ALASKA STATE LEGISLATURE  HOUSE SPECIAL COMMITTEE ON FISHERIES  April 30, 2019 10:09 a.m. MEMBERS PRESENT Representative Louise Stutes, Chair Representative Jonathan Kreiss-Tomkins Representative Geran Tarr Representative Sarah Vance MEMBERS ABSENT  Representative Bryce Edgmon Representative Chuck Kopp Representative Mark Neuman COMMITTEE CALENDAR  PRESENTATION: AN OVERVIEW OF BRITISH COLUMBIA MINING IN SHARED TRANSBOUNDARY WATERSHEDS - HEARD PREVIOUS COMMITTEE ACTION  No previous action to record WITNESS REGISTER JILL WEITZ, Director Salmon Beyond Borders (SBB) Juneau, Alaska POSITION STATEMENT: During the overview of British Columbia mining in shared transboundary watersheds, provided a PowerPoint presentation titled "Alaska - British Columbia Transboundary Watersheds." TIS PETERMAN, Coordinator Southeast Alaska Indigenous Transboundary Commission (SEITC) Wrangell, Alaska POSITION STATEMENT: Testified during the overview of British Columbia mining in shared transboundary watersheds. CHRIS SERGEANT, Research Scientist Flathead Lake Bio Station University of Montana Juneau, Alaska POSITION STATEMENT: During the overview of British Columbia mining in shared transboundary watersheds, provided a PowerPoint presentation titled "Assessing mining impacts on our shared Alaska-British Columbia rivers." DAVID LANDIS, Mayor Ketchikan Gateway Borough Ketchikan, Alaska POSITION STATEMENT: Testified during the overview of British Columbia mining in shared transboundary watersheds. FRANCES LEACH, Executive Director United Fishermen of Alaska (UFA) Juneau, Alaska POSITION STATEMENT: Testified during the overview of British Columbia mining in shared transboundary watersheds. NIKKI SKUCE, Director Northern Confluence Smithers, British Columbia, Canada POSITION STATEMENT: Testified during the overview of British Columbia mining in shared transboundary watersheds. ROBYN ALLAN, Independent Economist Whistler, British Columbia, Canada POSITION STATEMENT: Testified during the overview of British Columbia mining in shared transboundary watersheds. JASON DION, Lead Researcher Canada's Ecofiscal Commission Ottawa, Ontario, Canada POSITION STATEMENT: During the overview of British Columbia mining in shared transboundary watersheds, provided a PowerPoint presentation titled "Financial assurance for mining in British Columbia." ACTION NARRATIVE 10:09:15 AM CHAIR LOUISE STUTES called the House Special Committee on Fisheries meeting to order at 10:09 a.m. Present at the call to order were Representatives Kreiss-Tomkins, Vance, and Stutes. Representative Tarr arrived as the meeting was in progress. ^Presentation: An Overview of British Columbia Mining in Shared Transboundary Watersheds Presentation: An Overview of British Columbia Mining in Shared  Transboundary Watersheds  10:09:57 AM CHAIR STUTES announced that the only order of business would be an overview of British Columbia mining in shared transboundary watersheds provided by a variety of witnesses from Alaska and Canada. CHAIR STUTES stated that this is a very important issue to the future health of Alaska's fisheries. It is an issue that has brought many stakeholders together from both sides of the border to work towards a common goal of holding mining activities in British Columbia (BC) on the rivers shared by Alaska and BC accountable for safe practices. Today's presenters were invited to educate the committee on the nature of the issue, the past work that has been done between stakeholders, the legislature, and the Alaska Congressional Delegation, as well as the ultimate goal of putting a binding international framework in place to ensure accountable and responsible mining operations. 10:11:05 AM JILL WEITZ, Director, Salmon Beyond Borders (SBB), provided a PowerPoint presentation titled "Alaska - British Columbia Transboundary Watersheds." She began by recognizing the letter to Governor Dunleavy, dated 4/9/19, that was signed by 22 members of the Alaska State Legislature. The letter urges the Dunleavy Administration to continue the work that thousands of Alaskans, 15 of the 19 federally recognized tribes in Southeast Alaska, and the Alaska Delegation have been pushing for, including the securing of binding and enforceable protections for transboundary watersheds. MS. WEITZ said she has been working on the Salmon Beyond Borders campaign for five years, since its inception in 2014. Prior to that she served as a compliance and enforcement officer for the Department of Environmental Conservation (DEC) under the Parnell Administration, where she was tasked with regulating mines, seafood processing plants, large-scale construction projects, and water and wastewater treatment facilities. MS. WEITZ turned to slide 2 of her presentation and explained that Salmon Beyond Borders is a campaign that is driven by commercial and sport fishing groups, local businesses, tour operators, and concerned citizens, in collaboration with tribes and First Nations in Southeast Alaska and British Columbia. The goal is to defend and sustain the transboundary rivers, jobs, and way of life. She moved to slide 4 and acknowledged that this region is in the traditional lands of the Taku Kwaan. The watersheds being focused on are the Taku, Stikine, and Unuk. At roughly 30,000 square miles, these are some of the largest producing salmon rivers in the state of Alaska and the largest in Southeast Alaska, producing 80 percent of Southeast Alaska's king salmon. MS. WEITZ displayed slide 5 and explained that the focus is on these