Draft EIS outlines potential impacts from gasline project

The proposed Alaska LNG Project would damage some areas of permafrost and wetlands and could affect migrating caribou and six endangered or threatened wildlife species — referred to as “adverse impacts” — according to the federal draft environmental impact statement, or EIS, released June 28. “The project would result in substantial impacts on permafrost, wetlands, forest, and caribou (Central Arctic herds). Because the other current or reasonably foreseeable projects in the study area would similarly affect these resources, we found that cumulative impacts on these resources would or could be significant,” the report said. However, many of the effects could be reduced or eliminated if the right steps are taken during construction and operation to avoid, minimize or repair the damage, the draft said. “With the implementation of various best management practices and our recommendations, most impacts on wildlife would be less than significant, but adverse impacts on some species, including caribou (Central Arctic herds) and federally listed threatened and endangered species, would occur,” the draft EIS said. Not unexpected for a project of this size, the draft lists pluses and minuses in the same sentence: “The project would result in positive impacts on the state and local economies, but adverse impacts on housing, population, and public services could occur in some areas.” The Federal Energy Regulatory Commission is the lead on the environmental review of the state-sponsored $43 billion project to pipe Alaska North Slope gas 807 miles to a natural gas liquefaction plant and marine terminal in Nikiski, on the Kenai Peninsula. The review started when the Alaska Gasline Development Corp. applied in April 2017 for federal approval. The draft EIS was prepared with the assistance of nine other federal regulatory agencies, including the U.S. Fish and Wildlife Service, National Park Service, Environmental Protection Agency, National Marine Fisheries Service, Army Corps of Engineers and Bureau of Land Management. Report totals thousands of pages The draft review totals almost 3,800 pages, with 28 appendices of more detailed analysis, maps and charts adding thousands more pages to the three-volume package. The table of contents with its accompanying lists of tables, figures, appendices and acronyms is 40 pages on its own. Public comments to FERC are due by Oct. 3. The agency will hold a series of public meetings in Alaska; the dates were not announced with the release of the draft EIS. Allowing time for state and federal agency review, along with revisions to the draft, the commission’s schedule calls for release of the final EIS in March 2020. Under that timeline, FERC would be ready to vote on AGDC’s application in June 2020. Commission approval is required to build and operate a natural gas liquefaction plant. Even with FERC approval, the project would still face the economic-viability test of lining up a gas supply, LNG customers, investors and financing before the venture could reach an investment decision and start the estimated five-year construction timeline. Much of the report covers wildlife habitat. “Project construction and operation is likely to adversely affect six federally listed species (spectacled eider, polar bear, bearded seal, Cook Inlet Beluga whale, humpback whale, and ringed seal) and designated critical habitat for two species (polar bear and Cook Inlet beluga whale).” FERC requested that the project sponsor “initiate formal consultation with the U.S. Fish and Wildlife Service and National Marine Fisheries Service regarding project effects on federally listed species.” EIS rejects Port MacKenzie alternative In addition to reviewing effects on wildlife and their habitat, communities and their economies, the report considered alternatives to several parts of the Alaska LNG project. Federal law requires that an impact statement review economically feasible alternatives to determine the “least environmentally damaging practicable alternative,” including the developer’s preferred option. “We generally consider an alternative to be preferable to a proposed action if the alternative meets the stated purpose of the project, is technically and economically feasible, and offers a significant environmental advantage over a proposed action,” the FERC report explained. The alternatives reviewed that attracted the most attention in Alaska has been the Matanuska-Susitna Borough’s strong advocacy for its Port MacKenzie property across Knik Arm from Anchorage as a better location than Nikiski for the liquefaction plant and marine terminal. The draft EIS determined Nikiski is the better choice. “Although the Port MacKenzie alternative would be technically feasible, it would not allow the project to meet all its objectives,” the report said. “Moreover, its environmental advantages are not sufficiently great to offset operational environmental impacts stemming from the increased vessel traffic in Upper Cook Inlet. Therefore, we conclude that it would not provide a significant environmental advantage over the proposed Nikiski site.” Risks to Cook Inlet Beluga whales, listed as an endangered species, would be greater with the Port MacKenzie alternative, the report said. “These impacts would persist for the life of the project, as opposed to the short-term impact” from constructing the pipeline across Cook Inlet to reach the Nikiski site. “The summer density of Cook Inlet beluga whales in Knik Arm is more than 300 times greater than the density offshore of Nikiski,” the report said. “We estimate that there would be about an 80 percent higher