Legislature(2007 - 2008)BARNES 124

04/30/2007 01:00 PM RESOURCES


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HJR 17 KENSINGTON MINE APPEAL/9TH CIR. TELECONFERENCED
Moved CSHJR 17(RES) Out of Committee
+ SB 109 OIL & GAS CONSERVATION COMMISSION TELECONFERENCED
Moved Out of Committee
*+ HB 94 MARINE PARKS ADDITIONS/HUNTING ALLOWED TELECONFERENCED
Scheduled But Not Heard
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
               HOUSE RESOURCES STANDING COMMITTEE                                                                             
                         April 30, 2007                                                                                         
                           1:04 p.m.                                                                                            
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Carl Gatto, Co-Chair                                                                                             
Representative Craig Johnson, Co-Chair                                                                                          
Representative Vic Kohring                                                                                                      
Representative Bob Roses                                                                                                        
Representative Paul Seaton                                                                                                      
Representative Peggy Wilson                                                                                                     
Representative Bryce Edgmon                                                                                                     
Representative David Guttenberg                                                                                                 
Representative Scott Kawasaki                                                                                                   
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE JOINT RESOLUTION NO. 17                                                                                                   
Encouraging Coeur  Alaska, Inc., to  pursue all legal  options to                                                               
resolve  the issues  presented in  Southeast Alaska  Conservation                                                               
Council v.  United States  Army Corps of  Engineers on  behalf of                                                               
itself and  consistent with  the state's  efforts to  enforce its                                                               
rights as a  state over its resources; and  requesting the United                                                               
States  Court of  Appeals  for the  Ninth  Circuit to  adjudicate                                                               
those matters that come before the  court in a fair and impartial                                                               
manner so that the state's  natural resources can be developed in                                                               
a timely and lawful manner.                                                                                                     
                                                                                                                                
     - MOVED CSHJR 17(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
SENATE BILL NO. 109                                                                                                             
"An Act  relating to  the regulation  and permitting  of drilling                                                               
and  other operations  by  the Alaska  Oil  and Gas  Conservation                                                               
Commission,  to civil  penalties assessed  by the  commission, to                                                               
reconsideration  and appeal  of decisions  and the  allocation of                                                               
costs in  investigations and hearings before  the commission, and                                                               
to  information  filed  with  and fees  of  the  commission;  and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
     - MOVED CSSB 109(RES) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 94                                                                                                               
"An  Act relating  to fishing,  hunting, and  trapping in  marine                                                               
park units  of the  Alaska state park  system, amending  the area                                                               
within  designated marine  park units  of the  Alaska state  park                                                               
system, and  adding marine  park units to  the Alaska  state park                                                               
system."                                                                                                                        
                                                                                                                                
     - SCHEDULED BUT NOT HEARD                                                                                                  
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HJR 17                                                                                                                  
SHORT TITLE: KENSINGTON MINE APPEAL/9TH CIR.                                                                                    
SPONSOR(S): REPRESENTATIVE(S) JOHNSON                                                                                           
                                                                                                                                
04/05/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/05/07       (H)       RES, JUD                                                                                               
04/30/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: SB 109                                                                                                                  
SHORT TITLE: OIL & GAS CONSERVATION COMMISSION                                                                                  
SPONSOR(S): RULES BY REQUEST OF LEG BUDGET & AUDIT BY REQUEST                                                                   
                                                                                                                                
03/07/07       (S)       READ THE FIRST TIME - REFERRALS                                                                        
03/07/07       (S)       RES                                                                                                    
03/12/07       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
03/12/07       (S)       Scheduled But Not Heard                                                                                
04/13/07       (S)       RES AT 3:30 PM BUTROVICH 205                                                                           
04/13/07       (S)       Moved CSSB 109(RES) Out of Committee                                                                   
04/13/07       (S)       MINUTE(RES)                                                                                            
04/16/07       (S)       RES RPT CS  4DP 1NR   SAME TITLE                                                                       
04/16/07       (S)       DP: HUGGINS, STEDMAN, STEVENS, GREEN                                                                   
04/16/07       (S)       NR: WIELECHOWSKI                                                                                       
04/18/07       (S)       TRANSMITTED TO (H)                                                                                     
04/18/07       (S)       VERSION: CSSB 109(RES)                                                                                 
04/19/07       (H)       READ THE FIRST TIME - REFERRALS                                                                        
04/19/07       (H)       RES                                                                                                    
04/30/07       (H)       RES AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
TREVOR FULTON, Staff                                                                                                            
to Representative Craig Johnson                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HJR 17 on behalf of the sponsor,                                                               
Representative Johnson.                                                                                                         
                                                                                                                                
CAMERON LEONARD, Senior Assistant Attorney General                                                                              
Natural Resources Section                                                                                                       
Civil Division (Fairbanks)                                                                                                      
Department of Law (DOL)                                                                                                         
Fairbanks, Alaska                                                                                                               
POSITION STATEMENT:   During discussion  of HJR 17,  responded to                                                             
questions and offered comments.                                                                                                 
                                                                                                                                
STEVE BORELL, Executive Director                                                                                                
Alaska Miners Association (AMA)                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HJR 17.                                                                          
                                                                                                                                
ED FOGELS, Acting Director                                                                                                      
Office of Project Management & Permitting                                                                                       
Department of Natural Resources (DNR)                                                                                           
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During discussion  of HJR 17,  responded to                                                             
questions and offered comments.                                                                                                 
                                                                                                                                
ROB CADMUS, Water Quality and Mining Organizer                                                                                  
Southeast Alaska Conservation Council (SEACC)                                                                                   
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   During discussion  of HJR 17,  responded to                                                             
questions and offered comments.                                                                                                 
                                                                                                                                
CHERYL SUTTON, Staff                                                                                                            
to Representative Ralph Samuels                                                                                                 
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:   Presented SB 109 on behalf  of the sponsor,                                                             
Legislative  Budget &  Audit Committee,  of which  Representative                                                               
Samuels is the chair.                                                                                                           
                                                                                                                                
JOHN NORMAN, Chair                                                                                                              
Alaska Oil and Gas Conservation Commission (AOGCC)                                                                              
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During discussion  of  SB  109,  answered                                                             
questions  on  behalf of  the  Alaska  Oil and  Gas  Conservation                                                               
Commission.                                                                                                                     
                                                                                                                                
KARA MORIARTY, External Affairs Manager                                                                                         
Alaska Oil and Gas Association (AOGA)                                                                                           
Anchorage, Alaska                                                                                                               
POSITION  STATEMENT:    During testimony,  offered  comments  and                                                             
support for SB 109.                                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR  CARL   GATTO  called   the  House   Resources  Standing                                                             
Committee  meeting  to  order at  1:04:26  PM.    Representatives                                                             
Gatto, Johnson,  Seaton, Roses, Edgmon, Kawasaki  were present at                                                               
the  call  to  order.     Representatives  Kohring,  Wilson,  and                                                               
Guttenberg arrived as the meeting was in progress.                                                                              
                                                                                                                                
HJR 17-KENSINGTON MINE APPEAL/9TH CIR.                                                                                        
                                                                                                                              
1:04:30 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO announced  that the first order  of business would                                                               
be  HOUSE  JOINT RESOLUTION  NO.  17,  Encouraging Coeur  Alaska,                                                               
Inc.,  to  pursue  all  legal   options  to  resolve  the  issues                                                               
presented  in Southeast  Alaska  Conservation  Council v.  United                                                               
States  Army  Corps   of  Engineers  on  behalf   of  itself  and                                                               
consistent with  the state's efforts  to enforce its rights  as a                                                               
state over its resources; and  requesting the United States Court                                                               
of  Appeals for  the Ninth  Circuit to  adjudicate those  matters                                                               
that come  before the  court in  a fair  and impartial  manner so                                                               
that the state's  natural resources can be developed  in a timely                                                               
and lawful manner.                                                                                                              
                                                                                                                                
1:05:08 PM                                                                                                                    
                                                                                                                                
TREVOR  FULTON  Staff  to Representative  Craig  Johnson,  Alaska                                                               
State  Legislature,   paraphrased  from  the   following  sponsor                                                               
statement [original punctuation provided]:                                                                                      
                                                                                                                                
     Mr. Chairman,  members of the committee,  thank you for                                                                    
     allowing me  this opportunity to  speak on  House Joint                                                                    
     Resolution 17.                                                                                                             
                                                                                                                                