transboundary watersheds because of their productivity and because within these watersheds on the British Columbia side of the political border there are more than 12 large-scale open-pit mines in various stages of abandonment, advanced exploration, and development. Attention is being given to these projects because of their proximity as well as their scale and scope. Some of the projects rival the size of the proposed Pebble Mine in Bristol Bay. These open pit mines are at the headwaters of these shared watersheds, so the resources within these watersheds are shared by both British Columbian and Alaska. These projects are massive and nearly all of them have tailings dams or earthen dams that are backing toxic waste, making them ticking time bombs for Southeast Alaska's multi-billion dollar [salmon and] visitor economies. 10:15:30 AM MS. WEITZ reviewed the timeline outlined on slide 6. She said the Tulsequah Chief Mine (TCM) in British Columbia has been abandoned since 1957, and the Tulsequah River is a tributary of the Taku River watershed. This abandoned mine has been raising concerns for commercial fishermen for the last few decades and is continuing to generate attention from fishermen and governments on both sides of the border. In 2014 a transmission line was completed, bringing power to Northwest British Columbia. That led to the development of the permitting process for the Kerr-Sulphurets-Mitchell (KSM) Project in the Unuk River watershed 19 miles from the border with Alaska. The Unuk River drains into the Misty Fjords National Monument and if the KSM Mine is built as proposed it will be the largest open pit mine in North American and fifth largest in the world. The process and speed in which these projects were coming online came to the attention of nongovernment (NGO) organizations, tribes, local municipalities, and business owners. They recognized that they needed to learn more about what was happening and to organize as to what could be done to be engaged and to determine how these shared watersheds are managed. That was the evolution of the Salmon Beyond Borders campaign and the Southeast Indigenous Transboundary Commission, which is comprised of 15 of the 19 federally recognized tribes in Southeast Alaska. MS. WEITZ related that in 2014 the Mount Polley Mine tailings dam disaster in the Fraser River watershed dumped 6.6 billion gallons of toxins into the Fraser River just as the salmon were returning. More is being learned about the BC regulatory process and its inefficiencies. Letters and resolutions have been garnered from dozens of municipalities and tribes in Southeast Alaska and letters from legislators, which garnered attention from the state's administration and members of Congress. U.S. Senator Lisa Murkowski, U.S. Senator Dan Sullivan, and U.S. Congressman Don Young have been champions on this issue since these efforts began. In 2015 the State of Alaska signed an amended memorandum of understanding (MOU), with a subsequent statement of cooperation (SOC), that established opportunities for transparency between the State of Alaska and British Columbia. This is an important piece of work so that transparency is shared, but it does not secure binding and enforceable protections or financial assurances to protect Alaskan interests. MS. WEITZ said a push is continuing for a federal engagement and a federal process that will lead to those binding protections. This has led to continued pressure at the Department of State, the agency that would maintain these efforts with its counterparts in Canada, namely Global Affairs Canada, to establish the management of these transboundary watersheds. It also kickstarted the Interagency Working Group at the federal level, which is comprised of the Department of State, Department of Interior, and Environmental Protection Agency (EPA). That group is working to address the gaps and limitations of the MOU with Alaska and British Columbia as well as the other bordering states of Washington, Idaho, and Montana, all of which have various issues regarding transboundary impacts from BC mining into shared watersheds. MS. WEITZ noted that work is ongoing for increased funding for monitoring from the U.S. federal government. Just this year through U.S. Senator Lisa Murkowski, the U.S. Congress passed $1.5 million for the installation of super gauges that monitor water quantity and water quality. Those gauges will go in the transboundary watershed shared between the U.S. and Canada. 10:20:35 AM REPRESENTATIVE KREISS-TOMKINS inquired what the $1.5 million will do and whether it will get part of the way or all the way toward the need for water monitoring. MS. WEITZ replied that since fiscal year (FY) 2017, [the U.S.] has gone from a $300,000 appropriation to reinstitute a stream gauge in the Unuk watershed to $1.5 million for the U.S. Geological Survey (USGS) to prioritize transboundary watersheds that need bolstered data. To establish defensible data, which means the U.S. knows the current water quality so that impacts can be identified when they occur, three to five years of baseline data are needed, and these stream gauges will be very helpful in determining that data. REPRESENTATIVE KREISS-TOMKINS asked whether the USGS is the operative agency in gathering this data and whether other federal agencies are involved. He further asked whether state agencies should be involved. MS. WEITZ responded that for fiscal year 2020, an appropriations request has been submitted for EPA to be