Menge: Issues ground to talcum powder

Pebble copper-gold mine in Alaska's Bristol Bay region is still on the drawing board, but a debate is already raging in the state Legislature over the best way to oversee the project. Although Vancouver-based Northern Dynasty has said it won't submit permit applications for Pebble for another year, while it assesses new drill results, mine opponents have launched a multimedia advertising campaign in an effort to drown out the voices of supporters and those who prefer a wait-and-see approach.

The House Resources Committee heard two afternoons of public testimony in February regarding a resolution sponsored by Rep. Mike Hawker, R-Anchorage. The resolution calls for the Department of Natural Resources to complete a management plan for the area encompassing the Pebble deposit and for the department's commissioner to report the plan's findings to the Legislature. The management plan would be undertaken in addition to the mine permitting process and would cost the state an estimated $400,000.

Rep. Jay Ramras, R-Fairbanks, chaired the Pebble discussion, in which public testimony was limited to two minutes per person because of the high level of interest. Even so, the two afternoons weren't enough for everyone who wanted to speak and the debate will continue at future committee meetings. Northern Dynasty officials deliberately forfeited their opportunity to speak so that more members of the public could participate. "Our intention is not to move this bill with any great haste, but to allow the members to chew on this," Ramras said.

Hawker calls for transparent process

"I've come to realize that this mine has tremendous magnitude and potential consequences in the hearts and minds of Alaskans both for and against it," Hawker told the committee.

"I'm absolutely amazed at the interest that this proposal has drawn here.

...

Our interest here, in my opinion, is assuring that the state conducts - that is, the broad state, our administration, our legislative process - that the regulators of mining in the state conduct a fully open, transparent regulatory process, a process that is conducted in full compliance with our state's existing statutes and regulations, a process that gains the public's confidence in our discussions, and indeed conclusions that are reached in that regulatory process."

Rep. Gabrielle LeDoux, R-Kodiak, whose district includes the Pebble deposit, said that the resolution only asks DNR to follow the law and she asked Hawker if there was any reason to think that DNR would not follow the law without the resolution. He replied that sometimes the administration needs to be reminded of what it should do, and that the Pebble issue should be dealt with extraordinarily openly. LeDoux then asked if any other project had been selected for this type of resolution and Hawker replied that the Legislature had passed a resolution endorsing Kensington mine. In the case of Pebble, he wants more information.

Rep.

Carl Gatto, R-Palmer, asked Hawker if the resolution would kill the Pebble project.

Hawker replied that he had not intended to provoke a debate about the merits of the mine.

Rep.

Jim Elkins, R-Ketchikan, mentioned that he didn't know whether the mine was going to be an open pit mine or an underground mine.

"You have absolutely defined my own consternation here," Hawker replied.

"I again believe it is imperative that we use our best legislative abilities to have DNR conduct the science, bring forth that site-specific plan, which would have a great deal of bearing, whatever mining methods may be applied, would have a great deal of bearing on my ultimate decision and, I believe, the public's ultimate decision on whether this project should progress or not."

180-degree turn on permitting process?

"Don't you think that after a number of years of trying to streamline the permitting process, this is kind of a 180-degree turn from that, and that the end result would be to add uncertainty to people looking to come in to develop all kinds of resources, oil, gas, everything in the state?" Elkins asked. "No sir, I don't," Hawker replied. "I believe that we have an absolute responsibility to know what we're doing before we do it." The legislature should take the course of greatest caution, he added.

Rep.

Harry Crawford, D-Anchorage, pointed out that there are a number of big projects in sensitive areas and asked whether the resolution implies that the state's environmental regulations are too weak and that additional oversight is required.

Hawker replied that he didn't intend to imply that the state's environmental standards had weakened.

"Usually the feeling in the legislature is resolutions are innocuous," said Rep.

Mary Kapsner, D-Bethel.

"In this case I think it's very different.

I think when the governor and many of us in the legislature say we're open for business, that means we're open for business, and not, well, we're open for some businesses, and some businesses we want to add some more hurdles to."

Menge: DNR's responsibility to be dispassionate

"Unfortunately, the more emotion and more passion that's poured into a project, the more likely it is that the facts, while interesting, will turn out to be irrelevant," DNR Commissioner Michael Menge told the committee.

"It's the Department of Natural Resources' responsibility to be very dispassionate, and be very cold and calculating in its analysis of any project or proposal that affects the state's resources, and that is what we will do. ... Each issue on this project will be ground to talcum powder and will be looked at from a thousand different directions." DNR will have to organize all the information into a meaningful dialogue that will allow Alaskans to decide whether or not to proceed, he added. This is done through the permitting process.

The resolution proposes taking a step beyond what DNR would normally do and would set a precedent, Menge said. It would take about two years to conduct the management plan, which would run concurrently with the permitting process, and would require one full-time person per year and three part-time employees. There would be a heavy travel component. DNR believes that the permitting process by itself is sufficient, but if the legislature requests a management plan, the administration will not oppose it, Menge added.

