Mining Explorers 2015: Adversity buffets mining sector

The State of Alaska and its mining industry continue to benefit from a world-class natural resource base while being buffeted by significant challenges, mostly related to downward market trends for minerals and energy. The wide array of complex resource development issues and decisions facing Alaska resource managers, policy makers and the private sector is unabated - in fact it has grown - and the Alaska Department of Natural Resources is determined to address them as best we can despite adverse fiscal conditions.

Some good news for the minerals industry in Alaska is that the fiscal 2016 state budget reductions did not significantly undermine resource development, revenue generation, or DNR's stewardship role. We also have maintained DNR's strong permit coordination function. However, looking ahead to FY 2017, it will be very difficult to identify additional DNR budget reductions that will not impact our critical functions.

I want to take this opportunity to commend the excellent work on many fronts by the Division of Geological & Geophysical Surveys over the past year. This division faced painful FY 2016 cuts, including the loss of its airborne geophysical survey program, which we look forward to restoring in the future.

Yet with strong leadership from State Geologist Steve Masterman and new deputy director Ken Papp, the division opened its new Geologic Materials Center in Anchorage on July 1.

The center's entire geologic collection moved from Eagle River to Anchorage on 2,522 pallets in 142 trucks in 31 days.

Since opening, visits to the GMC have increased, and the center has received significant donations from corporations such as Calista Corp. and Bristol Bay Native Corp. These two organizations generously contributed core samples (more than 80 pallets combined) from a dozen mining prospects throughout Alaska, including the Saddle Mountain prospect in southwest Alaska and the Bee Creek prospect north of Chignik Bay.

I also would like to mention some personnel changes in DNR's Division of Mining, Land and Water. Marty Lentz is now the division's Mining Section Chief. Marty comes to us from the Pennsylvania Department of Conservation and Natural Resources. Also, Mitch Henning has returned to DNR to work in the Mining Section, and many of you are familiar with Mitch from his many years with DNR prior to his first retirement!

Much already has been said about the increased scrutiny and regulatory requirements placed on the Alaska mining industry in recent years.

A case in point is the adverse ruling from the Alaska Supreme Court about DNR's public noticing of past exploration activities at the Pebble Project.

We are actively evaluating what measures will be necessary to respond to the decision, and we are conferring with the plaintiffs and Pebble Limited Partnership to draw the case to a close.

Any statutory or regulatory changes that may be needed to implement the ruling will be subject to public review.

We will do what we can to ensure that the ruling has minimal impacts on project timelines.

Nevertheless, we encourage all miners to file their applications in a timely manner.

On the federal side, small-scale miners in Alaska continue to face uncertainty regarding pending regulations and policies such as the Environmental Protection Agency's rulemaking regarding the Clean Water Act and implementation of wetland management on all waters of the United States.

Furthermore, development and implementation by BLM of new Instruction Memoranda for placer mining and reclamation bonding also is generating a level of uncertainty.

The Division of Mining Land & Water is working diligently with BLM to develop an updated framework for reclamation bonding within the existing State of Alaska Reclamation Bond Pool, and to further refine the process by which federal mining claim locaters and mine operators might convert their federal mining claims into state mining claims.

The latter will allow the federal lands within a state land selection to become state-owned upon conveyance of that land to the State.

Wetland issues remain at the forefront of the State's efforts to improve permitting in Alaska. Currently, we are focusing on the urgent matter of wetland compensatory mitigation cost escalation and regulatory issues currently impacting resource development projects.

To that end, DNR's Office of Project Management & Permitting is leading the State's effort to develop the prospectus necessary to request approval from the U.S. Army Corps of Engineers to establish a state-managed in-lieu fee wetlands mitigation program. The Corps' current approach requires developers to pay ever-increasing sums of money for every acre of disturbed wetlands or impacted streams in Alaska. This money often is used to put additional land off limits to development. A state-run wetlands mitigation program may offer more ways to comply with federal wetlands mitigation requirements while utilizing more effective methods to support and enhance aquatic ecosystems on state land.

Other notable activities this year include the ongoing state and federal permitting process for the Donlin Gold project in the Yukon-Kuskokwim Region and the Chuitna Coal project near Beluga.

The Corps of Engineers is the lead agency for the National Environmental Policy Act review of both projects.

The Draft EIS for Donlin is currently scheduled to be released to the public in November 2015, with a final EIS released at the beginning of 2017 and many other state and federal permit decisions anticipated around that same time.

The draft Supplemental EIS and state and federal permit applications and draft decisions for Chuitna are currently scheduled for the early second quarter of 2016, with final decisions anticipated in 2017.

This year, the Division of Mining, Land & Water processed 488 placer mining applications, with about 413 of them on state land. As part of DNR's continuing efforts to improve permitting, the division is working on revisions to the APMA application to make it easier for miners to complete and also to better capture information for DNR's decision process.

Media attention tends to focus on adverse court rulings for the State on natural resource issues, so I'd like to conclude this piece by highlighting a significant legal win for the State with implications for Alaska mining.

In July, the U.S. Department of Justice conceded and U.S. District Judge Sharon Gleason signed an order confirming that the State of Alaska owns the submerged lands of the Fortymile River's Mosquito Fork, successfully concluding a case filed by the State in 2012.

Many mining claims located on these submerged lands could not be perfected because of uncertainty of ownership.

With the successful outcome of this case, mining on these claims would be authorized under the state's permitting process.

Ed Fogels is deputy commissioner of the Alaska Department of Natural Resources.