further engaged to supplement what the USGS is doing. In addition to the funding, report language within the bill in Congress requires that the USGS coordinate with state agencies in Alaska as well as tribes and local entities that are already on the ground doing water quality monitoring work. 10:22:52 AM MS. WEITZ resumed her presentation. She displayed slide 7 and pointed out the problems. She explained that deregulation under the various administrations in British Columbia and Canada has made it very hard to establish platforms that provide for adequate transboundary governance and the determination of these shared resources. Salmon Beyond Borders and many of its partners are advocating that there become a platform for both the province and the state to discuss these issues, as well as to bring in the federal governments, the tribes, and First Nations, and that they be very integral in determining the management. Such a platform would help in discussing concerns and advocating for protections because Alaska has everything to lose and nothing to gain from projects in British Columbia. MS. WEITZ moved to slide 8 and discussed the proposed solution of establishing a binding international framework. She related that the 1909 Boundary Waters Treaty between the U.S. and Canada is an already existing tool. The adjudicating body of the Boundary Waters Treaty, which was set to resolve and prevent disputes among transboundary watershed users, is the International Joint Commission (IJC). Salmon Beyond Borders has been working with various local, state, and congressional elected officials in pushing for an International Joint Commission referral. A referral would bring together the U.S. and Canada to review what it means to obtain consent from indigenous First Nations and tribes in traditional territories, what it means to analyze data, what it means to assess cumulative impacts through an adequate risk assessment, and to determine what is needed for near term monitoring and long term monitoring of these projects, most of which require perpetual treatment. This ultimately will lead into the best ways of determining that liability and accountability for British Columbia as well as the mining companies themselves and the industry as whole. 10:25:38 AM REPRESENTATIVE KREISS-TOMKINS recalled that during his freshman year as a legislator he was in Washington, D.C., when the issue of KSM and transboundary mines was just gaining steam and he met with the IJC to talk about that. He was told by both IJC and Department of State staff that, in so many words, good luck in getting them to engage and that there is no incentive for IJC to stand up for the interests of Alaska and the U.S. So, while the IJC exists, it doesn't have teeth or put its teeth into anything. He requested Ms. Weitz to speak to the strategy that Alaska and the U.S. might have in trying to get IJC to mediate the concerns of the U.S. in this issue. He also inquired whether there are examples from other transboundary watersheds in recent history in which IJC has involved itself and helped to mediate the different interests between the U.S. and Canada. MS. WEITZ answered, "We've been on that same path ... as far as knowing this tool exists and kind of being tossed around as far as its effectiveness and whether or not it actually seems plausible." The IJC has been engaged to address transboundary concerns, most recently in Vermont and Quebec and $20 million was appropriated to do this type of review to address how management of shared watersheds should be managed. In the 1980s in the Flathead Valley of Montana and British Columbia the Flathead River was the product of an IJC review because there were proposed coal mines in the headwaters of the Flathead River. The IJC determined that if the coal operation could not prove that it would have no impact to the endangered bull trout, it could not be authorized to begin operation. So, that watershed remains protected without development. An adjacent watershed, the Elk and Kootenai that originates in BC and flows into Montana and Idaho and then back into BC, has not had a federal review or engagement and existing pollution is wiping out fisheries and deformities are being seen in fish and birds. MS. WEITZ continued her answer, explaining that for the Alaska- British Columbia situation, walls are being run into in that Canada is not going to want to come to the table because this is an opportunity for BC to develop in these northern watersheds and there will be reluctancy from the industry. Not only is this an issue in Alaska that is now garnering more and more attention from members of Congress, but there is the possibility of development in the headwaters of the Skagit watershed, a river originating in BC and flowing into Washington that is Puget Sound's largest salmon producing river. Salmon Beyond Borders has come together with its partners in Washington, Idaho, and Montana and built power in numbers so that the IJC process now being sought is an assessment of what transboundary watershed management needs to look like in these mineral rich resource areas. More progress has been made during the current U.S. administration than the former, and in a recent trip to Washington, D.C., to meet with the Department of State, she gleaned that things are closer than before towards getting that multi-state IJC referral. So, it's critical that Alaska's Congressional Delegation continue pushing for it. As the letter from legislators to Governor