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R E V I E WRESOURCE

A PERIODIC PUBLICATION OF THE RESOURCE DEVELOPMENT COUNCIL FOR ALASKA, INC. www.akrdc.org

EE

ssential Fish Habitat, commonlyknown as EFH, is an issue with the potential to impact virtually every majordevelopment project in Alaska.

“By name alone, mine operators, roaddevelopers, and timber harvesters oftenperceive the issue as ‘having to do withfish,’” said Jason Brune, RDC ProjectsCoordinator. “Unfortunately, it hasbroader implications than just fish.”

EFH has been broadly defined by theMagnuson-Stevens Act to include “thosewaters and substrate necessary to fish forspawning, breeding, feeding, or growthto maturity.” In Alaska, that includesmost rivers, streams and ponds.

As a result of the Act, EFH consulta-tions are a requirement for any projectthat may have an adverse effect on suchhabitat. Projects as far inland asFairbanks may require EFH consultations.

To this end, the North Pacific FisheryManagement Council and the NationalMarine Fisheries Service have completed

a Draft Environmental Impact Statement(DEIS) for EFH in Alaska. Included inthis document is a section (Appendix G)outlining the impacts of non-fishing activities on EFH and the recommendedconservation measures.

“The document ignores many of thecurrent environmental requirements putin place by NEPA, the Alaska ForestPractices Act, and others,” Brune said.“At present it provides recommendationsthat are both overly burdensome and du-plicative, especially with respect tocoastal and inland non-fishing industriesand communities.”

He said NMFS should streamline theregulatory process by eliminating suchduplication. Copies of the DEIS and ad-ditional information can be found online:www.fakr.noaa.gov/habitat/seis/efheis.htm.

RDC is encouraging its members to re-view this DEIS and offer written com-ments on the specific guidelinesrecommended for their respective indus-try. Members should also encourage

NMFS to restrict consultations to proj-ects within defined essential fish habitatin federal marine waters, the agency’s traditional area of jurisdiction.

Public meetings will be held March 19in Seattle, March 31 in Anchorage, andApril 8 in Juneau. RDC will be issuingan action alert with specific recommen-dations at www.akrdc.org. The commentdeadline is April 15.

(Continued to Page 3)

I N S I D E

Fairbanks 55 Wrap-up 3

Alaska Gas Pipeline 4

Alaska GDP 5

Timber or Tinder? 6

Outside Perspective 7

Red Dog Decision 8

NPR-A Lawsuit 9

President’s Message 10

RDC News Digest 11

RDC is encouraging the National Marine Fisheries Service to restrictEssential Fish Habitat consultations to development projects withindefined habitat in federal marine waters, the agency’s traditional areaof jurisdiction. Recent EFH consultations have occurred as far inlandas the Pogo Gold Project south of Fairbanks (pictured at right).

EFH MEASURES TO IMPACT NON-FISHING

ACTIVITIES FAR INLAND FROM COAST

Resource Review is the official periodic publication

of the Resource Development Council (RDC),

Alaska's largest privately funded nonprofit economic

development organization working to develop

Alaska's natural resources in a responsible manner

and to create a broad-based, diversified economy

while protecting and enhancing the environment.

Resource Development Council121 W. Fireweed, Suite 250Anchorage, AK 99503Phone: (907) 276-0700Fax: (907) 276-3887E-mail: [email protected]: www.akrdc.org

Material in this publication may bereprinted without permission providedappropriate credit is given. Writer & Editor Carl Portman

Executive Committee OfficersPresident John ShivelySr. Vice President Mark HanleySecretary Chuck GreeneTreasurer Stephanie MadsenPast President Chuck Johnson

StaffExecutive Director Tadd OwensDeputy Director Carl R. PortmanProjects/AMEREF Coordinator Jason BruneFinance/Membership Billie Rae Gillas

March 2004 Resource Review www.akrdc.org

TADD OWENSA MESSAGE FROM THE EXECUTIVE DIRECTOR

(907) 276-0700 March 2004 Resource Review

CONFERENCE OF ALASKANS

Editor’s Note: Lindsey Holmes, Attorney, Heller Ehrman White & McAuliffe andJason Metrokin, Vice President of Programs, First Alaskans Institute, contributedto this column.

Surprising many who predicted the Conference of Alaskanswould be an elaborate cover-up for a raid on the PermanentFund, the 55 Alaskans who gathered in Fairbanks made apowerful statement in favor of protecting the Fund, while en-suring that earnings will be made available for dividends andessential state needs. As young professionals, community vol-unteers and committed Alaskans, we are proud to have partic-ipated in an effort to move our state forward.

With the Conference now over, people throughout the statehave had an opportunity to consider the delegates’ four resolutions and to read our letter to Alaskans. The debateover these important issues now rests with the public and ourelected officials in Juneau. Will the state move forward, or willthe momentum of the Conference stall?

We believe the recommendations made by the delegates willserve Alaskans well over the long term. Rather than restatingthe resolutions, we would like to describe what we believe arethe real accomplishments of the Conference.