     HJR 17  addresses yet another  chapter in the  long and                                                                    
     familiar story  of Alaska having  to defend  its rights                                                                    
     to  allow development  of  its  own natural  resources.                                                                    
     Regardless of the type of  resource - oil, timber, fish                                                                    
     and seafood, minerals - large  scale projects in Alaska                                                                    
     have always  been used as  a chess  piece of sorts  - a                                                                    
     litmus test, if  you will - in a  larger battle between                                                                    
     the interests of outside entities  and the interests of                                                                    
     the State  and its people.   The Kensington Mine  is no                                                                    
     different.                                                                                                                 
                                                                                                                                
     On  March 16th,  the US  9th Circuit  Court of  Appeals                                                                    
     announced a  forthcoming decision that  would undermine                                                                    
     a  two decades  long  permitting process  and halt  the                                                                    
     already ongoing construction of  the Coeur Alaska owned                                                                    
     and operated Kensington Mine.                                                                                              
                                                                                                                                
     Kensington Mine has  already proven to be  a huge boost                                                                    
     for  the   economy  of  the   area  and   has  garnered                                                                    
     widespread   support   among    the   businesses,   the                                                                    
     communities,  and  the   people  of  Southeast  Alaska.                                                                    
     Halting construction  of this valuable  economic engine                                                                    
     has  immediate consequences  for Southeast  Alaska, and                                                                    
     long term  consequences for  the State  of Alaska  as a                                                                    
     whole.                                                                                                                     
                                                                                                                                
     The 9th Circuit Court of  Appeals' decision hinges on a                                                                    
     tailings disposal  plan that was approved  twice by the                                                                    
     US Army  Corps of  Engineers, found  to be  in complete                                                                    
     compliance with the Clean Water  Act, and upheld by the                                                                    
     Federal District Court of Alaska.                                                                                          
                                                                                                                                
     This  practical  and   environmentally  sound  tailings                                                                    
     disposal plan came about as  the end result of over 900                                                                    
     studies  conducted by  and nearly  60 permits  approved                                                                    
     for  the  Kensington Mine  Project  over  the last  ten                                                                    
     years.                                                                                                                     
                                                                                                                                
     There is  pending federal legislation that  would split                                                                    
     the 9th  Circuit Court  of Appeals  - for  good reason.                                                                    
     The 9th Circuit is by far  the largest of the 13 courts                                                                    
     of appeals.   It presides over nine  western states and                                                                    
     the  territories  of  Guam  and  the  Northern  Mariana                                                                    
     Islands and encompasses over 20%  of the US population.                                                                    
     The   9th    Circuit   has   a   proven    history   of                                                                    
     antidevelopment  decision  making   when  it  comes  to                                                                    
     Alaska and its right to develop its natural resources.                                                                     
                                                                                                                                
     Until the  day when the  court is split  and litigation                                                                    
     involving Alaska's  resources can  be adjudicated  in a                                                                    
     fairer  and  more  impartial  manner,  developers  like                                                                    
     Coeur Alaska  will have to continue  to seek litigation                                                                    
     at the Supreme  Court level.  In the  ongoing effort to                                                                    
     assert  our  state's rights  to  our  resources, it  is                                                                    
     important  that  Alaska  encourage  and  support  these                                                                    
     pursuits.                                                                                                                  
                                                                                                                                
     For these reasons and the  reasons expressed in HJR 17,                                                                    
     we must  resolve our  objection to  impartial treatment                                                                    
     by  the  9th Circuit  Court  and  our encouragement  of                                                                    
     Coeur Alaska  to pursue all  legal options  to continue                                                                    
     the construction  and operation of the  Kensington Mine                                                                    
     Project.                                                                                                                   
                                                                                                                                
     Mr.  Chairman, respected  members of  the committee,  I                                                                    
     thank you for  listening and I urge you  to support HJR                                                                    
     17.                                                                                                                        
                                                                                                                                
1:08:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked for an explanation of the tailings disposal                                                                
plan, and he asked how it is different from any other SE Alaska                                                                 
mine plan.                                                                                                                      
                                                                                                                                
CAMERON LEONARD, Senior Assistant Attorney General, Natural                                                                     
Resources Section, Civil Division (Fairbanks), Department of Law                                                                
(DOL), said that he is available for questions.                                                                                 
                                                                                                                                
1:10:35 PM                                                                                                                    
                                                                                                                                
STEVE BORELL, Executive Director, Alaska Miners Association                                                                     
(AMA), stated that the AMA letter of support is in the members'                                                                 
packets.                                                                                                                        
                                                                                                                                
MR. BORELL read from the following testimony:                                                                                   
                                                                                                                                
     Thank you, Mr. Chairman and Members of the Committee,                                                                      
                                                                                                                                
     My name  is Steve Borell.   I am Executive  Director of                                                                    
     the Alaska  Miners Association and  I am  testifying on                                                                    
     behalf of the Association.                                                                                                 
                                                                                                                                
     I  believe you  have  our letter  of  support for  this                                                                    
     Resolution in  your packets so  I will not  repeat that                                                                    
     but I do wish to make a few additional comments.                                                                           
                                                                                                                                
     Coeur  Alaska has  been up  front and  straight forward                                                                    
     with the  community and  with the  environmental groups                                                                    
     that  opposed  the  project for  more  than  20  years.                                                                    
     Coeur made  numerous concessions  and changes  in their                                                                    
     plans to address  the issues that were  raised.  United                                                                    
     Fishermen of Alaska originally  opposed the project but                                                                    
     based on changes  to the design, they  no longer oppose                                                                    
     it.                                                                                                                        
                                                                                                                                
     At  one point  Coeur  committed to  use  a higher  cost                                                                    
     alternative where  they would  ship a  bulk concentrate                                                                    
     from the mine, rather than  produce a gold bar on site.                                                                    
     This was in response  to complaints SEACC regarding use                                                                    
     of certain  chemicals on site.   In effect,  this means                                                                    
     that  some of  the "value  added processing"  [original                                                                    
     punctuation provided] that could  be done in Alaska was                                                                    
     sent elsewhere,  and with it Alaska  lost approximately                                                                    
     24 high quality local jobs.                                                                                                
                                                                                                                                
     But the real issue at this  time is the decision of the                                                                    
     9th Circuit  Court of  Appeals.  This  Court is  out of                                                                    
     touch.  A  higher percent of decisions  from this court                                                                    
     have been  overturned by U.S.  Supreme Court  than from                                                                    
     any other  court of appeal.   I apologize that  I could                                                                    
     not  find the  exact  quote and  reference,  but if  my                                                                    
     memory serves  me, of  the past 72  cases from  the 9th                                                                    
     Circuit that  were appealed to the  U.S. Supreme Court,                                                                    
     65 of those cases were  overturned.  That gives the 9th                                                                    
     Circuit a 90% failure rate.                                                                                                
                                                                                                                                
     We agree  with Federal  District Court  Judge Singleton                                                                    
     when  he ruled  that  EPA and  the  Corps of  Engineers                                                                    
     properly applied the law.                                                                                                  
                                                                                                                                
     We urge  that this  Resolution be passed  and forwarded                                                                    
     to the listed parties at the earliest possible date.                                                                       
                                                                                                                                
1:13:43 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO asked  for  examples that  show  Coeur Alaska  is                                                               
willing to make changes.                                                                                                        
                                                                                                                                
MR. BORELL  reported that the  initial mine project was  going to                                                               
be along  the Lynn Canal, and  all the tailings were  going to be                                                               
deposited in  the 700  foot deep  waters of  the canal,  as there                                                               
will not  be any biological  effect.  However, the  fishermen are                                                               
concerned that their  nets could entangle on the pipes.   He said                                                               
that the  final design, currently  under appeal, is  proposing to                                                               
use a  small deep  lake of minimal  fisheries value  near Berners                                                               
Bay.                                                                                                                            
                                                                                                                                
MR. BORELL  indicated that Coeur  Alaska is proposing to  dam one                                                               
end of  the valley, thereby  doubling the  size of the  lake, and                                                               
using it  for tailings  disposal.  He  expressed his  belief that                                                               
the resulting  shallow lake will  be a  better fish habitat.   He                                                               
stated that the  initial plan for dry stack  tailings disposal is                                                               
the  same  process  used  at   nearby  Greens  Creek  Mine.    He                                                               
established that the  dry stack method will impact  a larger area                                                               
and will  require quarrying rock for  a cap on the  tailings.  He                                                               
offered  his belief  that  lake use  is the  best  solution.   He                                                               
reported that  the facilities can't  be seen from Lynn  Canal and                                                               
it will  allow mine workers to  live at home with  their families                                                               
and access the mine by boat, instead of helicopter.                                                                             
                                                                                                                                
