesn’t have enough information on Pebble’s new plan to support it in a recent interview with Alaska Public Radio. In an Oct. 6 prepared response to Walker’s comments, Collier said Walker’s hesitancy towards the project is appropriate at this point. Walker “should be skeptical; ask hard questions; and allow the permitting agencies to do their work,” Collier said. The governor said during his 2014 campaign that he was against the — at that point — large mine concept because of the potential impacts it could have on Bristol Bay fisheries, but also criticized the EPA for its move to preemptively prohibit the project because of the fear it could apply the same process to other projects in the state. Collier said in an interview following his talk that the company doesn’t have plans now to expand the project beyond the current proposal if it reaches production but noted any expansion would trigger another scrupulous environmental review. Pebble’s owner company, Northern Dynasty Minerals has indicated in recent investor presentations that it estimates the Pebble deposit holds up to 1.9 percent of all the gold ever mined in recorded history. “It’s not like since you’ve done phase one you get a leg up at all. You start all over, from scratch, new permit,” Collier said of expanding the mine. “And the key to that new permit is it’s going to look at whether the two together are too big and if it’s too big then it’s not going to get a permit but that doesn’t affect the first one. The first one stands on its own. If it works, it works and then if we propose a second one and it’s concluded that’s too big, it’s too much for the region then it doesn’t get built but that’s tomorrow’s question.” He also said that while Pebble and Northern Dynasty leaders previously said the parent company needs to secure a second investor in the project before starting what is expected to be a $150 million environmental impact statement, or EIS, process, that isn’t necessarily the case any longer. But he also said during his presentation that Northern Dynasty should announce a partner on Pebble by the end of the year — the time by which it will be known if Pebble makes good in its statements to formally apply for permits this go-round. Sharing the project The benefits of the mine start with jobs and could end with direct revenue payments to local residents based on the programs Pebble is proposing. Collier acknowledged that “Pebble’s got a credibility problem,” which in part stems from numerous claims not coming to fruition over a decade that the company would advance the project. Further, he noted that because the project is on state land there is no established way for Alaska Native residents in the region to benefit from it as have Natives closer to other mines in the state on Native corporation land. As a result, Pebble is suggesting it could set up a corporation to hold 5 percent of the project and distribute that revenue to the five area Native village corporations and nearby residents. Based on the company’s projections, such a setup would directly pay each of the village corporations about $500,000 and each resident, assuming about 5,000 people signed up, about $500 annually. Pebble would also bring excess power to a region that has exorbitant electricity prices — upwards of 80 cents per kilowatt-hour, Collier said. The company is in discussions with some of the large regional Native corporations in the state about owning the prospective power plant and other infrastructure related to the project, he added. “We’ll need to work with the state; we’ll need to work with the villages on how we wheel that power from the mine site to the region but that’s our clear intention,” Collier said. Pebble is also investigating ways it could benefit the Bristol Bay commercial sockeye fishery, he continued. “We’d like to do something with some of the revenue that this mine generates that would be seen as us showing that we’re good neighbors to that fishery. We don’t buy the dichotomy that you have to choose between the fishery and the mine. We think they can both coexist,” Collier said. The company is pursuing a crop insurance-like concept to mitigate the economic volatility in fishery. Collier described a plan that would pay fishing permit holders in years when the average vessel revenue fleet-wide dropped below a certain point. “When I first looked at this the numbers were daunting but when I went back and looked at it perhaps only for the fishermen from Bristol Bay that hold permits or perhaps only the Alaskan permit holders, the numbers are not quite so daunting,” he said. He also suggested a permit buyback program for Outsiders that hold permits as a way to get more ownership of the fishery back to the region. “We haven’t decided what we’re going to do yet but we have decided we’re going to do something,” Collier said, adding Pebble has economists running numbers while discussing the possibilities with fishermen. Hurley dismissed the revenue sharing concepts as more attempts to purchase support for the project, saying the salmon fishery will sustain the region longer than the life of any mine. In hard numbers, even the smaller project would bring about 2,000 jobs over the projected 20-year life of the mine to the region, according to the company’s figures. It would add about $20 million to the Lake and Peninsula Borough’s annual revenue and pay the state between $49 million and $66 million per year, Pebble estimates. Elwood Brehmer can be reached at [email protected]