The top priority of most delegates was protection of thePermanent Fund itself. Only a properly managed fund willhave the financial strength and stability to pay dividends tofuture generations of Alaskans. The Percent of Market Value(POMV) management tool accomplishes this goal and ensuresthe Permanent Fund will benefit from state-of-the-art invest-ment practices. Contrary to what many have stated, POMVis more important to the long-term health of the PermanentFund and future dividends than whether or not dividends aregiven Constitutional protection.

Before and during the Conference we heard from hundredsof Alaskans who asked us to leave the Permanent Fund alone.Based on the Fund’s past performance we understand this sen-timent. We must, however, respectfully disagree with thosewho advocate no action. The Fund must evolve to keep pacewith our changing circumstances — leaving the Fund alonenow will only exacerbate our challenges in the future.

We Alaskans need to break our cycle of dependency inorder to ensure a strong future. Earnings from the Fund canand should be used to support a healthy, safe, educated andemployed Alaska. We can continue to reap the benefits of ourfinancial and natural resources and help provide needed serv-ices to Alaskans. All it takes is a little trust and a willingnessto give back to an Alaska that has given us all so much.

While the media made much of the delegates’ discussion oftaxes, we believe there was neither a retreat from personal in-come taxes, nor an aversion to any other alternative sources ofrevenue. The delegates recognized that a fair, statewide taxneeds to be part of a fiscal solution. However, we felt it bestto allow our elected officials to decide on a specific course ofaction, while encouraging them to act.

Taken together, these policy recommendations have the potential to lift us up, to build a better state and improve ourquality of life.

While we are proud of the positions taken by the delegates,we believe the value of the Conference of Alaskans transcendspolicy and politics. Delegates spoke passionately about com-munity, culture, and investment in our collective future.Delegates from vastly different political and cultural back-grounds debated their points eloquently and, in the end, wereproud to sign the letter outlining a collective position.

A group of diverse Alaskans came together to address ourshared challenges in a spirit of cooperation and dialogue. Webelieve the Conference added to Alaska’s rich heritage of pos-itive political and community discourse. Our hope is that allAlaskans will insist that such qualities continue to be the foun-dation of our ongoing policy discussions.

During our final day of deliberations, Delegate CharlieCurtis said, “… when we talk about debate, there’s always awinner and a loser. That’s not in my culture — it’s foreign tome.” As we continue to work together to resolve our fiscalchallenges, we must remember those words. It’s not aboutwinning or losing, it’s about doing the best we can for allAlaskans.

On a parallel front outside the DEIS process, RDC is recommending NMFS move forward with regulatory revisions to its current national EFH guidelines. These guide-lines have broad implications for non-fishing industries and projects inland from marine areas.

The EFH guidelines were set in motion by regulations in1997. Given their broad and duplicative nature, RDC believeschanges to the guidelines are necessary. The comment periodon an Advance Notice of Proposed Rulemaking for revisionsto the guidelines has been extended to April 26.

RDC URGES EFH REGULATORY REVISIONS(Continued from page 1)

Alaska’s fiscal gap has been forecasted for many years, yet only marginalprogress has been made addressing the inevitable. The chart above was published in an RDC publication 19 years ago .


GAS PIPELINE APPLICANTSTO ENTER INTENSENEGOTIATION PHASE

TT

wo competing applica-tions submitted recently tothe State of Alaska for a fiscalcontract to build and operatea North Slope natural gaspipeline have sent a shot ofadrenaline through Alaska’soil patch, but GovernorFrank Murkowski warnedthat intense negotiations re-main before a “build/nobuild” decision occurs.

Murkowski listed five con-siderations any gas pipelinecontract would have to attain:

• Open access to thepipeline for other companiesthat may discover gas on theNorth Slope;

• Alaska’s participationthrough the opportunity toinvest in the pipeline;

• Access to the pipeline toallow a spur line toAnchorage, Valdez, and/orKenai;

• Access to the gas in thepipeline at Fairbanks; and

• Protection for impactedcommunities and boroughsthrough which the pipelinewill be built.

The two industry groupsthat submitted separate appli-cations under the StrandedGas Development Act(SGDA) are not applying toactually build the pipeline,but to negotiate with the stateon how the project would betaxed and other financialterms. A decision to buildwill largely depend on anumber of factors, includingan acceptable wellhead price,state and federal fiscal termsand conditions, an accurate

determination of the cost toconstruct and operate, andthe market price of the gas.

The SGDA allows the stateand a sponsor group to negotiate fiscal terms, such astaxes and royalty adjust-ments, as well as other provi-sions such as Alaska hire, gasoff-take points from thepipeline and access.

The state’s negotiatingteam is led by Commissionerof Revenue Bill Corbus,Commissioner of NaturalResources Tom Irwin, andAttorney General GreggRenkes. The state expects toenter formal negotiations inMarch with both sponsorgroups that have appliedunder the SGDA.

Murkowski has said hewould like to have a draftcontract to the Legislaturefor its consideration before itadjourns in May, butacknowledged that would bea tight timeframe.

The three major Alaska oiland gas producers and an in-dependent pipeline consor-tium led by MidAmericanEnergy Holding Companyfiled separate applications inJanuary to build the pipeline.While both applications havethe ultimate goal of movingNorth Slope gas to market,they are different in severalkey aspects.