1:19:22 PM                                                                                                                    
                                                                                                                                
ED  FOGELS,  Acting  Director, Office  of  Project  Management  &                                                               
Permitting, Department of Natural  Resources (DNR), said that DNR                                                               
and the State  of Alaska believe that this is  a good project and                                                               
that all  the permits are  legal.   He expressed his  belief that                                                               
the  United States  Forest  Service  (USFS) Environmental  Impact                                                               
Statement   (EIS)   reflects   that   this   project   could   be                                                               
environmentally responsible.                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  asked if  he agreed with  the Record  of Decision                                                               
from the District Court.                                                                                                        
                                                                                                                                
MR. FOGELS agreed.                                                                                                              
                                                                                                                                
1:20:43 PM                                                                                                                    
                                                                                                                                
ROB CADMUS, Water Quality and  Mining Organizer, Southeast Alaska                                                               
Conservation Council (SEACC), read from the following testimony:                                                                
                                                                                                                                
     Good afternoon, my name is Rob  Cadmus.  I am the Water                                                                    
     Quality and  Mining Organizer for SEACC,  the Southeast                                                                    
     Alaska Conservation  Council.  SEACC is  a coalition of                                                                    
     17  volunteer citizen  conservation groups  in thirteen                                                                    
     communities across Southeast  Alaska, from Ketchikan to                                                                    
     Yakutat.   Our mission is to  protect the extraordinary                                                                    
     resources  of  Southeast  Alaska while  ensuring  their                                                                    
     wise and sustainable use.                                                                                                  
                                                                                                                                
     I want to thank you  all for the opportunity to testify                                                                    
     on  House Joint  Resolution  17.   There are  important                                                                    
     issues  at stake  with the  Kensington Mine-  issues of                                                                    
     jobs and the responsible use  of our resources- and the                                                                    
     more broadly and fully they  are understood, the better                                                                    
     we, Alaskans, can make wise decisions regarding them.                                                                      
                                                                                                                                
     SEACC  has  actively  worked  on  the  Kensington  Mine                                                                    
     Project  since its  exploration  phase  2 decades  ago.                                                                    
     Since  then,  we have  watched  it  go through  several                                                                    
     different  designs and  two full  permitting processes.                                                                    
     In  1998, Coeur  received all  necessary permits  for a                                                                    
     project that  ultimately the  corporation chose  not to                                                                    
     pursue.     Instead,   it  redesigned   the  mine   and                                                                    
     reinitiated  the  review   and  permitting  process  to                                                                    
     arrive  at  the  current  mine  proposal.    SEACC  has                                                                    
     participated at every step of this process.                                                                                
                                                                                                                                
     SEACC  warned Coeur  Alaska and  the agencies  that its                                                                    
     tailings  disposal design  was illegal  4 ½  years ago.                                                                    
     Coeur's  plan  to  dump chemically  processed  tailings                                                                    
     into a  lake is  a clear violation  of the  Clean Water                                                                    
     Act, they put our Clean Water  at risk, and could set a                                                                    
     dangerous precedent  of using our lakes  and streams as                                                                    
     mine waste dumps.                                                                                                          
                                                                                                                                
     Unfortunately,  Coeur  chose  to ignore  our  warnings.                                                                    
     Instead,   it  gambled   by  betting   that  it   could                                                                    
     successfully roll back a generation  of settled law and                                                                    
     that no citizen would step  forward to defend our right                                                                    
     to clean water.                                                                                                            
                                                                                                                                
     Coeur lost its gamble.  Its  job now is to redesign the                                                                    
     Kensington Mine  so that it's legal  and fully protects                                                                    
     the waters and resources of Berners Bay.                                                                                   
                                                                                                                                
     Alternatives  to dumping  tailings into  a lake  exist.                                                                    
     In 1998,  Coeur had all  the necessary permits  for Dry                                                                    
     Stack  Tailings  facility.    It  is  the  same  method                                                                    
     tailings disposal  the Greens Creek Mine  and Pogo Mine                                                                    
     uses.  It  is the method that SEACC has  stated that it                                                                    
     prefers for the Kensington.                                                                                                
                                                                                                                                
     Our state's  constitution requires that  development of                                                                    
     our natural resources benefits all  Alaskans.  There is                                                                    
     little  value  to  this  state, and  no  value  to  the                                                                    
     country in  the long run, if  we do not do  it right at                                                                    
     the Kensington.   Cutting corners today  will result in                                                                    
     larger problems in the future.                                                                                             
                                                                                                                                
     This case  will impact  the way we  care for  our clean                                                                    
     water  throughout the  nation, and  because the  United                                                                    
     States is often  a model for other  countries, it could                                                                    
     influence how  mines in  other parts  of the  world are                                                                    
     managed.                                                                                                                   
                                                                                                                                
     It is  important to  remember the  legacy of  mining is                                                                    
     not  a  good  one.    Too  many  people  and  too  many                                                                    
     communities  have been  devastated by  the toxicity  of                                                                    
     mine wastes to take lightly  what Coeur proposed to do.                                                                    
     As we have  said since the early days of  this mine, it                                                                    
     is important to do it right.                                                                                               
                                                                                                                                
1:25:36 PM                                                                                                                    
                                                                                                                                
MR.  CADMUS  encouraged  committee  members to  use  House  Joint                                                               
Resolution   17  to   meet   the   constitutional  mandate   that                                                               
development  is  done  for  the  benefit of  all  Alaskans.    He                                                               
advocated that  Coeur Alaska redesign its  tailings disposal plan                                                               
so that it is legal and will fully protect Alaska's clean water.                                                                
                                                                                                                                
REPRESENTATIVE  ROSES asked  if SEACC  supports the  original dry                                                               
stack tailings proposal.                                                                                                        
                                                                                                                                
MR. CADMUS  reported that since  1991, SEACC has  maintained that                                                               
dry stack  is the preferred  alternative for disposal,  and SEACC                                                               
has never opposed this method.                                                                                                  
                                                                                                                                
1:26:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES asked to clarify  if SEACC or its 17 members                                                               
has encouraged Coeur Alaska to  take a different approach for the                                                               
tailings disposal.                                                                                                              
                                                                                                                                
MR. CADMUS  clarified that  SEACC does not  oppose the  dry stack                                                               
tailings method, though they have  offered suggestions to improve                                                               
the method.                                                                                                                     
                                                                                                                                
REPRESENTATIVE ROSES asked if SEACC  has made any recommendations                                                               
regarding the Greens Creek Mine.                                                                                                
                                                                                                                                
MR. CADMUS stated  that SEACC has not filed  any lawsuits against                                                               
the Greens  Creek Mine.   He noted  that SEACC had  concerns with                                                               
the acid mine  drainage problems and that SEACC  did get involved                                                               
with the tailing expansion permits.                                                                                             
                                                                                                                                
1:28:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked what Mr. Cadmus's job entailed.                                                                            
                                                                                                                                
MR. CADMUS  explained that his  background is with  water quality                                                               
and  mining issues,  but he  spends a  lot of  time working  with                                                               
people in the community.                                                                                                        
                                                                                                                                
CO-CHAIR GATTO asked what his background was.                                                                                   
                                                                                                                                
MR.  CADMUS responded  that he  has  a Masters  in Water  Quality                                                               
Restoration.                                                                                                                    
                                                                                                                                
1:29:36 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON asked  if SEACC is confident of  the appeal with                                                               
the 9th Circuit Court of Appeals.                                                                                               
                                                                                                                                
MR. CADMUS  replied that  SEACC is confident  that the  appeal is                                                               
right.                                                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON  asked why SEACC  is opposing the case  going to                                                               
the U.S. Supreme Court.                                                                                                         
                                                                                                                                
MR. CADMUS reminded Co-Chair Johnson  that it is the Coeur Alaska                                                               
decision for  appeal to the U.S.  Supreme Court.  He  pointed out                                                               
that SEACC wants to ensure the tailings facility meets the law.                                                                 
                                                                                                                                
CO-CHAIR JOHNSON repeated his question.                                                                                         
                                                                                                                                