probability of a whale strike from LNG carriers transiting to and from Port MacKenzie during operation.” In addition, the report noted, “the Port MacKenzie marine improvements would occur within Critical Habitat Area 1 for the federally listed Cook Inlet beluga whale,” while work at the Nikiski site would occur in a less critical habitat area. In sticking with the Nikiski site, the report also cited the heavier ice conditions of Upper Cook Inlet compared to the Nikiski area. Another concern was dredging: “The need to maintain a deeper and wider channel across the Knik Arm Shoal suggests that more overall dredging would likely be required to operate at the Port MacKenzie alternative site.” The Matanuska-Susitna Borough filed last year as an intervenor in the FERC review, which gives it the legal ability to challenge decisions in the EIS. Worker camps, tourism impacts In addition to considering environmental risks, the review analyzed the project’s economic impacts. “Project construction would increase population due to worker influx, but impacts would be minor due to the use of closed construction camps,” the report said. However, jobseekers and others would be drawn to Alaska during the construction, and “these additional residents could create an added burden on local governments because they would increase the demand for local community services and facilities.” Additional tax revenues during the construction period “in most cases would offset the increase in expenditures,” the report said. But keeping much of the construction workforce in closed camps, while reducing effects on local communities and services, has a downside, the report said: “Workers living in the construction camps would have little opportunity to make purchases within the local economy; therefore, most of the non-resident worker earnings would be spent outside the state.” The tourism industry could be affected as hopefuls coming to Alaska in search of construction work “could compete with tourists for temporary accommodations, such as hotel/motel rooms, campgrounds, and house/apartment rental units.” High occupancy rates could be good for business, the report said: “However, if tourists should be prevented from visiting these areas due to a lack of accommodations, other parts of the tourism industry could be adversely affected.” The draft EIS also looked at the project’s effects on residents who depend on subsistence harvests. “Project construction and operation have the potential to affect the subsistence practices of Native Alaska communities due to reductions in resource abundance and availability, reduced access to harvest areas, and increased competition from non-local harvesters,” it said. “Impacts would result from the loss or alteration of habitat and loss or displacement of wildlife,” the report said. “The extent of impacts would vary by community, but overall, the impacts would be less than significant.” Some impacts to wildlife ‘would be significant’ The report frequently refers to the project’s impacts on wildlife habitat and the environment, with the reminder that most effects could be reduced. “We conclude that project construction and operation would result in temporary, long-term, and permanent impacts on the environment,” the report states. “Most impacts would not be significant or would be reduced to less than significant levels with the implementation of proposed or recommended avoidance, minimization and mitigation measures, but some impacts would be adverse and significant.” The report included a substantial analysis of the project’s impacts on the state’s caribou population. “Impacts on all herds, other than the Central Arctic herds, would be less than significant,” the report said. However, pipeline facilities would be constructed “at the center” of the Central Arctic herd’s range. “Three construction camps would be within this herd’s range, including one that would be in insect relief habitat. Since project facilities would be central within this herd’s range, the project could serve as a barrier to migration between habitat areas or movement within specialized habitats. Operational activities would result in a permanent disturbance to these habitats.” Although the report determined that impacts on the herd would be significant, it qualified that statement: “We do not know if the impact would be temporary or long term, or to what extent, if any,” the gas treatment plant at Prudhoe Bay or the 62.5-mile pipeline from the Point Thomson gas field to Prudhoe Bay would affect caribou herd movements. To confirm that the gas treatment plant and Point Thomson pipeline “are compatible with caribou use of the area and to address concerns expressed by local residents,” the report recommends: • Following construction, AGDC should conduct seasonal monitoring for three years to track caribou herd movement and determine if the project is creating a barrier to caribou movement. • At the end of the three years, “if it is clear based on the annual reports that the project has created a barrier to normal herd movement, AGDC should develop and file” for federal review “a plan to minimize or mitigate any identified issues with caribou movement related to the project.” Report gives recommendations, more homework Multiple recommendations are scattered throughout the report for specific steps during construction and follow-up analysis after the work is done. The EIS also assigned additional homework before the final EIS, such as requesting that AGDC submit updates of its revegetation plan to restore disturbed soils and its plan to prevent construction equipment from bringing invasive species into specific areas. There are 