MidAmerican wants tobuild and operate the gas line,but does not intend to buy orsell the gas. The North Slopeproducers or other gas shippers would pay

MidAmerican to carry thegas regardless of its marketprice.

The producers’ applicationcomes from ConocoPhillips,BP and ExxonMobil, whopropose building the linethemselves and shipping theirown gas and that of othercompanies. Under eitherproject, the producers wouldbear the risk if gas prices fall.

The state and project spon-sors face the challenge of deciding whether the companies or governmentwill shoulder the risk if future gas prices don’t coverthe tariff to ship gas throughthe pipeline and give a rea-sonable rate of return for theproducers.

The two applications alsodiffer on points of negotia-tion with the state. Withoutgas of its own, MidAmericanwill be negotiating on statecorporate income taxes, stateand local property taxes andlocal sales taxes on purchases.The producers could negoti-ate those same taxes, but theyalso have additional tax con-siderations on the gas theyproduce to put into the line.The companies will likelyseek some type of tax relief inthe contract to help reducerisk when prices are low.

MidAmerican is proposing

to build and operate a $6.3billion, 745-mile pipeline tothe Alaska-Canada borderwhere TransCanada or an-other pipeline companywould build another linethrough the Yukon Territoryand British Columbia to con-nect with Canada’s pipelinenetwork.

MidAmerican is controlledby billionaire Warren Buffet’sBerkshire Hathaway. Thecompany says it would takesix years to design, permitand build the pipeline afterfiscal terms are reached withthe state and federal govern-ment.

The producers’ $20 billionpipeline would extend 1,800miles, carrying 4 billion cubicfeet (bcf) of gas per day to theNorth American distributiongrid in Alberta. TheMidAmerican line wouldmove 4.5 bcf per day.

Included in the producers’application is a $2.6 billionplant on the North Slope tocondition the gas for ship-ment. MidAmerican antici-pates the producers wouldbuild the plant even if itbuilds the pipeline, but thecompany said it would con-struct such a facility if re-quired.

While MidAmerican’s(Continued to page 5)

Source: State of Alaska


By Greg Wolf, Executive Director,World Trade Center Alaska

Alaska is one of the mosttrade-oriented states inAmerica. While many statesenjoy sizeable domestic mar-kets for their manufacturing,high-tech or agricultural in-dustries, Alaska is dependenton the exports of its naturalresources to overseas customers for much of itseconomic well-being.

The importance of re-source development and theexport of these resources toforeign markets were high-lighted at the First AnnualStatewide Economic Fore-cast Luncheon in January byWorld Trade Center Alaska.

At the luncheon, PatBurden, the president ofNorthern Economics, pre-sented the 2004 statewideforecast. Burden predictedstatewide employmentgrowth of 1.7 percent, or ap-proximately 6000 jobs, in2004. He anticipates thatAlaska’s Gross State Product(GSP) will expand by $1.5billion this year to reach atotal of $33 billion. Similar tothe Gross Domestic Product(GDP) statistic used to meas-ure the economic perform-ance of countries, the GSPmeasures the sum all ofgoods and services produced

by a state in a given yearBurden also presented in-

formation on the contribu-tion of each major industrysector to the GSP. Amongthe sectors, natural resources(oil and gas, minerals,seafood, etc) contributed themost to the GSP, some 25percent of the statewide

total. By comparison, the finance and services sector(includes insurance, banking,real estate, and professionalservices) contributed 21 per-cent and government (fed-eral, state, local and military)followed next with 19 percent.

Jobs supported by re-source development are alsovery important to Alaska’s

economy. According toBurden, while resource jobsmake up only 5 percent ofthe state’s total employment,these same jobs rank numberone when measuring the GSPper employee. In the naturalresource sector, GSP per em-ployee is more than $400,000while the Finance and Service

sector and theTransportation and Utilitiessector lagged considerablybehind at approximately$100,000 per employee.

For 2004, Burden fore-casted that the natural resource sector’s contribu-tion to the state GSP will in-crease by $1 billion, or 14percent, and that 700 jobswill be added in the year

ahead. Both Burden and Gary

Scholssberg, a senior eco-nomic for Wells FargoCapital Management basedin San Francisco, predictedthat oil and other commodityprices important to Alaskawould remain relatively highin 2004. Burden sees crudeoil prices on the West coastaveraging about $28 per bar-rel, gold staying above $400per ounce and zinc prices re-maining higher than their recent lows.

Schollsberg attributedgains in commodity prices tothe economic growth andmodernization occurring inChina, Alaska’s fourthlargest trading partner. Hereported that as much as 20to 25 percent of the newglobal demand for metalssuch as zinc and copper, aswell as one-third of the in-cremental demand for crudeoil, can be attributed to therapidly growing Chineseeconomy.

According to Schlossberg,China is now the second-largest importer of crude oilbehind the United States.And it is not just China thatis driving commodity priceshigher. Other Asianeconomies are on the rebound from the economic

Alaska Gross State Product To Expand

project budget is one-third ofthe producers’ estimate, itdoes not include the NorthSlope conditioning plant orthe 1,100 miles of pipeline inCanada.