Bill duplicates what already required

"This bill duplicates what is already required by state law," said Steve Borell, the executive director of the Alaska Miners Association. "This is not an innocuous resolution. If this resolution is passed, it will be carried to Wall Street, Toronto and London financial markets to discourage investment in Pebble and to make potential investors afraid of investing in Alaska. Make no mistake about it, such a threat if made on one project will spill over onto ANWR, it'll spill over onto the gas line, it'll spill over onto any other major project that we seek to see built in Alaska in the future."

The Renewable Resources Coalition, which has run newspaper ads opposing the mine, showed the committee a short film about the salmon and trout in Bristol Bay, warning that other mines would follow on the heels of Pebble, and that an open pit mine would have more impact on the Bristol Bay area than it would on Yellowstone Park.

Rep.

Kapsner asked Richard Jameson, a director of the 501(c)(6) nonprofit corporation, if he could give the legislature a list of contributors.

Jameson replied that he was not allowed to do that.

According to state filings, the other directors of the coalition are Brian Kraft, who owns a lodge in the Bristol Bay area, Art Hackney, a political consultant and Francis Gallela, who operates an adventure travel agency.

Jameson himself is a lawyer.

"In general we are businessmen and we are pro-development, but this is just the wrong place," Jameson said. "To have somebody join the public process who has a very secretive membership is disturbing," Kapsner said. The Renewable Resources Coalition supports Hawker's resolution. The organization believes DNR will conclude that the Pebble site is the wrong place for a mine, Jameson said.

Hellenthal hired to conduct survey

Art Hackney and lodge-owner Bob Gillam hired Mark Hellenthal to conduct a public opinion survey in the area that would be impacted by Pebble. Hellenthal surveyed 265 residents in late January of this year, he told the committee. Asked how they felt about the mine, 8.7 percent said they strongly favor it, 11.3 percent somewhat favor it, 15.1 percent somewhat oppose it, 56.6 percent strongly oppose it and 8.3 percent are undecided, with a 5.83 plus or minus margin of error. Hellenthal described Gillam as an "almost lifetime friend".

The Alaska AFL-CIO supports the resolution, Barbara Huff told the committee.

"Does this mean that we are anti-Pebble?" she asked.

"Absolutely not.

We represent members ...

at Usibelli coal mine.

We actually have a history of supporting mining and also oil development strongly." Brian Kraft, a director of the nonprofit Bristol Bay Alliance as well as the Renewable Resources Coalition, also expressed support for the resolution.

He told the committee that he has been to 15 presentations by Northern Dynasty and traveled to every village in the Bristol Bay area.

Like Jameson, he sharply criticized open pit mining and pointed to restrictions on open pit mining imposed by other states.

"I'm not trying to stop it; I want protection," Kraft said.

"I think that Northern Dynasty should embrace any kind of legislation that adds protection to the residents of Alaska."

Nondalton supports resolution

Nondalton tribal council's president, Jack Hobson, told the committee that 220 of the council's members oppose the Pebble project. "I've been to a lot of meetings with Northern Dynasty and at every one of those meetings they always make promises, and we all know that promises are made to be broken," he said. "If they could stand up there and guarantee that there will be zero net loss, I mean guarantee on paper, on record, that there will be zero net loss, we may look at it." The people of Nondalton, a village close to the Pebble deposit, support the resolution, he added.

Hobson is also concerned that DNR officials may be biased towards Northern Dynasty because they are being reimbursed by Northern Dynasty for the time they spend working on the project. "As Native people we rely on the renewable resources and without them we'd have a hard time to exist, especially with pure water out there," Hobson said. "Everything out there depends on pure water."

"I personally and my company, we own upwards of a billion dollars worth of mining company stocks around the world and we are in fact the fifth-largest owner of Teck Cominco in the world, personally and my company," Pebble opponent Bob Gillam told the committee. "So we are not here to talk and make bad-mouth with respect to the mining industry. So therefore as a professional investor I can tell you what makes sense and what does not make sense. .... Northern Dynasty is a second-tier mining company. That means that they have never mined gold. They have never had a dollar worth of revenues. This company is a promotion company."

An as-yet unidentified mining major will have to raise between $1.5 billion and $2 billion dollars to build Pebble mine, and Northern Dynasty cannot make promises on their behalf, Gillam continued. "A sulfide mine nowhere in the western hemisphere has ever been, in our view, ever, ever, it's never been done properly. They always pollute. ... When sulfur rocks hit oxygen and water they turn into sulfuric acid. So mines in Fairbanks, my home town, they do not do that." Gillam urged the committee to support the resolution and described himself as a member of the board of directors of the Renewable Resources Coalition.

Jenkins: you don't mine sulfide

"Bob Gillam went to great lengths to try to convince the committee that he's mining friendly; then he said he was opposed to sulfide mining," Northern Dynasty's chief operating officer, Bruce Jenkins, told Mining News afterwards. "In any case, you don't mine sulfide, you mine the metals from sulfide rock. Sulfide mining is a derogatory term. Bob Gillam said he or his funds are the fifth-largest investor in Teck Cominco. He's contradicting himself and setting up a double standard. Red Dog is a 'sulfide mine' and Highland Valley is an open pit mine that has been operating for 40-plus years. Teck Cominco operates these two mines safely and wins reclamation awards."