Dunleavy alluded to and encouraged, there is support from the executive offices in these states, as well, in pushing for those binding protections, which would be a result of a review such as this. 10:31:06 AM REPRESENTATIVE TARR asked whether Salmon Beyond Borders has looked at the Great Lakes [Water Quality Agreement] as a possible framework for international cooperation. She noted she worked on this as a college student. MS. WEITZ replied that the Great Lakes Water Quality Agreement is an excellent example of an authorized appropriation and that is what Salmon Beyond Borders is working for in FY 2021 with members of Congress and the various agencies. That type of platform has been effective and is something SBB is open to considering because it involves tribes and stakeholders and First Nations as well as the appropriate government entities. CHAIR STUTES requested Ms. Weitz to elaborate about the Great Lakes Water Quality Agreement. MS. WEITZ responded that the agreement is an opportunity for experts, primarily in the technical sense. So, it is scientists coming together to determine water quality levels and standards that need to be worked towards. It brings together the various state and federal agencies and tribes to work towards management of these watersheds, be it monitoring and the permitting of potential development for current and future operations. REPRESENTATIVE TARR commented that her work on that issue was impactful because political boundaries are meaningless when talking about resource management. It was an important learning experience through which she learned that pollution in Lake Superior takes 60 years to make its way into the St. Lawrence seaway. She grew up in the Akron-Cleveland area, called the cancer belt as a result of heavy industry, and where the Cuyahoga River spontaneously caught on fire [on 6/22/1969] because of pollution. Much great work has now been done and this example of success should be looked at, as well as why this work was necessary in the first place. 10:33:52 AM REPRESENTATIVE KREISS-TOMKINS offered his understanding that in the IJC process, Canada's commissioners on the IJC must acquiesce to an IJC finding or agreement. He inquired about what motivated Canada politically to acquiesce and effectively give up ground on its interests in the Flathead watershed. MS. WEITZ answered that folks and tribes in Montana and Idaho and folks in British Columbia, raised so much stink about the potential of the pollution to the Flathead. It was right around the time of the Vancouver Olympics, so lawmakers in BC wanted to make this go away by giving them what they wanted. REPRESENTATIVE KREISS-TOMKINS remarked that he wonders what leverage the State of Alaska might have with British Columbia. 10:35:30 AM TIS PETERMAN, Coordinator, Southeast Alaska Indigenous Transboundary Commission (SEITC), pointed out that SEITC represents 15 federally recognized tribes in the region on the issue of transboundary mining. The mission of SEITC is to protect the tribal lands and waterways for future generations. The organization's message to the committee is to encourage [Alaska's] current administration to continue to work with British Columbia through the MOU that was started under the previous administration. The State of Alaska also needs to continue to support the leadership of Alaska's Congressional Delegation on this issue and their push for international protections and financial assurances in shared watersheds. MS. PETERMAN stated that [on 12/5/18] SEITC presented the Human Rights Petition to the Inter-American [Commission on Human Rights] which states that the transboundary mines are threatening the tribes' way of life. The Red Chris Mine on the Stikine River has a tailings dam that was engineered in the same way as the Mount Polley Dam that breached in 2014. Through the efforts of SEITC and American Rivers, the Stikine was recently designated as one of the top ten most endangered rivers in the U.S. She related that SEITC met with First Nations in British Columbia this past year and created a Unity Statement that the tribes will support each other on transboundary mining issues. A second meeting is scheduled for this fall that will include tribes from Washington, Montana, and Idaho and that will continue to build on this relationship to protect the tribes' way of life from the threat of transboundary mining. Much work has been done with British Columbia First Nations and this work continues today. REPRESENTATIVE TARR stated she is unfamiliar with the Inter- American [Commission on Human Rights] and requested Ms. Peterman to elaborate regarding this commission and SEITC's work with this commission. MS. PETERMAN replied that the Inter-American [Commission on Human Rights] hears international petitions, which are non- binding, but which provide a spotlight on SEITC's issue of transboundary mining. The statements in the petition are investigated by the commission and it usually takes anywhere from two to seven years for the commission's decision. 