In addition to the fiscalterms yet to be worked outbetween the state and theprevailing applicant to en-

courage pipeline construc-tion, provisions in the federalenergy bill may be requiredto make the project a reality.Those provisions include co-ordinated and expedited per-mit reviews, tax savings andaccelerated depreciation ofthe pipeline, tax credits onthe North Slope plant and afederal loan guarantee of upto 80 percent of the project’sdebt.

MidAmerican has an 80.1

percent interest in the inde-pendent gas consortium,known officially as MEHCAlaska Gas TransmissionCompany. Pacific StarEnergy, of which 12 of the 13Alaska regional Native cor-porations are partners, holdsoptions to take up to 10 per-cent interest while CookInlet Region has a 9.9 percentshare in the venture. PacificStar is headed by fomer Arcoexecutive Ken Thompson.

MidAmerican and oil ma-jors BP and ConocoPhillipsrecently held informal talksto discuss their two applica-tions for the gas pipeline.

“We’ve had meetings withthem,” said Kirk Morgan,project manager for MEHCAlaska Gas TransmissionCompany. “Only onepipeline will get built. We arelooking to collaborate ratherthan compete.”

GAS PIPELINE ...(Continued from page 4)

(Continued to page 6)


Guest Opinion

Dale R. Lindsey

Alaska has nearly four percent of the nation’s commercial timber volume, butaccounts for less than one percent of theharvest.

Insects, decay and disease have trans-formed much of our timberland into tin-der land, a spark away from widespreaddisaster and devastation such as theMillers Reach fire near Big Lake in 1996.

We’ve been losing our forest resourcesrather than using them.

A group of private sector Alaskans ispursuing a venture that will help to reverse the trend — one that will con-vert the liability of over maturity, wild-fire danger and insect infestation in ourforests into an asset benefiting Alaskans.

The project involves harvesting tim-ber primarily from state land in theSusitna and Tanana basins and trans-porting it by rail, highway and barge toSeward for processing into laminatedveneer lumber for structural and archi-tectural use. Finished products will beexported to the Far East and substitutedfor lumber currently imported into Alaska.

Laminated veneer lumber can be manufactured from mixed species, in-cluding birch, spruce, aspen and cotton-wood. Low-quality wood from theharvest areas will be used to fuel a powerplant supporting the factory in Seward.

Such a venture will help to revitalizethe state’s ailing timber industry whilecreating a long-term value-added industryfrom an abundant renewable resource.

It will generate about 400 long-termjobs in logging, transportation and manufacturing in areas of high unem-ployment, as well as many constructionjobs. It will reduce wildfire risk and pro-vide recreation and transportation opportunities. And it will improvewildlife habitat.

But it also will require significant investment – an estimated $60 million inthe manufacturing facility alone. At leastone global timber company has ex-pressed serious interest.

The market for laminated veneer lum-ber in the Far East is growing. Seward iscloser to Pacific Rim markets than otherWest Coast ports. And the prevalence of

white birch in the Susitna and Tananaarea offers a competitive advantage overother sources in terms of quality.

There’s also a catch: any potential in-vestor must be assured of a reliablesource of timber for at least the next 25years in order to amortize the investment.

That means the state must adopt aproactive policy of forest management

that includes responsible use of our pub-lic forest resources and demonstrates awillingness to work with the private sec-tor to attract investment capital.

This venture promotes Gov. FrankMurkowski’s vision that Alaska’s eco-nomic future depends on our ability toresponsibly develop our natural resources.

It’s consistent with the sustained yieldprinciple outlined in Alaska’sConstitution. It’s also consistent withour belief that environmental steward-ship and job opportunities can coexist,ensuring a healthy environment and arobust economy for the next generationof Alaskans.

But to transform its potential into newprosperity, it will take many Alaskansspeaking up for balanced forest management

that provides for multiple beneficial uses.“Don’t-cut-anything” policies haven’t

worked elsewhere, and they aren’tworking here. We must not be misled bythe rhetoric of those who tell us thatharvesting means deforestation … thatcutting trees inevitably destroys habitatand ruins the environment.

Responsible management and loggingpractices will speed the regeneration ofAlaska’s forests. Timber volumes haveincreased and forests are healthier inplaces around the world where regulatedlogging is conducted.

The laminated veneer lumber projectis on the leading edge of timber productstechnology and will require less than aquarter of the sustainable yields in theharvest areas while providing significanteconomic, social, environmental andrecreational benefits.

Will Alaska’s forest resources be anasset or a liability — timberland or tin-der land — fuel for our economy and future growth, or fuel for devastatingwildfires and insect infestation?

With state policies promoting reason-able and responsible use of our timber,Alaskans once again will have a choice.The time to diversify our economic baseand take control of our destiny is here.

“ Wil l Al a sk a’s f o re st

re s o u rce s b e a n a sse t o r

a l ia b il i t y — t i m b e r l a n d

o r t i n d e r l a n d — f u e l f o r

o u r e co n o m y a n d f u t u re

g ro w t h , o r f u e l f o r

d e va st a t i ng wil d f ire s

a n d i n se c t i n f e st a t i o n ? ”

TIMBER OR TINDER?

crisis of 1997-98 and the SARS epidemic.This demand is serving to boost prices.