MR.  CADMUS reiterated  that  it is  Coeur  Alaska's decision  to                                                               
appeal.  He offered his belief  that the best option is for Coeur                                                               
Alaska to redesign the tailings facility  so that it is legal and                                                               
protects clean water.                                                                                                           
                                                                                                                                
1:31:10 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO asked  what is  meant by  the statement  that "it                                                               
doesn't  benefit the  state  or the  country if  we  don't do  it                                                               
right."                                                                                                                         
                                                                                                                                
MR. CADMUS observed  that no mine has been allowed  to use a lake                                                               
as  a  tailings  disposal  system  in 30  years,  and  that  this                                                               
decision  could set  a precedent.    He offered  his belief  that                                                               
cutting corners  at the  Kensington Mine will  not do  the nation                                                               
any good.                                                                                                                       
                                                                                                                                
1:31:47 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked for a clarification of "right."                                                                            
                                                                                                                                
MR.  CADMUS agreed  that  this  is a  difficult  definition.   He                                                               
pointed  out  that SEACC  does  not  oppose  the 1997  dry  stack                                                               
tailings  proposal.   He declared  that if  a mine  is legal,  is                                                               
meeting the Clean  Water Act, and is protecting  the resources to                                                               
the maximum extent possible, then that is considered "right."                                                                   
                                                                                                                                
CO-CHAIR GATTO asked  for an explanation of why  the current plan                                                               
will not meet the Clean Water Act.                                                                                              
                                                                                                                                
MR. CADMUS  explained that since  the passage of the  Clean Water                                                               
Act in 1972, mines have not  been allowed to dump untreated waste                                                               
water  or tailings  into lakes.    He directed  attention to  the                                                               
Environmental  Protection Agency  standards passed  in 1982  that                                                               
address mines exactly like Kensington.   These specific standards                                                               
are set  because alternatives  exist to  using lakes  as tailings                                                               
disposal systems.   He suggested  that dry stacks tailings  is an                                                               
alternative.                                                                                                                    
                                                                                                                                
1:33:32 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO asked  if the  U.S.  District Court  is aware  of                                                               
this.                                                                                                                           
                                                                                                                                
MR. CADMUS  stated that he  is unsure, but  that is why  SEACC is                                                               
appealing the decision.                                                                                                         
                                                                                                                                
1:33:51 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  if  the  U.S.  Army  Corps  of                                                               
Engineers (USACE)  responded to  SEACC after the  initial inquiry                                                               
into the legality of dumping tailings into Lower Slate Lake.                                                                    
                                                                                                                                
MR.  CADMUS  responded   that  he  will  need   to  research  the                                                               
correspondence.  He  offered that the initial  SEACC statement of                                                               
concern for  legality of the  tailings disposal into  Lower Slate                                                               
Lake was made during the USFS scoping process.                                                                                  
                                                                                                                                
1:34:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  if  both the  Greens Creek  and                                                               
Pogo Mine tailings  disposal processes adhere to  the Clean Water                                                               
Act.                                                                                                                            
                                                                                                                                
MR. CADMUS  explained that the  dry stack process at  both Greens                                                               
Creek and Pogo mines takes  the tailings, squeezes the water from                                                               
the tailings, recycles the water for  use in the mine, and stacks                                                               
the tailings  in a  land fill.   The proposed  Kensington process                                                               
will dump the tailings into  Lower Slate Lake, allow the sediment                                                               
to  settle, and  treat the  lake water  before it  can leave  the                                                               
lake.    He  mentioned  that   the  dry  stack  process  is  more                                                               
expensive, and he  offered his belief that the extra  cost is one                                                               
of  the reasons  that  Kensington changed  the tailings  disposal                                                               
plan.                                                                                                                           
                                                                                                                                
1:36:07 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  why  the 9th  Circuit Court  of                                                               
Appeals is reversing the Record of Decision.                                                                                    
                                                                                                                                
MR. CADMUS recounted that the  court specifically told SEACC that                                                               
the USACE violated the Clean Water  Act by issuing Coeur Alaska a                                                               
permit to dump the mine tailings into the lake.                                                                                 
                                                                                                                                
REPRESENTATIVE  GUTTENBERG posed  that  the  U.S. District  Court                                                               
does not believe this is a violation.                                                                                           
                                                                                                                                
MR. CADMUS agreed.                                                                                                              
                                                                                                                                
1:37:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  offered  her  belief  that  testimony  in                                                               
another  committee  indicated  that Coeur  Alaska  revised  their                                                               
disposal  plan because  of initial  opposition to  the dry  stack                                                               
tailings by environmentalists.                                                                                                  
                                                                                                                                
MR. CADMUS responded  that there was never  any active opposition                                                               
to the 1997  proposal for dry stack tailings.   He explained that                                                               
SEACC did not actively support  the mine project as they believed                                                               
that there  was not a  complete USFS analysis for  the cumulative                                                               
effects of the mine, the  proposed Juneau Access Road, a proposed                                                               
hydroelectric  facility  near  the  Lace  River,  and  the  ferry                                                               
traffic to the mine.                                                                                                            
                                                                                                                                
1:39:08 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON expressed her  belief that Lower Slate Lake                                                               
has almost no use and will  be self contained, and asked if SEACC                                                               
is most concerned for the precedent.                                                                                            
                                                                                                                                
MR. CADMUS  allowed that a major  concern for SEACC is  that this                                                               
decision will set  a precedent.  He noted that  40 percent of the                                                               
stream reaches from  headwaters in the Western  U.S. are polluted                                                               
by mine waste, and he  declared that mines dumping their tailings                                                               
into a  lake does  put clean water  at risk.   He added  that the                                                               
Kensington  plans  for  restoration   of  Lower  Slate  Lake  are                                                               
inconclusive.                                                                                                                   
                                                                                                                                
1:40:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON said  that  some people  will support  the                                                               
plan and others will oppose it.                                                                                                 
                                                                                                                                
MR. CADMUS agreed.                                                                                                              
                                                                                                                                
REPRESENTATIVE WILSON asked for an  update on mine problems since                                                               
the mining quality standards have been improved.                                                                                
                                                                                                                                
MR. CADMUS  identified a recent  report by James Kuipers  and Ann                                                               
Maest,  "Comparison  of Predicted  and  Actual  Water Quality  at                                                               
Hardrock Mines:  the reliability of predictions  in Environmental                                                               
Impact Statements", that analyzes  every permitted mine since the                                                               
Environmental  Impact Statement  (EIS) process  was initiated  25                                                               
years  ago.   This study  determines  that while  100 percent  of                                                               
these  mines predicted  attainment  of  water quality  standards,                                                               
only 24  percent actually achieved  these standards.   He offered                                                               
to send the executive summary of this report to the committee.                                                                  
                                                                                                                                
1:42:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON asked if SEACC is doing anything.                                                                         
                                                                                                                                
MR. CADMUS replied that this history  is the reason for the SEACC                                                               
involvement with the Kensington process.                                                                                        
                                                                                                                                
REPRESENTATIVE WILSON  asked if  SEACC can  be involved  in other                                                               
locations.                                                                                                                      
                                                                                                                                
MR. CADMUS explained that SEACC  is a small organization based in                                                               
Southeast Alaska, but that many  agencies are working to clean up                                                               
these mining problems.                                                                                                          
                                                                                                                                
1:43:19 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked the depth of Lower Slate Lake.                                                                             
                                                                                                                                
MR. CADMUS replied that he is not sure.                                                                                         
                                                                                                                                
CO-CHAIR GATTO posed  that if Lower Slate Lake were  merely a dry                                                               
depression,  would the  disposal process  then be  considered dry                                                               
stacking.                                                                                                                       
                                                                                                                                
MR.  CADMUS responded  that  without  a pond  this  would be  dry                                                               
stacking.    He allowed  that  a  dam  around  a dry  basin  that                                                               
contains slurry is not a violation of the Clean Water Act.                                                                      
                                                                                                                                
1:44:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked to clarify that dry stacking is not slurry.                                                                
                                                                                                                                
MR. CADMUS  replied that the  dry stack process removes  about 70                                                               
percent of the water, and stacks the remaining concentrate.                                                                     
                                                                                                                                
CO-CHAIR GATTO asked what is done with the contaminated water.                                                                  
                                                                                                                                
MR.  CADMUS stated  that the  water  is recycled  for other  mine                                                               
uses,  or it  is treated  to meet  water quality  standards.   He                                                               
confirmed  that the  water released  from Lower  Slate Lake  will                                                               
have to be treated, as it will not meet water quality standards.                                                                
                                                                                                                                