Habitat initiative proponents argue appeal in Superior Court

Is there discretion in the term “significant adverse effects?” That is the question at the center of the court debate over a ballot initiative aimed at reforming Alaska’s permitting laws to better protect salmon habitat from large development projects. The Department of Law doesn’t think so, and Assistant Attorney General Elizabeth Bakalar stressed as much during about 90 minutes of oral arguments Oct. 3 in Anchorage for Stand for Salmon’s appeal of Lt. Gov. Byron Mallott’s rejection of the initiative, which was based on a Department of Law recommendation. Superior Court Judge Mark Rindner heard the appeal. Valerie Brown, legal director for the nonprofit environmental advocacy law firm Trustees for Alaska, argued on behalf of fellow nonprofit Stand for Salmon that the initiative entitled, “An Act providing for protection of wild salmon and fish and wildlife habitat,” indeed affords the Department of Fish and Game adequate discretion to determine what constitutes significant adverse effects on salmon habitat. Mallott rejected the citizens’ ballot initiative Sept. 12 after receiving a legal opinion from Bakalar, who wrote that the proposed law change would blatantly limit the Legislature’s ability to allocate state assets; in this case anadromous fish habitat. In June, Bakalar wrote a letter to initiative sponsors Mike Wood, a commercial fisherman, Bristol Bay lodge owner Brian Kraft and Gayla Hoseth of Dillingham, informing them that a prior version of the initiative would likely be denied because it was deemed to appropriate state resources. The Alaska Constitution reserves the power of resource appropriation for the Legislature and thus prohibits ballot measures from doing so. Brown repeatedly stressed that the initiative’s key language mirrors a 2008 initiative that was rejected by voters after making it to the ballot after being upheld by the Alaska Supreme Court. In that case, the initiative, aimed at restricting discharges from the proposed Pebble mine, would have prohibited large mining operations from releasing or storing pollutants that “could adversely affect water that is used by humans or salmon.” The state’s current salmon habitat law, Title 16, directs the Fish and Game commissioner to issue a development permit as long as a project provides “proper protection of fish and game.” The petitioners contend that is far too vague and an update is needed to just define what “proper protection” means. Opponents in the mining, oil and gas, and construction industries argue the initiative would ostensibly prohibit projects of any meaningful size, including many pipeline and road construction efforts, among others. Bakalar reiterated that argument as proof that the initiative would appropriate waters for fish habitat. However, she said, “This is not a policy debate. It’s a question of Article XI, Section 7 (of the Alaska Constitution.)” Bakalar added that the initiative’s language might indeed be good policy, but that is up to the Legislature to decide. To that end, House Bill 199 sponsored by Rep. Louise Stutes, R-Kodiak, which mirrors the language in the voter proposal, is up for consideration by the Legislature come the regular legislative session in January. According to Bakalar, even if the initiative is not a strict appropriation, Judge Rindner must rule on how voters would interpret the proposed changes in the voting booth. She said it “defies plain English” to read the language of the proposal as anything but putting water for salmon habitat above all other uses. Brown said the current initiative in question would add scrutiny to the permitting process for large development projects but would still allow them to go forward if Fish and Game determined they would not have those “significant adverse effects” on salmon-bearing waters. Additionally, the department would have the discretion to permit large projects even if they impacted salmon waters as long as mitigation and restoration measures helped the waters recover to be viable fish habitat in a “reasonable period,” as the initiative states. “The definition of substantial damage includes the discretion of Fish and Game to determine how much harm is substantial damage so that makes it very similar to the Pebble case where the commissioner can allow some kinds of harm,” Brown argued. “He can’t allow harm that is so significant that it rises to substantial damage and that’s exactly the kind of regulation that’s allowed to prohibit harm to a state asset.” The first iteration of the initiative also required restoration to support historic levels of water flow and fish populations, Brown noted, but that requirement was pulled from the version now in court. “It would have to say no disturbance of fish habitat is permitted” to be an appropriation of assets, she added. Brown said that the now-abandoned Chuitna coal mine, which Stand for Salmon fought to prevent, would have been allowed under the initiative if the habitat restoration methods proposed could be proven effective. Bakalar noted that the initiative generally requires water restoration to account for the life cycle of salmon; meaning restoration could have to