Many of our major natural resourceindustries would not be as large withoutthese sales to overseas markets. Thereare a number of examples that highlightthe importance of exports: the only nat-ural gas to leave Alaska has been theLNG deliveries to Japan; the only coalto leave Alaska has been the shipmentsto Korea; virtually one hundred percentof the fertilizers manufactured at theAgrium plant on the Kenai Peninsula areexported to foreign markets and an esti-mated fifty percent of Alaska’s annualseafood production finds its way to cus-tomers abroad. These examples demon-strate how important internationalmarkets are to sustaining our industries.

ALASKA EXPORTS...(Continued from page 5)


Governor Angus KingGuest Opinion

AN OUTSIDE PERSPECTIVE OF ALASKA

Editor’s Note: Below is an edited version of formerMaine Governor Angus King’s opening speech at therecent Alaska 20/20 Conference.

An Outside perspective can be useful;I don’t want to be presumptuous, but Iam going to make some observationsbased upon your process in chartingAlaska’s future.

The first is this is a place with enor-mous assets. You have minerals, timberand scenic beauty. And you havetremendous human assets as well. Youhave the wonderful diversity of theNative populations, which enrich andadd to the tapestry of life that a lot ofstates don’t have.

The next thing that jumped out at mewas a glaring weakness — the lack of diversity in your economy. One out ofevery three jobs in Alaska is dependentupon federal spending. Wow, that’sstunning. And I believe if you add statespending, it’s one out of every two jobsdependent upon government spendingin one way or another. That’s a thin reedupon which to rest the future of youreconomy. Of course, the other leg ofyour economy is oil.

I’m probably treading into some sen-sitive territory here, but if you thinkyou’re going to be able to base the future of Alaska for the next 30 to 50years on oil and Ted Stevens, you’rewrong.

Oil is trending downward and TedStevens is leaving the AppropriationsCommittee chairmanship. Those figuresin the report that show per capita federalinvestment at twice the national level arenot sustainable, particularly in a time offederal budget deficits.

It’s very dangerous to have a lack ofdiversity in an economy. Ask Oregon,California and the Carolinas.

So the lesson, it seems to me, is you

should really think hard about how todiversify your economy.

You’ve got to find a niche. I thinkyour niche is Alaska itself. You’ve got aplace here that is different than anyother. It’s one of the richest in resourcesand scenery. That gives you a lot towork with.

Now, here are some modest suggestions.

• Natural resources: Continue explo-ration and development with limits, be-cause if your niche is your place, youdon’t want to screw that up. You canhave the toughest environmental stan-dards in the country and as long as yourprocess is fair and predictable, every-body can do business there. That wasmy goal in Maine. A company came tous and said we want to build a brandnew $800 million facility. We did a fullpermitting of that facility from theground up in 87 days. You can protectyour environment but make sure yourprocess works.

• Tourism: I think you’ve got moretourism potential than you have realizedso far. If you’re getting a million peopleup here, given what you have, you couldhave more. People say, well, tourismjobs aren’t so good, but if you stretchthe season, these jobs aren’t bad, andthey provide entry level positions for alot of people.

• Nongeographic businesses: We’vehad tremendous success in Maine intelecommunication-based businesseswhere geography doesn’t matter. Wenow have somewhere in the neighbor-hood of 30,000 to 50,000 jobs involvedin doing back-office financial transac-tions, telephone work, telecommunica-tions, and insurance. I don’t know whatyour telecommunications infrastructureis, but insist that your phone company isproviding good bandwidth; then youcan do business anywhere.

• Talent: Talent is the future of theAmerican economy. Geography is nolonger a barrier. One of the hottest citiesin the country in terms of technology isAustin, Texas. They have created a

“scene” there — an open, exciting, vibrant society where talented peoplewant to live.

• Education: I believe in the next 50years the story is going to be that the educated get richer and the uneducatedget poorer. There are going to be jobs in10 years we haven’t heard of, we haven’tthought of, but if you prepare the kidswith a good education, they’ll be well-positioned.

The other piece of education I consider important is research and development. All the innovation comesfrom research and development. It’s along-term investment.

I’m going to digress on what I call theentitlement mentality. When I was onone of my motorcycle tours, we stoppedat a little general store in northernMaine. The lady behind the counter sawme coming. When I walked through thedoor, the first thing she said, “ha, the taxman.” But here’s the punch line. On myway out she said, “where are you goingfrom here?” I said, “well, we’re headedsouth.” She said, “good, I hope you havea bumpy ride, maybe you’ll fix theroad.”

Do you see the irony there folks? Shewanted the road fixed but she didn’twant to pay the taxes. Everybody wantspublic services. Everybody thinks thegovernment can fix everything. Well,we’ll have to raise taxes to pay for it all.Oh, no, I want my taxes cut.

Now, here’s where I’m really going toget in trouble. I’m in the national capitalof the entitlement mentality. You’re theonly state in the union that not onlydoesn’t pay taxes but gets a check. Yougot free government and a check; that’sunbelievable. I don’t think you have anyconception of how wonderful andunique your situation is compared withthe rest of the country.