1:45:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO  asked  how  to  treat  water  with  heavy  metal                                                               
contamination.                                                                                                                  
                                                                                                                                
MR. CADMUS explained that there  are methods, such as filters and                                                               
reverse osmosis, though he is  unsure which method Kensington has                                                               
proposed.                                                                                                                       
                                                                                                                                
CO-CHAIR  GATTO  commented that  reverse  osmosis  would be  very                                                               
expensive.                                                                                                                      
                                                                                                                                
MR. CADMUS  agreed, and stated that  he is not familiar  with the                                                               
processes.                                                                                                                      
                                                                                                                                
1:45:38 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO   asked  if  water  treatment   will  make  water                                                               
acceptable for fish.                                                                                                            
                                                                                                                                
MR. CADMUS offered his belief that the technology does exist.                                                                   
                                                                                                                                
CO-CHAIR  GATTO  posed  that  when the  Record  of  Decision  was                                                               
pronounced, SEACC endorsed pursuit of an objection.                                                                             
                                                                                                                                
MR. CADMUS asked to clarify which Record of Decision.                                                                           
                                                                                                                                
CO-CHAIR GATTO  replied that  he meant the  decision of  the U.S.                                                               
District Court.                                                                                                                 
                                                                                                                                
MR.  CADMUS  recounted that  SEACC  filed  an appeal  immediately                                                               
after the ruling.                                                                                                               
                                                                                                                                
CO-CHAIR GATTO commented that this is a legal right.                                                                            
                                                                                                                                
MR. CADMUS agreed.                                                                                                              
                                                                                                                                
CO-CHAIR GATTO asked if SEACC objects to a Coeur Alaska appeal.                                                                 
                                                                                                                                
MR. CADMUS agreed that Coeur Alaska does have that legal right.                                                                 
                                                                                                                                
CO-CHAIR GATTO asked if Mr. Cadmus supports that right.                                                                         
                                                                                                                                
MR. CADMUS emphasized that SEACC supports that right.                                                                           
                                                                                                                                
1:46:47 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  EDGMON  lamented  that this  discussion  had  not                                                               
transpired earlier  in the  session because  of the  magnitude of                                                               
the underlying issues.   He mentioned that the  Pebble Mine issue                                                               
in Southwest Alaska is approaching  and there is concern with the                                                               
precedent  that will  be set.    He allowed  that water  quality,                                                               
fisheries, economic benefits,  and jobs are all  issues that need                                                               
to be discussed.   He asked what attempts at  mediation SEACC has                                                               
been involved in.                                                                                                               
                                                                                                                                
MR. CADMUS emphasized that SEACC is  willing to be engaged in the                                                               
planning for  an alternative to  this tailings  disposal process.                                                               
He reported  that SEACC has  twice negotiated with  Coeur Alaska,                                                               
and neither  time was a settlement  reached.  He noted  that this                                                               
appeal will  delay the project and  that will affect the  jobs at                                                               
Kensington.  He pointed out that  more than half the current work                                                               
force is  temporary, construction related,  and that a  dry stack                                                               
tailings disposal  process will create  more permanent jobs.   He                                                               
directed  attention to  the delay  of jobs  caused by  Kensington                                                               
when the 1997 plan was altered.                                                                                                 
                                                                                                                                
1:51:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG  commented that the definition  for the                                                               
disposal of  tailings is key to  the Court's decision.   He asked                                                               
what  the U.S.  District Court  used as  a definition  that makes                                                               
this  decision   inconsistent  with  other   decisions  regarding                                                               
"waters of the United States."                                                                                                  
                                                                                                                                
MR. CADMUS agreed that a definition  to the "waters of the United                                                               
States" is central to this case.   He briefed that the Kensington                                                               
is the first  mine since passage of the Clean  Water Act that has                                                               
been permitted  to dump its  tailings into "waters of  the United                                                               
States."   He stated that  there is  no dispute that  Lower Slate                                                               
Lake is  "waters of the  United States."   He explained  that the                                                               
USACE granted a permit for fill  material to be dumped into Lower                                                               
Slate  Lake; however,  these tailings  are not  fill material  as                                                               
defined by the EPA in 1982.                                                                                                     
                                                                                                                                
1:53:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES asked for an  example of a mine in Southeast                                                               
Alaska that is "doing it right."                                                                                                
                                                                                                                                
MR.  CADMUS said  that SEACC  has  not opposed  the Greens  Creek                                                               
Mine, although  he would  not say they  are "doing  it completely                                                               
right" as they have had an occurrence of acid mine drainage.                                                                    
                                                                                                                                
1:55:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON asked which mines SEACC has opposed.                                                                           
                                                                                                                                
MR. CADMUS clarified  that SEACC is filing a  lawsuit against the                                                               
Kensington Mine  tailings storage facility, not  against the mine                                                               
itself.                                                                                                                         
                                                                                                                                
1:55:39 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  GATTO expressed  his  belief that  the  Pebble Mine  is                                                               
applying for  a permit  to fill  Frying Pan  Lake, and  he opined                                                               
that the  similarity to Kensington would  trigger opposition from                                                               
SEACC.                                                                                                                          
                                                                                                                                
MR. CADMUS  stated that SEACC is  opposed to using lakes  as mine                                                               
waste dumps.                                                                                                                    
                                                                                                                                
1:56:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON asked if SEACC  will take a position on the                                                               
Pebble Mine, as it is not in Southeast Alaska.                                                                                  
                                                                                                                                
MR.  CADMUS clarified  that SEACC  is actively  dealing with  the                                                               
issues  in  Southeast  Alaska,  but SEACC  is  still  opposed  to                                                               
dumping tailings into a lake.                                                                                                   
                                                                                                                                
REPRESENTATIVE WILSON  opined that  SEACC will oppose  the Pebble                                                               
Mine.                                                                                                                           
                                                                                                                                
MR. CADMUS  expressed that the  Pebble Mine project is  still far                                                               
in the future,  and he reiterated that SEACC  is actively working                                                               
primarily in Southeast Alaska.                                                                                                  
                                                                                                                                
1:57:21 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO closed public testimony.                                                                                         
                                                                                                                                
REPRESENTATIVE  SEATON asked  Mr. Fogels  if he  agrees that  the                                                               
Clean Water  Act does not  allow discharge of mine  tailings into                                                               
fresh water bodies.                                                                                                             
                                                                                                                                
MR. FOGELS  replied that he  does not  believe that a  permit for                                                               
tailings discharge into  fresh water has been  approved since the                                                               
Clean Water Act was enacted.   He offered his belief that permits                                                               
have been issued  to discharge into wetlands and  other waters of                                                               
the United States.                                                                                                              
                                                                                                                                
1:58:50 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  asked if the  Greens Creek and  Pogo Mines                                                               
use the dry stack tailings disposal.                                                                                            
                                                                                                                                
MR. FOGELS responded that they do.                                                                                              
                                                                                                                                
REPRESENTATIVE  SEATON asked  what  the Fort  Knox Mine  disposal                                                               
method is.                                                                                                                      
                                                                                                                                
MR.  FOGELS  responded  that  Fort   Knox  uses  a  wet  tailings                                                               
discharge process.   He explained that Fort Knox has  built a dam                                                               
across the Fish Creek Valley and  they pipe the wet tailings into                                                               
the valley.                                                                                                                     
                                                                                                                                
REPRESENTATIVE  SEATON  assessed  that  this is  a  wet  tailings                                                               
disposal in an artificially constructed lake.                                                                                   
                                                                                                                                
MR. FOGELS allowed that there  were wetlands, streams, and waters                                                               
of the United States, but not a lake.                                                                                           
                                                                                                                                
2:00:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO posed that the  subsequent pumping of flood waters                                                               
after Hurricane Katrina is a violation of the Clean Water Act.                                                                  
                                                                                                                                
MR. FOGELS replied  that he did not know the  answer, and offered                                                               
his belief  that there was  probably not an  Environmental Impact                                                               
Statement done prior to the pumping.                                                                                            
                                                                                                                                
CO-CHAIR GATTO  opined that it  is possible to get  exceptions to                                                               
the rule,  and asked if there  is any issue in  Alaska that would                                                               
allow violation of the Clean Water Act.                                                                                         
                                                                                                                                
MR.  FOGELS  allowed  that  he  did not  know  if  there  is  any                                                               
emergency provision to the Clean Water Act.                                                                                     
                                                                                                                                