happen in such a short time frame to make it unfeasible. “There’s simply no way to build some of these projects without dewatering habitat,” Bakalar said. James Leik, arguing on behalf of the Council of Alaska Producers, a mining industry group, said the initiative is much broader than the 2008 Pebble case emphasized by Brown. “Very fundamentally the initiative changes the priority for the use of these assets. That in itself restricts the Legislature’s ability to allocate those assets,” Leik said. The petitioners simply “scattered the words ‘adverse effect’ into several of the provisions” of the revised initiative to make the claim it aligns with the Pebble case, he contended. Brown rebutted that Rindner shouldn’t speculate on how Fish and Game would implement the provisions, but that he must only determine whether or not there is discretion in the language. “The initiative doesn’t establish a preferred use as anadromous fish habitat. Anadromous fish habitat is the asset that’s being regulated and the question is: Is the initiative a permissible regulation of harm to that asset?” Brown said. “It’s clearly not a priority of use initiative; it is about protecting a specific asset, anadromous fish habitat, from harm.” Rindner said he would rule on the appeal as expeditiously as possible, acknowledging trial court judges such as himself are often seen as “speed bumps” on the way to the Supreme Court, a nod to the almost certain appeal that will follow his ruling, whichever side it favors. Elwood Brehmer can be reached at [email protected]

Ballot measure would give greater say to ADFG

Alaska fishing groups concerned about the impacts that large-scale development projects could have on salmon habitat are pushing to reform the state’s permitting requirements through a voter initiative on the 2018 ballot. The initiative would primarily establish a two-tiered permitting structure for projects with the potential to impact salmon-bearing waters. It would give the Department of Fish and Game commissioner the authority to issue broad approval for projects deemed “minor,” but also require proponents of larger projects to prove they would not have a significant adverse impact on salmon habitat. Additionally, it would require project advocates to prove to Fish and Game that the area of the water body the development could damage is not used by salmon sometime in their life cycle if the water is connected to one known to have salmon. The initiative was sponsored by Cook Inlet commercial fisherman Mike Wood, Bristol Bay lodge owner Brian Kraft and Gayla Hoseth of Bristol Bay Native Association. Lt. Gov. Byron Mallott will decide whether to certify the initiative by Sept. 12. In an interview, Wood said it is not intended to stop development projects, but rather to simply update the state’s protections for salmon as the Board of Fisheries requested. Current law directs the Fish and Game commissioner to approve fish habitat permits if a project is deemed to provide “the proper protection for fish and game.” Board of Fisheries Chair John Jensen wrote in a Jan. 19 letter to House and Senate leaders that there is nothing in current state laws or regulations defining what is a proper protection. “Additional guidance is warranted for the protection of fish, to set clear expectations for permit applicants and to reduce uncertainty in predevelopment planning costs,” Jensen wrote. “To strengthen ADF&G’s implementation enforcement of the permitting program, the Legislature may want to consider creating enforceable standards in statute to protect fish habitat, and to guide and create a more certain permitting system.” The Board of Fisheries letter was spurred by public pressure to amend Title 16, the state’s general laws relating to Fish and Game, according to Jensen. To that end, the initiative, which would rewrite state law, is mirrored after House Bill 199 sponsored by Rep. Louise Stutes, R-Kodiak. “We don’t want to stop (development); we want to make sure that the permitting process is rigorous so that we don’t destroy the fish habitat that we need to get the returns that are so important to the Alaska economy,” Wood said. The Alaska Constitution was written with a huge amount of thought toward salmon resources and the effort is to get back to that mindset in the state, he added. “It’s gotten a little blown out of proportion because this won’t stop things; it’s just trying to elevate the level of accountability back to where we believe it began at statehood. Over the years the regulations have been whittled away from administration to administration,” Wood said. Initiative opponents have cited federal laws, such as the Clean Water Act and National Environmental Policy Act that guides the environmental impact statement process as additional adequate salmon habitat protections; meaning an update to Title 16 is unnecessary. “I think there was a time when we thought we could have faith in the feds, the EPA, to have those standards and I think now we’re seeing that we can’t and it’s just part of the state having a greater say in its own outcome to have those high (permitting) standards,” Wood said. Wood characterized Alaska as simply “lucky” it hasn’t seen a large-scale manmade disaster of late similar to the 2014 Mount Polley mine tailings dam failure in British Columbia. He noted many of the state’s largest mines