35 pages of recommendations at the end of the report to prevent, reduce or mitigate impacts during construction and/or operations. The recommendations cover a wide range of issues, such as: • Before the public comment period closes on the draft EIS, regulators want AGDC to submit a revised plan of directional micro-tunneling to install the pipeline beneath the Middle Fork Koyukuk, Yukon, Tanana, Chulitna and Deshka rivers, and the Parks Highway. The plan should provide additional details of “feasibility crossing studies and the potential impacts and mitigation specific to the selected crossing.” • Also before the public comment period on the draft closes, AGDC shall file a summary of the “acreages of designated critical habitat for polar bear that would be affected by project facilities.” Acreage shall be listed “by the four categories of critical habitat (feeding, no disturbance zone, barrier islands and denning habitat)” as defined by the Fish and Wildlife Service. Protecting sensitive permafrost and wetlands are a major part of the EIS analysis. “We conclude that constructing the project would have significant impacts on permafrost due to granular fill (gravel) placement, particularly for the mainline pipeline facilities. The project would have significant adverse impacts on wetlands from granular fill placement resulting in substantial conversions of wetlands to uplands.” Between the Arctic Coastal Plain and the Alaska Range to the south, about 580 miles of the 807-mile-long pipeline would cross continuous or discontinuous permafrost terrain. Construction work could degrade or thaw permafrost, affecting surface wetlands, soils and runoff, the report said: “Operation of the mainline pipeline could cause long-term changes to permafrost, affecting subsurface hydrologic connectivity, groundwater flow, greenhouse gas emissions, right-of-way integrity, and revegetation. Frost heave could cause bending strain in the pipe or disruption to surface drainage patterns.” AGDC’s work plan “identifies construction, restoration and mitigation measures specific to permafrost areas,” including: • Selecting the most appropriate construction method based on permafrost type and topography. • Working in thaw-sensitive permafrost during the winter only. • Working from gravel or ice pads to provide insulation over the permafrost. • Putting insulating material on slopes to control the rate of permafrost thawing and/or minimize degradation. The report provided numbers: “The project would result in significant long-term to permanent impacts on thaw-sensitive permafrost (about 6,377 acres), thaw-stable permafrost (about 3,415 acres), and forest (about 12,474 acres); and convert about 4,162 acres of wetland to upland.” Air quality and noise levels also would be affected by the project. “During the years of simultaneous construction, start-up, and operational activities at the liquefaction facilities (in Nikiski), as well as during flaring events, impacts on air quality could be significant.” The report said the same for noise levels near the Nikiski facilities: “Operational noise associated with the liquefaction facilities at the two nearest noise sensitive areas would likely double due to facility operation, which would be considered a significant increase.” ^ Larry Persily is a former Alaska journalist, state and federal official who has long tracked oil and gas markets and projects worldwide. He is the incoming Atwood Chair of Journalism at the University of Alaska Anchorage School of Journalism and Public Communication.

Dunleavy follows through with massive budget vetoes

Gov. Michael J. Dunleavy followed through on many of his budget proposals but faltered on some of his other stated priorities when he announced his state budget vetoes June 28. The governor vetoed $410 million in General Fund spending from part or all of 182 items in the Legislature’s 2020 fiscal year state operating budget before signing it. He said in a press briefing that his reductions, when combined with the $280 million in cuts the Legislature made, get the state about halfway to a balanced budget. Dunleavy has prioritized paying full, statutorily calculated Permanent Fund dividends and balancing the budget without adding state revenue. Collectively, the budget cuts total nearly $700 million and get the state almost halfway to closing what started as a roughly $1.6 billion budget deficit for the 2020 fiscal year that started July 1. “Next year it’s our goal to complete this process and completely close the gap,” Dunleavy said. “I believe we’re on our way to having a balanced budget.” With the vetoes, the 2020 budget is about 12 percent less than the current year budget, which ends June 30, and the lowest level of state spending since 2005, according to Office of Management and Budget Director Donna Arduin. The University of Alaska absorbed the largest cut from the governor’s red pen, with a reduction to the Anchorage and Fairbanks campuses of $130 million — as Dunleavy first proposed in February — after the Legislature reduced the UA budget by $5 million. The cuts take state support for the university system budget from $327 million to $191 million, or a 42 percent cut. The state’s UA appropriation, which comprises about 40 percent of the overall university budget this year, peaked at $378 million in 2014 and has fallen since as the Legislature and governor deal with the impacts of lower oil revenues. OMB officials noted the cuts don’t impact community college campuses around the state or the University of Alaska Southeast. Those institutions provide the type of career and technical training the governor hopes to expand in Alaska. They