2:02:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG related  a  story of  flooding in  his                                                               
district and allowed  that the rescue response may  not have been                                                               
legal.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  ROSES asked  why  the USACE  and  the EPA  issued                                                               
permits if this is a violation of the Clean Water Act.                                                                          
                                                                                                                                
MR.  FOGELS stated  that  all the  agencies  determined that  the                                                               
proposal  is in  compliance with  the Clean  Water Act,  and that                                                               
they do  not agree  with either  the SEACC  challenge or  the 9th                                                               
Circuit Court of Appeals ruling.                                                                                                
                                                                                                                                
2:04:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES  asked  if  there is  a  provision  in  the                                                               
permitting  process outlining  that  filtration  of the  tailings                                                               
water will be prior to entering or prior to exiting the lake.                                                                   
                                                                                                                                
MR.  FOGELS  reported that  the  analysis  shows that  the  water                                                               
quality  in  the   lake  at  closure  will   meet  water  quality                                                               
standards.   He declared that all  the water that is  leaving the                                                               
lake  system over  the dam  will meet  clean water  standards and                                                               
that Coeur  Alaska is  proposing a water  treatment plant  at the                                                               
dam to  ensure compliance with  the Clean  Water Act.   He stated                                                               
that the analysis indicates that  the post-mining lake will be as                                                               
or more productive than prior to mining.                                                                                        
                                                                                                                                
2:05:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES asked  if there is concern  that the dumping                                                               
into  the lake  will leach  into  the water  sources beneath  the                                                               
lake.                                                                                                                           
                                                                                                                                
MR. FOGELS  said that is  not a concern.   He explained  that the                                                               
models  show  that  the  flotation agents  in  the  tailings  are                                                               
relatively  benign  and will  biodegrade,  and  that no  polluted                                                               
water  will  leave the  lake.    He  stated  that there  is  some                                                               
question  about toxicity  of the  tailings, but  Coeur Alaska  is                                                               
proposing to place an organic cap  on the surface of the tailings                                                               
if nothing will grow  on the tailings.  He noted  that all of the                                                               
agencies  feel  that  this  is   adequate  to  ensure  successful                                                               
reclamation of the lake.                                                                                                        
                                                                                                                                
2:07:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  posed that  the floating chemicals  and the                                                               
toxicity will biodegrade with exposure to the sun and the air.                                                                  
                                                                                                                                
MR. FOGELS  expressed his  belief that this  is the  process, and                                                               
that it was  shown to all the agencies that  the water quality in                                                               
the lake will meet clean water standards at closure.                                                                            
                                                                                                                                
REPRESENTATIVE ROSES  asked what  the outcome  is for  the liquid                                                               
separated during the dry stack process and re-used in the mine.                                                                 
                                                                                                                                
MR. FOGELS replied that he does  not know the answer.  He offered                                                               
his  belief that  the  water is  pumped back  into  the mill  and                                                               
reused, but  that the environmental  impact of that water  is not                                                               
evaluated.                                                                                                                      
                                                                                                                                
2:08:36 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES asked  why  Coeur Alaska  changed the  plan                                                               
from a  dry stacking process,  and why  they now have  to reapply                                                               
and resubmit for these permits.                                                                                                 
                                                                                                                                
MR. FOGELS  expressed his belief  that wet disposal is  much more                                                               
economical, and  that dry stack  tailings disposal will  make the                                                               
project uneconomical.                                                                                                           
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  asked  to what  judicial  level  this                                                               
decision has been upheld before, and  if the 9th Circuit Court of                                                               
Appeals has ever heard and ruled on this type of case.                                                                          
                                                                                                                                
MR.  FOGELS expressed  his belief  that  this is  the first  time                                                               
either  the U.S.  District  Court  or the  9th  Circuit Court  of                                                               
Appeals has heard this type of case.                                                                                            
                                                                                                                                
2:12:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON opined that he  supports the portion of the                                                               
resolution  telling  Coeur Alaska  to  pursue  all legal  options                                                               
however, he  does not  agree with the  sections stating  that the                                                               
9th Circuit Court  of Appeals does not know what  they are doing.                                                               
He said that  he would like to hear a  final determination of the                                                               
status of federal law in this situation.                                                                                        
                                                                                                                                
REPRESENTATIVE EDGMON affirmed that  these issues are complicated                                                               
and it  is valuable to bring  all the parties to  the discussion.                                                               
He asked where a representative for Coeur Alaska is.                                                                            
                                                                                                                                
CO-CHAIR  JOHNSON  responded that  Coeur  Alaska  is in  a  legal                                                               
proceeding and opted not to  testify, so they asked Steve Borell,                                                               
Alaska Miners Association, to represent the mining interests.                                                                   
                                                                                                                                
2:14:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE EDGMON asked what the  future of the Alaska mining                                                               
industry is, if the U.S. Supreme Court upholds this decision.                                                                   
                                                                                                                                
MR. FOGELS  pointed out that every  mine permit in Alaska  is for                                                               
tailings  disposal  in wetlands,  so  the  9th Circuit  Court  of                                                               
Appeals  final  decision  has   far  reaching  ramifications  for                                                               
Alaska.                                                                                                                         
                                                                                                                                
REPRESENTATIVE EDGMON commented that  the court decision has both                                                               
federal and state significance.                                                                                                 
                                                                                                                                
MR. FOGELS agreed.                                                                                                              
                                                                                                                                
2:16:00 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON  observed that  the committee  is concerned                                                               
about  the  environment  and  wants  to  ensure  that  Alaska  is                                                               
preserved  in  every  possible  way,  but this  is  not  an  easy                                                               
decision.  She said:                                                                                                            
                                                                                                                                
     "We all  care about the state  and we all want  to make                                                                    
     sure that things are safe,  but we also have to realize                                                                    
     that  we do  have resources  in the  state, that's  the                                                                    
     only thing  we have, only  thing we have in  the state,                                                                    
     and the people  of the state have made  it very obvious                                                                    
     that  they don't  want  to have  to  pay for  anything.                                                                    
     They would rather that the  state uses the resources so                                                                    
     that they  could live  here and not  have to  fork over                                                                    
     lots  of  money,  so  it's a  very  hard  decision  for                                                                    
     legislators."                                                                                                              
                                                                                                                                
2:17:22 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON moved to adopt Amendment 1, as follows:                                                                   
                                                                                                                                
     Page 2, line 9, delete the word "and"                                                                                      
     Page 2, delete lines 10-12                                                                                                 
                                                                                                                                
CO-CHAIR JOHNSON  objected.  He  offered his belief  that "having                                                               
64 of 75  cases overturned once they get to  the Supreme Court is                                                               
a  pretty good  statement as  to how  successful they've  been at                                                               
litigating in  these types of  issues."  He expressed  his belief                                                               
that the language in the resolution is "barely strong enough."                                                                  
                                                                                                                                
REPRESENTATIVE GUTTENBERG  pointed out that success  with the 9th                                                               
Circuit  Court  of  Appeals  requires   a  conversation,  not  an                                                               
inflammatory attack.   He emphasized that the State  of Alaska is                                                               
asking the court for permission to develop.                                                                                     
                                                                                                                                
2:19:24 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON declared that this  resolution is not to the 9th                                                               
Circuit Court  of Appeals and  that it would be  inappropriate to                                                               
send the  court a  resolution on  a pending case.   He  said that                                                               
this  resolution  encourages Coeur  Alaska  to  pursue all  legal                                                               
options,  and that  it is  sent to  various members  of the  U.S.                                                               
Congress and the U.S. Supreme Court.                                                                                            
                                                                                                                                
CO-CHAIR GATTO  pointed out  that page 2,  line 25,  mentions the                                                               
Chief Judge  of the 9th Circuit  Court of Appeals as  a recipient                                                               
of the resolution.                                                                                                              
                                                                                                                                
CO-CHAIR  JOHNSON  maintained  that  the Chief  Judge  can  be  a                                                               
recipient because she is the overseeing person of that body.                                                                    
                                                                                                                                
2:20:13 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON emphasized  that he does not want  to remove the                                                               
Chief Judge  as he believes  she needs to  know.  He  stated that                                                               
"quite honestly, I wouldn't have  introduced it if I didn't think                                                               
it was good the way it is."                                                                                                     
                                                                                                                                
REPRESENTATIVE  WILSON agreed  that this  resolution needs  to be                                                               
respectful, and she offered her support of Amendment 1.                                                                         
                                                                                                                                