and other developments are in the Interior region or otherwise away from major salmon-bearing watersheds. The Department of Law deemed an earlier iteration of the initiative as a means to allocate resources and prohibit projects such as the Pebble and Chuitna mines and Susitna-Watana dam, which the initiative sponsors have opposed. A June 30 Department of Law letter to the sponsors outlined the provisions in the first draft of the initiative that would not pass legal muster. Assistant Attorney General Elizabeth Bakalar emphasized in an interview that the letter was in large part a response to industry concerns about the initiative that the department heard and is the same type of opinion state attorneys issue on any ballot measure — just earlier. She commented that the department isn’t likely to issue “courtesy” opinions in the future because this one has been incorrectly perceived as the state helping the petitioners. However, it could just as easily be seen as a way to calm development industry concerns by clarifying ahead of time that the initiative would not be ratified. “It’s just a heads up; do with it what you will,” Bakalar said. Wood said small changes were made to the latest version to hopefully meet the Department of Law standards. He acknowledged that the preferable vehicle to address salmon habitat protections would be through HB 199, which could be amended to include input from development proponents, but characterized the ballot proposal as a “belt and suspenders” approach to the issue. The Resource Development Council and other pro-development groups stressed in testimony on HB 199 that reforming the state’s habitat permit requirements is a solution searching for a problem. “The intent to safeguard Alaska’s salmon fisheries is an objective we share and it is why we support Alaska’s existing rigorous and science-based regulatory system,” wrote a coalition including the Alaska Chamber, Southeast Conference and the Anchorage and Fairbanks economic development corporations in an April letter to legislators. “As a coalition that includes urban and rural Alaskans and businesses and associations representing tens of thousands of jobs for our state’s citizens, we cannot overstate how important it is to have consistent regulator and permitting processes.” They continued to contend that HB 199 or the initiative would likely cause delays to smaller community projects like wastewater facility upgrades or airport expansions while worsening the state’s fiscal crisis by slowing or stopping economic development without any true benefits to fish habitat. Alaska Native corporations such as Cook Inlet Region Inc., Calista Corp. and Doyon Ltd. have opposed the measures, while Native tribal organizations such as the Tanana Chiefs Conference and the Native Village of Eklutna support it. The Kenai Peninsula Borough Assembly unanimously approved a resolution in September 2016 supporting an update to Title 16 to further protect fish habitat. A 2014 state ballot measure requiring legislative approval for a large mine in Bristol Bay — which Pebble argues is a blatant violation of the Alaska Constitution — was billed as a way to protect the region’s salmon and passed with 66 percent support among Alaska voters. It was supported by 72 percent of voters in Bristol Bay and greater southwest Alaska, according to Division of Election results. Elwood Brehmer can be reached at [email protected]

Bristol Bay study stands, but EPA moves to halt its finding

Is Environmental Protection Agency Administrator Scott Pruitt just putting the shoe on the other foot? The EPA announced July 11 that it was starting the process to withdraw the proposed determination reached under President Barack Obama’s administration to prohibit large-scale mining in Bristol Bay — a roundabout way of saying the Pebble mine project. A 90-day public comment period on the proposed withdrawal is now open through Oct. 17. Pebble Limited Partnership and its parent company Northern Dynasty Minerals hailed the decision as a major step toward returning to a normal and fair permitting process. “The current administration at EPA is closely focused on enforcing environmental standards and permitting requirements for major development projects like Pebble in a way that is both rigorous and robust, but also consistent in order to provide predictability and an even playing field for all resource developers,” Pebble CEO Tom Collier said in a formal statement. “It’s an approach all Alaskans and all Americans should support because it has the benefit of maintaining the high standards for environmental protection for which the state and country are known, while attracting investment in projects that create high-wage jobs and other much-needed economic benefits in our country.” Pebble has long held that the EPA’s push in 2014 to block mine development through its Clean Water Act Section 404(c) authority was a biased decision. That’s because the junior mining company contends the 1,000-plus page Bristol Bay Watershed Assessment, on which the 404(c) proposal was largely based, is an erroneous document developed over several years to be used as a means to reach a predetermined decision that the mine must be stopped. The Bristol Bay Watershed Assessment ultimately determined that large-scale mining in the region would irreparably harm Bristol Bay’s