arrived at the $130 million cut for the main campuses by first starting with the national average state contribution to higher education of about $7,600 per student and added a 40 percent Alaska cost adjustment to get to funding equivalent to about $11,000 per student. According to OMB, UAA is roughly at that level currently, while UAF funding is about three times that level. Dunleavy said he thinks the UA System can be transformed into a “smaller, leaner, but still very positive, productive university.” “This budget is going to impact all of Alaskans,” Dunleavy said further. “The University of Alaska I have a lot of faith in. I know their leadership. I know many of the regents. I believe that they’re going to work through this and I believe they can turn the University of Alaska into, if not the finest university of the Arctic, in a few select areas — they can’t be all things to all people.” UAF is widely regarded as the world’s leading Arctic research institution and UA President Jim Johnsen has said each dollar of state support translates to $6 of outside investment in research for Fairbanks. He called the cut “devastating” to the Anchorage Daily News and furlough notices have been sent to 2,500 UA staff. Dunleavy also cut $50 million from the state’s general Medicaid appropriation on top of a more than $70 million cut by the Legislature. The administration originally proposed a $225 million cut to Medicaid this year but eventually backed off that stance. Department of Health and Social Services officials previously said they could achieve $102 million in savings through provider rate reductions and other regulatory actions that do not require legislative approval. The governor also vetoed $8 million of state funding for preventative adult dental treatment under Medicaid, which equates to a loss of $18 million in federal funds. Alaska State Hospital and Nursing Home Association CEO Becky Hultberg, who has been roundly critical of the administration’s plans to cut Medicaid support, said the governor’s vetoes are “arbitrary” and could actually lead to additional costs in future years. “The governor’s own department has been unable to identify how to implement cuts of this magnitude, which calls into question the Department of Health and Social Services’ ability to reduce costs without cutting the Medicaid program,” Hultberg said in a formal statement. “Alaskans deserve a more complete explanation of these reductions. Since the Medicaid program is statutory, benefits must be provided. Further cuts will simply result in the need for supplemental funding next year, delayed payments to providers, and reduced access to care for vulnerable Alaskans.” She has previously told the Journal that major Medicaid cuts not tied to programmatic reforms could result in the closing of small, rural health care facilities that don’t have the financial base of larger hospitals. DHSS is currently awaiting the results of a consultant study on ways to further reduce Medicaid spending. Dunleavy did not veto the Alaska Marine Highway budget beyond the Legislature’s $44 million cut, which will allow ferry managers to run a bare-bones sailing schedule through the winter. Dunleavy had previously proposed a $95 million cut to the state ferry system and shutting down service completely this winter. And while the governor has stressed a need for lawmakers to “follow the law” in regards to the PFD, he diverted from that principle himself with several of his vetoes. He eliminated $3.4 million for the Ocean Ranger program — which regulates cruise ship activity in Alaska waters and is paid for through passenger fees, not state dollars. The Ocean Ranger program was established via a 2006 voter initiative. It’s funded through a fee on cruise ship passengers that travel to Alaska. The vetoed funds for the program remain in the General Fund. He also vetoed more than $21 million for the Senior Benefits program and halved the state’s school bond debt reimbursement appropriation to $48.9 million; in a fact sheet accompanying the vetoes, Dunleavy defended the cut to debt reimbursement by citing the “subject to appropriation” clause in the law. In the same sheet, he said the senior benefit veto “eliminates” the program. Local government officials from across the state have said cutting the bond debt cost-share, which is spelled out in state law, would lead to higher local property taxes. “I believe the communities are going to have to make decisions on how they deal with that,” he said at a press briefing in response to a question about the cut. Dunleavy largely avoided questions regarding how his moves to de-fund programs still on the books levels with his emphasis on following state laws but noted that his administration proposed repealing many of those programs; those proposals were rejected by the Legislature. He also vetoed $1 billion from the $2.9 billion percent of market value, or POMV, draw from the Permanent Fund to pay PFDs and support government services. The move was made to keep the $1 billion out of the General Fund and leave it in the Permanent Fund for paying PFDs that are expected to cost $1.9 billion based on the current formula. He also vetoed $5.5 billion of the $9.5 billion one-time transfer the Legislature planned to make from the spendable, currently $19 billion Earnings Reserve Account to the constitutionally protected corpus of the $65 billion Permanent Fund. He said the full transfer put the ability to pay future PFDs at risk. “We need to provide for a full PFD. Until that statute is changed or until the people of Alaska have a voice in changing that statute we’ve got two statutes that some say in some respects