CO-CHAIR JOHNSON removed his objection.                                                                                         
                                                                                                                                
There being no objection, Amendment 1 was adopted.                                                                              
                                                                                                                                
2:21:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON moved to adopt Amendment 2, as follows:                                                                   
                                                                                                                                
     Page 2, line 17:                                                                                                           
          Delete "; and be it"                                                                                                  
                                                                                                                                
     Page 2, line 17:                                                                                                           
          After "resources" add "."                                                                                             
                                                                                                                                
     Page 2, lines 18-21:                                                                                                       
          Delete all material                                                                                                   
                                                                                                                                
2:22:11 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GUTTENBERG objected and moved to adopt an                                                                        
amendment to Amendment 2, to now include:                                                                                       
                                                                                                                                
     Page 1, lines 4-7:                                                                                                         
          After "resources" delete all material                                                                                 
                                                                                                                                
     Page 1, line 4:                                                                                                            
          After "resources" add "."                                                                                             
                                                                                                                                
2:23:14 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES said that he supports the amendment to                                                                     
Amendment 2.                                                                                                                    
                                                                                                                                
There being no objection, the amendment to Amendment 2 was                                                                      
adopted.                                                                                                                        
                                                                                                                                
REPRESENTATIVE GUTTENBERG removed his objection to Amendment 2.                                                                 
                                                                                                                                
There being no objection, Amendment 2, as amended, was adopted.                                                                 
                                                                                                                                
2:24:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON moved to adopt Amendment 3, as follows:                                                                   
                                                                                                                                
     Page 1, Line 22:                                                                                                           
          After "sent" insert "by electronic transmission"                                                                      
                                                                                                                                
There being no objection, Amendment 3 was adopted.                                                                              
                                                                                                                                
2:25:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON moved to adopt Amendment 4, as follows:                                                                   
                                                                                                                                
     Page 2, line 26 - Page 3, line 22:                                                                                         
        After "Circuit;" delete all material through and                                                                        
          including "Delegation;"                                                                                               
                                                                                                                                
CO-CHAIR  GATTO   asked  if   Representative  Seaton   wants  the                                                               
Honorable  Mary M.  Schroeder to  remain  as a  recipient of  the                                                               
resolution.                                                                                                                     
                                                                                                                                
REPRESENTATIVE SEATON replied that he does.                                                                                     
                                                                                                                                
There being no objection, Amendment 4 was adopted.                                                                              
                                                                                                                                
2:27:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KAWASAKI commented that  the testimony indicates a                                                               
desire to work  toward resolution through mediation.   He offered                                                               
his  belief that  it is  bad advice  for a  resolution to  send a                                                               
message to  Coeur Alaska inviting lawsuits  involving the Supreme                                                               
Court.                                                                                                                          
                                                                                                                                
CO-CHAIR JOHNSON stated that mediation is a legal option.                                                                       
                                                                                                                                
REPRESENTATIVE ROSES asked if Coeur  Alaska should be a recipient                                                               
of the resolution.                                                                                                              
                                                                                                                                
CO-CHAIR  JOHNSON  moved to  adopt  Conceptual  Amendment 5  that                                                               
would include Coeur Alaska to be a recipient of the resolution.                                                                 
                                                                                                                                
There being no objection, Amendment 5 was adopted.                                                                              
                                                                                                                                
2:29:29 PM                                                                                                                    
                                                                                                                                
CO-CHAIR  JOHNSON moved  to report  HJR  17, as  amended, out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal notes.                                                                                                              
                                                                                                                                
REPRESENTATIVE  GUTTENBERG objected.    He  expressed his  belief                                                               
that the  state might not like  the decisions handed down  by the                                                               
9th Circuit Court of Appeals and  the Supreme Court, and that the                                                               
CBJ resolution in the members'  packets is far more acceptable as                                                               
it  allows the  state  to mediate  a solution.    He offered  two                                                               
examples  of the  dialogue process  that settled  the contentious                                                               
issues  for both  the  Pogo Mine  and  the Fort  Knox  Mine.   He                                                               
allowed that an agreeable settlement  is reached far more quickly                                                               
through dialogue than through litigation.                                                                                       
                                                                                                                                
REPRESENTATIVE   SEATON   established   his  belief   that   this                                                               
resolution  is  clarifying  a  request  for  the  solution  to  a                                                               
definition of  federal law.   The resolution  is now  directed to                                                               
the people who are actually working on the Kensington Mine.                                                                     
                                                                                                                                
CO-CHAIR  JOHNSON declared  his desire  to show  support for  the                                                               
Kensington Mine.   He  emphasized that the  9th Circuit  Court of                                                               
Appeals is  overturning the state  and federal process,  and that                                                               
Coeur Alaska should pursue the legal options.                                                                                   
                                                                                                                                
REPRESENTATIVE GUTTENBERG withdrew his objection.                                                                               
                                                                                                                                
2:34:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ROSES objected,  explaining that  as a  mediator,                                                               
the  goal is  for  both parties  to  come to  an  agreement.   He                                                               
declared that  he does  not see a  common ground  for compromise.                                                               
He  removed  his   objection  and  said  that   he  supports  the                                                               
resolution.                                                                                                                     
                                                                                                                                
CO-CHAIR GATTO  announced that there being  no further objection,                                                               
CSHJR 17(RES) was moved out of committee.                                                                                       
                                                                                                                              
SB 109-OIL & GAS CONSERVATION COMMISSION                                                                                      
                                                                                                                              
2:37:02 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  announced that the  next order of  business would                                                               
be  CS FOR  SENATE BILL  NO. 109(RES),  "An Act  relating to  the                                                               
regulation  and permitting  of drilling  and other  operations by                                                               
the  Alaska  Oil  and  Gas   Conservation  Commission,  to  civil                                                               
penalties  assessed by  the  commission,  to reconsideration  and                                                               
appeal   of   decisions   and  the   allocation   of   costs   in                                                               
investigations  and  hearings  before   the  commission,  and  to                                                               
information filed with and fees  of the commission; and providing                                                               
for an effective date."                                                                                                         
                                                                                                                                
2:37:29 PM                                                                                                                    
                                                                                                                                
CHERYL  SUTTON, Staff  to  Representative  Ralph Samuels,  Alaska                                                               
State   Legislature,   explained  that   Representative   Samuels                                                               
introduced SB 109 and the companion  bill, HB 183, at the request                                                               
of the Alaska  Oil and Gas Conservation Commission  (AOGCC).  The                                                               
AOGCC  requested  this  legislation  to update  and  improve  the                                                               
governing  statute,  Title XXXI.    She  stated  that HB  183  is                                                               
exactly the  same as CSSB  109(RES) and this same  version passed                                                               
without objection  from the  House Special  Committee on  Oil and                                                               
Gas.  She deferred to John Norman for any further questions.                                                                    
                                                                                                                                
2:38:33 PM                                                                                                                    
                                                                                                                                
JOHN NORMAN,  Chair, Alaska Oil  and Gas  Conservation Commission                                                               
(AOGCC),  stated that  SB 109  is a  comprehensive update  of the                                                               
Alaska  Oil  and  Gas  Conservation Act,  first  adopted  by  the                                                               
Territorial Legislature in 1955.  He  stated that Section 1 of SB                                                               
109  removes   from  the  Act  outdated   territorial  provisions                                                               
relating to  appeals of  decisions by  the Commission  from other                                                               
agencies.                                                                                                                       
                                                                                                                                
2:41:03 PM                                                                                                                    
                                                                                                                                
MR.  NORMAN  explained that  Section  3  adds public  health  and                                                               
safety to the  AOGCC area of oversight.  This  is consistent with                                                               
what   the  commission   is  already   doing   and  follows   the                                                               
recommendations from the Declaration of  Purpose of the Model Oil                                                               
and Gas Conservation  Act.  He said Section 3  also clarifies the                                                               
AOGCC authority  to regulate natural  gas storage.   He explained                                                               
that South Central  Alaska has seasonal variations  of demand for                                                               
gas and  has a need  to identify  reservoirs and inject  gas into                                                               
the ground to store for peak demand.   He added that all the bill                                                               
provisions have a zero fiscal note,  and that the bill allows the                                                               
law to conform to the industry developments and standards.                                                                      
                                                                                                                                