world-class salmon fisheries that currently support much of the areas economy. Pebble subsequently sued the EPA in 2014, alleging the agency had colluded with anti-mine activists and environmental-leaning scientists in drafting the assessment. Federal District Court of Alaska Judge H. Russel Holland saw enough validity to Pebble’s argument to issue an injunction in November 2014 halting the 404(c) proceedings until the lawsuit was resolved. A January 2016 EPA Inspector General report supported the validity of the assessment, but scolded the agency for months’ worth of missing emails and other procedural missteps related to evaluating the prospective Pebble project. Settlement talks in December 2016 that preceded President Donald Trump’s administration concluded this spring when the sides reached agreement, giving Pebble 30 months to submit its environmental permit applications for the mine at which point the 404(c) process could be resumed. However, the settlement also allows the Bristol Bay Watershed Assessment to stand. Pebble also contends the assessment’s conclusions are highly speculative, given the company has yet to submit a formal mine plan. Yet, despite the assessment being the only valid, on-the-record, scientific document upon which decisions regarding Pebble can be made at this point, Collier is confident the proposed determination to block Pebble will be withdrawn at the end of the comment period. Pebble spokesman Mike Heatwole said in an interview that a fair review of the project in a normal permitting process is all the company has ever wanted. In moving the 404(c) process prior to Pebble even applying for permits, the EPA broke from precedent, but Holland also dismissed another suit in which Pebble claimed the agency had overstepped its authority. Withdrawing the proposed determination “allows us to get an environmental impact statement on the record, which is a far more legitimate, fact-based and thorough document that has to be based upon an actual plan of development with actual science,” Heatwole said. “If you have that level of rigor it would probably make the watershed assessment moot. We have held all along that the process and that document is flawed on its premise.” Alannah Hurley, head of United Tribes of Bristol Bay, the Dillingham-based coalition that has led the fight against Pebble, said if EPA Administrator Pruitt appropriately considers all of the public comments that have been submitted supporting protections for Bristol Bay the withdrawal will be short-lived. “If they listen to the people and actually take the public comment seriously and they look at the immense amount of scientific work that went into that determination it will not be rescinded,” Hurley said in an interview. “If they choose to ignore that and ignore the scientific rigor and the will of the people — if they choose to ignore that and not take it seriously, it will be.” Hurley further argued “99.9 percent of the comments” submitted in 2014 supported the proposed determination. While a large majority of people who testified during August 2014 public meetings supported the EPA’s move, the agency’s Alaska spokeswoman Suzanne Skadowski said Holland’s injunction prevented the results of the 671,517 written comments submitted on the Federal Register from being tabulated. Heatwole contends many of the comments in support of the agency at the time were “postcards” or form letters from individuals without adequate knowledge of, or an appropriate stake in, the issue. A 2014 state ballot measure requiring legislative approval for a large mine in Bristol Bay — which Pebble argues is a blatant violation of the Alaska Constitution — was billed as a way to protect the region’s salmon and passed with 66 percent support among Alaska voters. It was supported by 72 percent of voters in Bristol Bay and greater southwest Alaska, according to Division of Election results. Skadowski called reversing course and moving ahead with the withdrawal despite the assessment being the only available science on Pebble “a policy call” made by Pruitt to see what Pebble’s plans are before making a decision. “We’ll use that existing science and whatever becomes available at that time,” Skadowski said. Heatwole cited a line in the EPA’s Federal Register notice about the withdrawal which states, “A withdrawal of the proposed determination would remove any uncertainty, real or perceived, about (Pebble’s) ability to submit a permit application and have that permit application reviewed.” The notice further reiterates that under the settlement the EPA retains the right to eventually use its 404(c) authority on Pebble if it is deemed necessary. Pebble leaders continue to say they intend to file permit applications this year for a smaller, less impactful mine than had previously been conceptualized. A recent investor presentation on Northern Dynasty’s website states the Pebble copper and gold deposit contains 1.9 percent of all the gold ever mined in recorded history. The company has been roundly criticized, even by some Republican lawmakers who have also criticized the EPA’s actions, for repeatedly stating over more than a decade that a mine plan and permit applications were coming soon, without making good on the promise. Elwood Brehmer can be reached at [email protected]

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