All the other states would kill for a$27 billion fund to take care of some oftheir needs.

If, in the situation of relative affluencethat you’re in now in terms of oil

“If you think you’re

going to be able to base the

future of Alaska for the next

30 to 50 years on oil and

Ted Stevens, you’re wrong.”

(Continued to page 9)


The recent U.S. SupremeCourt’s split decision on theRed Dog mine air permit is amajor blow to the State’s airpermitting authority, accord-ing to Alaska’s attorney gen-eral and the court’s dissentingopinion.

“We anticipated a split de-cision, but we are obviouslydisappointed that the fifthvote on the court did notswing our way,” said AlaskaAttorney General GreggRenkes. “This close decisiondeals a blow to the authoritydelegated to states byCongress in the Clean AirAct.”

In a 5-4 decision, theCourt in January ruledagainst the AlaskaDepartment of Environ-mental Conservation in theRed Dog Mine case. The ma-jority opinion holds theClean Air Act provides theEnvironmental ProtectionAgency with the authority todisapprove a state agency’sdiscretionary choice of the“best available control tech-nology” for permits subjectto the Clean Air Act.

“Alaska sought and gainedprimary responsibility for theair permitting program toprovide a predictable and sta-ble regulatory environment,”said Ernesta Ballard,

Commissioner ADEC.“This case and its outcomehave the potential to signifi-cantly disrupt that environ-ment.”

In the dissenting opinion,Justice Kennedy argued themajority erred “by failing tohold that EPA, based on

nothing more than its sub-stantive disagreement withthe State’s discretionary judg-ment, exceeded its powers insetting aside Alaska’s [pollu-tion control technology] determination.”

In their view, the decisionrepresents “a great step back-ward in Congress’ design togrant states a significant stakein developing and enforcingnational environmental ob-jectives and relegates states to

the role of mere provinces orpolitical corporations, in-stead of coequal sovereignsentitled to the same dignityand respect,” Kennedywrote. As the dissent noted,

state agencies should be“trusted to do their part” inthe common fight againstpollution, and any distrust byEPA of state agencies is in-consistent with the Act’s clearmandate that States bear theprimary role in controllingpollution.

“The dissenting justicesrecognized the important factthat states are more respon-sive to local conditions, andcan better strike the balance

between preserving environ-mental quality and encourag-ing resource development,”said Renkes.

The dispute between theEPA and ADEC arose fouryears ago when TeckCominco Alaska, Inc., opera-tor of the Red Dog Mine inNorthwest Alaska, applied tothe state for a new dieselpower generator permit. Inlocations where national airquality standards have beenattained or are unclassifiable,the Clean Air Act requiresstates with EPA approved airpollution programs to deter-mine what is the best avail-able pollution controltechnology that should beapplied to a facility.

After prolonged negotia-tions regarding the appropri-ate technology, the EPA andADEC reached impasse, withthe EPA ordering ADEC tonot issue the permit.Believing that EPA exceededits authority in vetoing thestate permit, ADEC issued itanyway, which elevated thedispute to the federal courts.The state argued the CleanAir Act gives states with approved programs broaddiscretion to make decisions.

COURT RULING IS

BLOW TO STATE’S

AIR PERMITTING

AUTHORITYThe Red Dog Mine dispute arose four years ago when TeckCominco Alaska applied to the State for a new diesel power generator permit. The mine is thelargest producer of zinc in the world.

“Alaska sought and gained primary responsibility for the air permitting program to provide a pre-dictable and stable regulatoryenvironment. This case and itsoutcome have the potential tosignificantly disrupt that environment.”

— Commissioner Ernesta Ballard


Seven environmentalgroups have sued the U.S.Department of the Interiorover its recent decision toopen the 8.8 million-acrenorthwest section of NPR-Ato oil exploration. Thegroups may seek an injunc-tion to block a June lease sale.

Exploration efforts are currently underway in thenortheast section of the oilreserve, where an earlier decision was also challengedby environmentalists.

BLM conducted a thor-ough environmental reviewleading up to its decision toopen the northwest area. Inits decision, BLM put 1.57million acres off-limits forten years pending furtherstudies. The BLM plan forthe area includes measures topreserve habitat and protectthe environment. Permanentsurface structures are prohib-ited along coastal areas, deep-water lakes and rivers.

The BLM plan designatesspecial study areas of more

than a half million acres eachfor the Pacific black brandtand caribou. It also reserveshabitat for the study of eidersand sets restrictions to mini-mize loss of foraging habitatfor raptors around theColville River Special StudyArea.

However, some environ-mentalists would like to seepermanent protection undera Wilderness designation ofsome coastal areas of the re-serve. These areas also holdthe highest potential formajor oil and gas discoveries.

Geologists believe the 23million acre reserve may con-tain 6 to 13 billion barrels ofoil, similar to estimates for

the Arctic National WildlifeRefuge several hundred milesto the east. Because of intensepressure from environmen-talists, all of the refuge re-mains closed to drilling, eventhough its coastal plain —eight percent of the unit —was originally set aside byCongress in 1980 for poten-tial oil and gas explorationand development.