2:42:53 PM                                                                                                                    
                                                                                                                                
MR. NORMAN  explained that Section  7 proposes to retain  the two                                                               
year  period of  confidentiality only  for exploratory  wells and                                                               
stratigraphic test wells,  not on the development  of routine oil                                                               
and gas well drilling.                                                                                                          
                                                                                                                                
MR. NORMAN  presented that Section  5 modifies that the  coal bed                                                               
methane water testing  program is required only when  a well goes                                                               
into production, not during  exploratory production testing which                                                               
poses no threat to water quality.                                                                                               
                                                                                                                                
There  was  a  brief  discussion  comparing  the  definitions  of                                                               
"assure" and "ensure".                                                                                                          
                                                                                                                                
2:46:28 PM                                                                                                                    
                                                                                                                                
MR. NORMAN  noted that  Section 4  increases the  civil penalties                                                               
assessed by  the commission to be  no more than $100,000  for the                                                               
initial  violation and  no more  than  $10,000 per  day for  each                                                               
subsequent day of violation.   He informed the committee that the                                                               
civil  penalty for  wasting gas  is increasing  to two  times the                                                               
fair market value.                                                                                                              
                                                                                                                                
CO-CHAIR GATTO asked if flaring is considered wasting gas.                                                                      
                                                                                                                                
MR.  NORMAN  responded that  there  is  always some  flaring  for                                                               
safety.                                                                                                                         
                                                                                                                                
2:48:49 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  allowed that there  is no penalty for  flaring to                                                               
protect us, but there is a  difference with flaring to get rid of                                                               
gas.                                                                                                                            
                                                                                                                                
MR.  NORMAN   said  that  this   is  already  addressed   in  the                                                               
legislation and that  it is further monitored  by the commission.                                                               
He pointed out  that there are monthly accounting  reports of gas                                                               
disposition.   He continued, explaining  that Section  12 deletes                                                               
the  $100  fee  for a  permit  to  drill  as  the fees  are  more                                                               
efficiently  collected through  the regulatory  cost charge.   He                                                               
noted that  the bill makes  a number of housekeeping  and wording                                                               
changes and that the AOGCC supports the bill.                                                                                   
                                                                                                                                
CO-CHAIR  GATTO asked  if Mr.  Norman  is a  commissioner of  the                                                               
AOGCC.                                                                                                                          
                                                                                                                                
MR. NORMAN replied that he is the chairman of the commission.                                                                   
                                                                                                                                
2:51:46 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE WILSON asked how it  is ascertained that a company                                                               
is flaring too much.                                                                                                            
                                                                                                                                
MR.  NORMAN explained  that the  commission receives  monthly gas                                                               
disposition reports, and that the  reports must exactly track the                                                               
gas.   He noted that  the commission  also has inspectors  in the                                                               
field, both in Cook Inlet and the North Slope.                                                                                  
                                                                                                                                
CO-CHAIR  GATTO  asked  how  often  there  is  blatant  incorrect                                                               
reporting.                                                                                                                      
                                                                                                                                
MR. NORMAN  stated that  a few  times a  year there  is incorrect                                                               
reporting,  but  that overall  there  is  a  very high  level  of                                                               
compliance.                                                                                                                     
                                                                                                                                
2:54:03 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  WILSON  asked  about  the  cost  of  time  charge                                                               
addressed in Section 11.                                                                                                        
                                                                                                                                
MR.  NORMAN identified  that the  need to  charge arose  during a                                                               
very  lengthy investigation  of  falsification  by an  operator's                                                               
employee.   The investigation required  many hours  of engineers'                                                               
time  so this  will allow  the Commission  to assess  and recover                                                               
these costs from the operator.                                                                                                  
                                                                                                                                
REPRESENTATIVE WILSON asked what the hourly charge will be.                                                                     
                                                                                                                                
MR. NORMAN replied that he did not  have the rate, but it will be                                                               
calculated based  on the staff member  used.  He allowed  that it                                                               
will  be infrequently  used, but  it  is an  enforcement tool  to                                                               
ensure the violator bears the responsibility.                                                                                   
                                                                                                                                
2:56:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  asked to  clarify that  gas flaring  is for                                                               
safety.                                                                                                                         
                                                                                                                                
MR.  NORMAN  explained  that  gas  comes up  with  oil  and  that                                                               
although  safety flaring  can  be for  several  reasons, it  most                                                               
commonly helps  to avoid fires  or explosions caused by  a sudden                                                               
abundance of gas.                                                                                                               
                                                                                                                                
REPRESENTATIVE  ROSES  asked  if  a system  to  deliver  the  gas                                                               
directly to a pipeline eliminates the necessity for the flare.                                                                  
                                                                                                                                
MR. NORMAN replied  that some flare might  be necessary depending                                                               
on how  the gas  is handled.   He explained  that flaring  is not                                                               
allowed to simply burn off the gas.                                                                                             
                                                                                                                                
2:59:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ROSES  posed that  should a pipeline  be available                                                               
for a  company to  put gas  into and they  are still  flaring, is                                                               
this considered a waste of gas by not delivering it.                                                                            
                                                                                                                                
MR.  NORMAN presented  that flaring  for  safety or  for fuel  is                                                               
permissible.  He  reported that the burden is on  the operator to                                                               
demonstrate why they are not putting it into the pipeline.                                                                      
                                                                                                                                
REPRESENTATIVE ROSES asked about re-injection.                                                                                  
                                                                                                                                
MR. NORMAN replied that reinjection is not wasting gas.                                                                         
                                                                                                                                
3:01:15 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO turned the gavel over to CO-CHAIR JOHNSON.                                                                       
                                                                                                                                
REPRESENTATIVE  GUTTENBERG asked  about the  commission sentiment                                                               
for having extended authority to determine gas takeoffs.                                                                        
                                                                                                                                
MR. NORMAN  noted that the  commission is an  independent, quasi-                                                               
judicial  body.   He allowed  that  the commission  does not  set                                                               
offtake rates unless  an operator requests it.   For this legally                                                               
structured  process,  the  commission  receives  an  application,                                                               
publishes  it, and  takes public  testimony.   He  said that  gas                                                               
sales  from Prudhoe  Bay  have  been discussed  for  the past  30                                                               
years.  The  commission has not tried to update  the offtake rate                                                               
of 2.9  billion cubic feet  (bcf) per day.   He allowed  that the                                                               
commission has  done the research and  is ready with a  new rate,                                                               
but they would be short circuiting the legal process.                                                                           
                                                                                                                                
3:05:26 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  GUTTENBERG  allowed   that  the  House  Resources                                                               
Standing Committee is trying to write  a bill to induce a company                                                               
to enter the bidding.                                                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON  asked  if  Section  2,  subparagraph  (B)                                                               
requires that information be filed more quickly.                                                                                
                                                                                                                                
MR. NORMAN  replied that the  request for information in  90 days                                                               
is a realistic amount of time to receive the information.                                                                       
                                                                                                                                
3:08:20 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON asked for  a definition of "completion" and                                                               
asked  for clarification  that Section  2 (B)  will provide  more                                                               
information than is currently required.                                                                                         
                                                                                                                                
MR. NORMAN  defined "completion" as bringing  it into production.                                                               
He informed  that Section 2  identifies in more detail  the types                                                               
of information and  specifies the response period is  30 days for                                                               
reports, and  90 days for logs.   He said that  this section does                                                               
not provide any more information than was received previously.                                                                  
                                                                                                                                
3:10:34 PM                                                                                                                    
                                                                                                                                
CO-CHAIR JOHNSON opened up public testimony.                                                                                    
                                                                                                                                
KARA  MORIARTY,  External Affairs  Manager,  Alaska  Oil and  Gas                                                               
Association, said that the AOGCC  has answered the AOGA questions                                                               
and that AOGA supports the current bill version.                                                                                
                                                                                                                                
CO-CHAIR JOHNSON closed public testimony.                                                                                       
                                                                                                                                
3:12:34 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  asked  if  the  reference  in  Section  4                                                               
applies to the new horizontal drilling technology.                                                                              
                                                                                                                                
MR.  NORMAN  said  that  Section   4  keeps  pace  with  the  new                                                               
technology  including the  ability to  have multiple  completions                                                               
within one well.                                                                                                                
                                                                                                                                
3:13:30 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  moved  to  report CSSB  109(RES)  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
zero fiscal notes.   There being no objection,  CSSB 109(RES) was                                                               
reported out of the House Resources Standing Committee.                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Resources Standing Committee meeting was adjourned at 3:14 p.m.                                                                 

Document Name Date/Time Subjects