Jenkins was unhappy that the hearings turned into a debate about the Pebble project itself instead of a debate about the proposed management plan. Legislators tried to return to the issue of the management plan on the second day of the hearings. Rep. Paul Seaton, R-Homer, asked Dick Mylius, director of DNR's Division of Mining, Land and Water, if there was potential for a takings claim if the management plan reclassified the land, preventing mineral development.

"Generally in management plans we don't do wholesale reclassifications," Mylius replied. "As a general rule, a management plan doesn't change the overall intent from an area plan. ... Even if we do a wholesale reclassification, all state land is open to mineral entry under state law unless specifically closed by the Legislature." Even if land is classified for recreational use, it is not closed to mineral entry. Existing mining claims remain valid whatever happens, and in that case if the Legislature closes the area, there could be a takings claim, Mylius added. The closure of Kachemak Bay to oil and gas leases created a similar situation.

Co-existence of development and environment

The mayor of the Lake and Peninsula Borough, Glen Alsworth, spoke against the resolution. "We live on clean water and good fish, and that's dear to the hearts of all of us here," Alsworth said. "We're not willing to sacrifice that, but I come personally from a stance that development and environment can co-exist if it's done right. .... I hear a lot of talk about no net loss. I don't really buy into no net loss. What I want to buy into is net gain."

The Pebble debate and the associated environmental studies comprise the largest public process Alsworth has ever been involved in, he said. Even when Lake Clark National Park was being created in 1980 there weren't public meetings in local villages, he told the committee.

"Our villages, I believe, they're either going to go to work or die," Alsworth said. "If you can imagine the long-term effect of no economic opportunity, we see this played out in many rural areas with a lot of people living in hopelessness and helplessness and depression because they're not worrying about where to spend next year's vacation, they're trying to figure out how to pay the sewer bill at the end of the month, and that's a bad predicament to be in."

The rules of the process should not change in mid-stream as they do in Russia, which Alsworth has often visited, he said. Ralph Angason, president of the Alaska Peninsula Corp., the largest adjacent land-owner to the Pebble deposit, also opposed the resolution. "This resolution is nothing more than pandering to special interests, to the rich and famous and powerful outside interests that do not have a stake in the economic future and potential of the Pebble deposit," he said. "We ask that you wait and see whether the mine is even possible under existing modern technology. ... Please give us a chance."

Alaskans for Responsible Mining

Another nonprofit coalition, Alaskans for Responsible Mining, makes frequent public presentations about the risks of the Pebble project, pointing to environmental problems with mines elsewhere in the country. ARM's director, Scott Brennan, who only moved to Alaska recently, testified in support of the resolution. He told the committee that 19 organizations are members of his group and that the membership list is public. Brennan acknowledged that Bob Gillam had made contributions to ARM, but that the contributions amounted to less than 5 percent of ARM's annual budget.

Seaton asked Brennan how best management practices would get incorporated in a land management plan, in a way that would not happen during the normal mine permitting process.

Brennan reiterated Jack Hobson's argument that Northern Dynasty's financial relationship with DNR, detailed in a memorandum of understanding between the company and the department that Brennan cited, could cause a conflict of interest in the permitting process. "The existence of this MOU ... has given rise to this call for legislative oversight," Brennan said. "DNR isn't necessarily capable of conducting that oversight for itself."

Fishing no longer viable

Lisa Reimers, a director of Iliamna Natives Ltd., told the committee that people in the Pebble area can no longer support themselves with commercial fishing because of the competition from farmed salmon which is available all year round.

Reimers said that the tourism business is another option but although her mother owns a lodge, they can't afford the million-dollar plane needed to fly visitors out to fish.

She criticized the survey of local residents, pointing out that villages closest to the mine site, like Iliamna, weren't included.

"We don't have a lot of money, we don't have a billionaire backing us up," Reimers said.

If the mine can be safe, Iliamna Natives will consider supporting it, she added.

Reimers and other local residents who testified spoke angrily about lawsuits from Bob Gillam and Trout Unlimited that are preventing the construction of a bridge over Newhalen River. Several people have died in the area because their ATVs went through the ice. "Five, six years ago we appropriated a large sum of money for the Nondalton bridge, and it's been held up by a certain individual that's a billionaire," said Rep. Carl Moses, D-Unalaska.

The resolution is "deceptively innocuous," Bruce Jenkins from Northern Dynasty told Mining News. "The real critical point is the third statement in the resolution, saying that the commissioner of Natural Resources would come back to the Legislature and could change the land use status. That's the dynamite buried in the resolution. ... That is changing the rules part-way through." To counter the upsurge of organized opposition to Pebble, Northern Dynasty has added to its lobbying base to make sure that the facts get out in Juneau. "We will stick to our plan, continue to do a defensible job and wait for the thorough review process," Jenkins said.