Interior Secretary GaleNorton said that oil and gasdevelopment from the NorthSlope is essential in stemmingthe nation’s reliance on for-eign oil and to stabilize energy prices.

“This plan will help pro-duce energy in an environ-

mentally responsible mannerwith the best available tech-nology, while protecting theimportant biological, subsis-tence and cultural valuesfound in this area,” Nortonsaid.

The reserve was set aside inthe 1920s for energy develop-ment. The Clinton adminis-tration had opened up theeastern areas of the reserve,but under strict measures toprotect the environment.

Noting that the State ofAlaska has significant inter-ests in seeing oil explorationand development move for-ward, Governor FrankMurkowski said the statemay intervene in the lawsuit.

PETROLEUM

RESERVE

DECISION

ATTRACTS

LAWSUIT

revenues, the PermanentFund and federal resources,you cut research and develop-ment and education, you’re nuts.

I’ll leave you with a quote

from Charles Darwin andWayne Gretzky.

When we hear Darwin, wethink survival of the fittest. I wastalking to a friend three or fouryears ago and he said, “no,Angus, that’s not right, that’s notwhat Darwin said. If you goback and actually look, he defined the fittest as those indi-viduals, organisms and groupsmost adaptable to change. That’s

who survives.” And that’s thechallenge facing Alaska — to bemost adaptable to change. Notto resist it, but to embrace it.

Finally, Gretzky, the greatesthockey player in the history ofthe National Hockey League.Somebody once asked him howhe scored so many goals, he’s notas big or as fast as all these otherguys, and yet he had enormoussuccess.

Gretzky gave this answer:“It’s easy, I skate to where thepuck is going to be, everybodyelse skates to where it is.” Sothat’s my challenge and advice toyou: think about where the puckis going to be. Not next week ornext month, but five, ten, fifteenor twenty years from now inAlaska, and that’s the direction in which you shouldskate.

Maine GovernorAngus King...(Continued from page 7)

Source: Alaska Oil & Gas Reporter


A Message From The PresidentJohn Shively

For those of you hoping for some cogent themein my column, wait until May. Several items andissues have crossed my mind that I consider worthwriting about, so I have decided to allow myselfthe luxury of rambling.

Tadd – I would like to commend Tadd, our ex-ecutive director, for being chosen to participate inthe Conference of Alaskans whose purpose was toconsider solutions for our state’s fiscal woes. Hisparticipation brings honor both to himself andRDC. It is also a well-deserved recognition of theeffort Tadd puts into the issue of encouraging ourelected leaders to address the fiscal problems fac-ing Alaska. The picture ofTadd on the front page of theAnchorage Daily News issuitable for framing. Havinga picture on the front page ofany paper for somethingpositive is an event worthcelebrating in its own right.

The Conference ofAlaskans – I was very im-pressed with the conference.Thanks to the efforts of 55hard working Alaskans, allof us citizens who care aboutgovernment had our attention focused on thestate’s fiscal situation, as we followed the extensivenews coverage of the event. The conferees vigor-ously debated some very complicated and difficultissues. Governor Murkowski should be com-mended for calling the conference, but the partic-ipants need to be commended for the manner inwhich they addressed the issues.

I’m sure each of us individually might havewritten the final recommendations of the confer-ence a little differently, but the report of the con-vention provides a basis for the legislature and thegovernor to move forward. It is incumbent on allof us to continue to communicate our desire tohave our elected officials address the fiscal situa-tion this year.

Alaska Public Offices Commission (APOC) –For anyone who thinks the bureaucracy is undercontrol, a reading of the proposed new regulationsfor how employers of lobbyists will have to reporttheir own activities may disabuse those optimisticsouls of their beliefs. It would seem that under theproposals any business that employs a lobbyistmust report the “compensation, travel expenses

and per diem, and related expenses (whatever re-lated expenses are) of any of their employees whotalk to their lobbyist. As I read this APOC wantsto make anyone who talks to a lobbyist into a lob-byist. Go figure. I thought they claimed they arealready understaffed. Their proposal will result ina mountain of new paperwork.

In addition, the proposed regulations wouldmake testifying before a legislative committee alobbying activity. I am astounded that one of thebasic constitutional rights upon which our coun-try was founded may now become a reportablelobbying activity.

A number of organizationsand businesses, includingRDC, have objected to theoverreaching nature of theseproposals. I hope thatAPOC will listen.

U. S. Fish and WildlifeService – I was intrigued by alittle item in the newspaper acouple of weeks ago. TheU.S. Fish and WildlifeService announced a contractwith an organization repre-senting ten Alaska Native

tribes from the upper Yukon area. The contract isdesigned to allow the tribal organization to helpmanage refuge lands, apparently a first for theagency nationwide. The contract was for a yearand funded at $59,000.

Opposition to this seemingly meager, but per-haps groundbreaking, contract comes from pre-dictable sources - an organization of federalemployees and an Outside environmental groupheadquartered in Albuquerque, New Mexico.Their fear is my hope – that local people will begiven a more active role in the management ofsome of the conservation units in the state.