compete,” Dunleavy said to a question about he justifies his vetoes that don’t follow some state laws. Meanwhile, legislators were gathered in Anchorage for a meeting of the Bicameral Permanent Fund Working Group, which was established several weeks ago to hopefully find a resolution to the ongoing battle over the PFD and how to use the earnings of the fund without damaging its long-term value. Senate Democrats denounced the governor’s decisions in formal statements. “Gov. Dunleavy simple doesn’t value public education in Alaska,” said Senate Minority Lead Tom Begich, D-Anchorage. “The majority of his cuts cripple our university system, which should be a world-renowned leader in Arctic and global research, and takes away certainty from public schools, educators and families.” House Speaker Bryce Edgmon, I-Dillingham, said the Legislature’s budget “struck a balance” between funding essential services and necessary cuts. “Today, the governor made major vetoes that will have drastic, negative impacts on all Alaskans. The fundamental question is now squarely before Alaskans. What’s more important: a healthy economy, our schools, university, and seniors, or doubling the Permanent Fund dividend at the expense of essential state services? The governor has made his choice clear,” Edgmon said. Whether or not the Legislature will override some of the vetoes is unclear. Veto overrides require support from 45 of 60 legislators, an intentionally high bar set in the Alaska Constitution. Legislators and their staffers gathered in Anchorage for the Permanent Fund meeting said they needed time to evaluate all 182 line-item actions before determining which, if any, of the vetoes there is support to override. The Legislature is set to convene July 8 to consider this year’s PFD — with the location still being disputed between Wasilla as the governor has called for or in Juneau as a majority of lawmakers want — at which point the larger budget questions should start to be answered. Elwood Brehmer can be reached at [email protected]

BLM lifts Alaska land withdrawals, opens 1.3 million acres

More than 1.3 million acres of federal land in Alaska are a big step closer to being “open for business.” Assistant Interior Department Secretary Joe Balash signed directives June 26 in Anchorage revoking decades-old federal public land orders, in the process making more than 1.3 million acres overseen by the Bureau of Land Management eligible for conveyance to the state, Alaska Native corporations and other uses. Balash said lifting the PLOs will allow the federal government to make good on longstanding commitments to the State of Alaska and Native corporations. “We know that these lands can be unlocked for development responsibly without sacrificing (public) access,” Balash said during a speech to the Resource Development Council for Alaska prior to acting on the orders. Balash also led the Department of Natural Resources under former Gov. Sean Parnell. The PLOs covered two areas: approximately 1.1 million acres of BLM land in eastern Interior Alaska, generally between Delta Junction, Tok and the Yukon River, as well as about 200,000 acres east of the Copper River delta and near the large Bering Glacier. Both areas are known for their mineral potential. The Interior Fortymile region is an area popular among Alaska placer miners and revoking the orders will open the areas to new federal mining claims. The actions take effect in 30 days, according to BLM Alaska officials. According to Balash there are 17 such withdrawals that impact the use of roughly 50 million acres in the state. Most of them were put in place shortly after Congress passed the 1972 Alaska Native Claims Settlement Act to allow for careful evaluation of land-use classifications at a time when the State of Alaska and Native corporations were selecting millions of acres to receive from the federal government. Balash said the PLOs were a prudent step when they were put in place but largely are no longer necessary. “This is the first of many (PLO revocations) that will take place over the next several months. We’re going to have a conveyor belt operating here,” he said. Gov. Michael J. Dunleavy, whose administration has stressed the motto that “Alaska is open for business” said Interior Department officials are serious about doing the right thing in lifting the withdrawals. The governor was headed to meet with President Donald Trump, who was making a Air Force One refueling stop at Joint Base Elmendorf-Richardson, and said he would thank the president for his administration’s push to open more land in the state to development. “It’s land that Alaska can use to hopefully create wealth,” Dunleavy said during a press briefing. He has also expressed a desire to transfer more state land to private ownership. The members of Alaska’s congressional delegation also commended the moves, citing the economic development opportunities and the need to fulfill land conveyance commitments to the state and Native corporations. The State of Alaska is entitled to 104.5 million acres from the federal government under the Alaska Statehood Act and to date has received title to approximately 99.3 million acres. In total, Alaska covers roughly 365 million acres and BLM manages about 70 million of those acres. Balash said the state has selections in the eastern Interior-Fortymile area that will become available, but has already “over-selected” acreage for conveyance beyond what it is entitled to, meaning state officials have to determine which selections they want to move forward with. Elwood Brehmer can be reached at [email protected]


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