I know that when ANILCA passed, many in theNative community hoped that the establishmentof the large conservation units in the rural areaswould result in some economic opportunities forpeople living in rural Alaska villages. That dreamhas not been realized. Perhaps this contract can beviewed as a very small step toward improving theeconomic conditions in the rural areas of our state.The federal government needs to take many moresuch steps - sooner rather than later.

REFLECTIONS ON SEVERAL

ISSUES FACING ALASKANS

“ I am astounded thatone of the basic constitutional rights upon which our countrywas founded may now become a reportable lobbying activity.”


Public CommentsFavor AlpineAlternative A

RDC members attendedpublic hearings in Anchorageand Fairbanks last month totestify in favor of developingfuture satellite oil fields onthe western North Slope.

ConocoPhillips Alaska isproposing to develop two oiland gas accumulations in theColville River Delta east ofNPR-A and three accumula-tions within the petroleumreserve. The projects maygenerate nearly $600 millionin tax revenues to the stateand federal government, cre-ate hundreds of new jobs andresult in increased economicactivity in the Arctic regionand the state.

In testimony before BLM,RDC Executive DirectorTadd Owens said, “thesebenefits are crucial during anage of massive state and fed-eral budget deficits.”

Owens noted the projectwould pose little disturbanceto caribou and other wildlifeand that habitat conservationand wildlife protection meas-ures would significantly re-duce environmental impacts.

Pogo Receives Wetlands Permit

The Pogo gold venturenear Delta Junction clearedanother major regulatoryhurdle when the U.S. ArmyCorps of Engineers inJanuary granted a major fed-eral wetlands permit for theproject.

The world-class gold de-posit being explored and pur-sued by Teck-Pogo has nowreceived nearly all permitsneeded to move forward. The

federal permit allows Teck-Pogo to start filling wetlandsscattered throughout theproject area for camp facili-ties, a mill, tailings impound-ment, an airstrip and a50-mile access road. Thosewetlands, 303 acres, are notconsidered highly productivefor fish or wildlife. The per-mit will require 114 acres tobe restored and another 52acres will be created as part ofthe restoration.

Once the mine is operating,it will process up to 500,000ounces of gold a year.Reserves are valued at $2.3billion. Pogo is expected tocost $250 million to developand it will employ up to 300people year-round. Pro-duction is expected in late2005.

King Cove Road Gets Green Light

The U.S. Army Corps ofEngineers gave a green lightlast month to construction ofa road and hovercraft con-nection between King Coveand Cold Bay. The decision isgood news for residents ofKing Cove who want betteraccess to Cold Bay for med-ical, economic and social reasons.

The project consists of 17.2miles of one lane road, twohovercraft terminals and ahovercraft. The gravel roadwould include 90 turnoutsfor passing.

The new transportationlink could be open byOctober 2005, barring a legalchallenge from environmen-talists.

Eleven people have died inplane crashes trying to getinto Cold Bay from KingCove. In most cases, resi-dents were seeking medicalattention in Anchorage orelsewhere, but first had toreach the all-weather airportin Cold Bay.

Access has been a majorissue for King Cove residentssince the late 1970s when thefederal government desig-nated much of the landaround the village asWilderness. No project facili-ties or operations will bewithin the Izembek NationalWildlife Refuge or theIzembek Wilderness area.

Kensington Mine Plan Amended

Coeur Alaska, Inc. is pro-posing to amend its approved1998 Plan of Operations forthe Kensington Gold Projectlocated 45 miles north ofJuneau. The new projectwould involve undergroundmining at a rate of 2,000 tonsper day for at least 10 years.The mine concentrate wouldbe shipped offsite for pro-cessing.

Proposed operationalchanges are intended to pro-vide more reliable transporta-tion and access to the mine byreplacing helicopters with aboat, and improving trans-portation safety and concen-trate shipping schedules. Thechanges also reduce land dis-turbance and conflicts withcommercial fishing activity,significantly reduce the com-plexity of long-term reclama-tion needs, and make the

operating plan more efficient.Coeur anticipates receiving

final permits for the $75 mil-lion project this spring, allowing start-up in the second half of 2004.

Governor NominatesMadsen to NPFMC

Governor Murkowski hasnominated RDC TreasurerStephanie Madsen for athree-year term on the NorthPacific Fisheries ManagementCouncil (NPFMC). He alsonominated Douglas Hoedelof Anchorage and Kodiak tothe NPFMC.

Madsen is cur-rently serving ina first term at theNPFMC andwas recentlyelected chair byboard members.

“Stephanie has a provenability to work with all sec-tors of the seafood industryand has broad-based supportto continue the job,”Murkowski said.

The nominations now go tothe Secretary of Commerce whowill make the appointments inJune.

RDC Electronic Policy

RDC encourages its mem-bers to sign up for electronicupdates. We use several meas-ures to ensure our electronicmail is safe and virus free.Additionally, RDC tries tominimize the use of attach-ments, utilizing links to itswebsite instead. If RDC doeschoose to send an attach-ment, it will be in pdf format.RDC is a Macintosh environ-ment and virtually all virusesare targeted for Windows operating systems.

RDC NEWS DIGEST

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