10:39:00 AM CHRIS SERGEANT, Research Scientist, Flathead Lake Bio Station, University of Montana, provided a PowerPoint presentation titled "Assessing mining impacts on our shared Alaska-British Columbia rivers." He said his research currently focuses on assessing how mining in the Taku, Stikine, and Unuk rivers affects the health of their freshwater ecosystems and includes three major near-term goals. The first goal is to inventory and synthesize existing data from these rivers. The second goal is to identify knowledge gaps and prioritize future research to fill those gaps. The third goal is to help create a larger collaborative network of scientists interested in this issue and working on research related to it. MR. SERGEANT turned to the map on slide 2 depicting the three transboundary rivers. He noted the map also includes the Nass River which is not transboundary but fully included in British Columbia. He explained that the KSM Mine would impact both the Unuk and the Nass watersheds if the mine is built as proposed. The three transboundary watersheds make up over 72,000 square kilometers of drainage area. A [2016] McDowell Group report demonstrated that activities taking place in these watersheds raise about $48 million annually and almost half of those can be attributed to fisheries-related activities. Nearly 90 percent of households in Southeast Alaska use salmon to some extent. MR. SERGEANT moved to slide 3 and stated that together these three critically important watersheds produce about 80 percent of Southeast Alaska's wild chinook salmon. From 2007-2018 the runs have averaged about 55,000 chinook salmon per year. Displaying slide 4, he noted that these biologically rich watersheds are also rich in mineral resources. He pointed out that the orange dots and yellow crosses on the map represent mining projects in various stages of past production, exploration, development, or current operation. He added that these symbols represent only projects where he was able to extract basic information on mine location, operations, and primary mineral resources. There are additional places, but the information cannot easily be found. 10:42:17 AM MR SERGEANT explained that the map on slide 5 includes an overlay of all the active mining claims and leases in British Columbia, which are represented by the black and white shading. Overall across the three focal watersheds, 19 percent of the drainage area is covered in mining tenures of some kind. The Unuk River has about 59 percent coverage. When it comes to ensuring the sustained health of Alaska's shared rivers with British Columbia and their valuable ecosystem services, such as clean water and abundant salmon, the map shows how mining impacts must be carefully considered in close collaboration with Canada and continue to stress the need for consistency in scientific methods used on both sides of the border. MR. SERGEANT displayed slide 6 and stated he believes there are several immediately apparent messages to pass on where science can be improved to better aid decision makers. First is better monitoring, such as increased frequency of measurement. Many projects only measure important chemicals such as mercury or selenium on a monthly or quarterly timestep. But, in general, this is nowhere nearly frequent enough to detect increasing or decreasing trends in these chemicals over time. It is important to create a solid baseline of information before a project begins by doing more years of monitoring and more frequent measurements to properly assess the potential impacts of proposed mining projects. 10:44:02 AM CHAIR STUTES inquired whether Mr. Sergeant is currently seeing any adverse effects from these mines on these rivers. MR. SERGEANT replied that in a lot of cases it is difficult to even assess. For example, there are annual monitoring reports on the Red Chris Mine on the Stikine River, and while they are extensive, they are confusingly structured and do not follow normal scientific conventions for writing reports. In some cases, data is missing and not yet available. There is evidence that there could be adverse effects, but it is hard to assess at this time until [scientists] get more information. For the Tulsequah Chief Mine on the Taku River, there are demonstrated effects over time of acid mine drainage in the river affecting water quality and fish populations. CHAIR STUTES asked how long the Red Chris Mine has been operational. MR. SERGEANT responded that the Red Chris Mine has operated in the headwaters of the Stikine River since 2014. CHAIR STUTES inquired about the Tulsequah Chief Mine. MR. SERGEANT answered that the Tulsequah Chief Mine ended operations in 1957. A series of owners have purchased the mine and attempted to restart it but have gone subsequently bankrupt. Currently, British Columbia has contracted a remediation plan for the mine that is now being actively worked on and hopefully it will lead to full reclamation of the site. Responding further, he said the Tulsequah Chief Mine has not been operational for over six decades. 10:45:54 AM REPRESENTATIVE TARR, regarding circumstances where the damage is done, asked whether Mr. Sergeant's work is evaluating other infrastructure or modifications that could be done for remediation. MR. SERGEANT confirmed he is in the early stages. He said there are places like Tulsequah Chief that are extremely important to clean up. However, he continued, most of the mines depicted in orange on the map are proposed projects. There is an urgent need to get the baseline data that is not yet had to assess their impacts and to see what can be done on the Alaska side to collect better scientific data consistently and be able to answer questions about what the impacts would be if the mines are built as proposed. REPRESENTATIVE TARR inquired whether there are "midway" opportunities that could be done, such as structural modifications, to improve the overall outlook for potential damage. MR. SERGEANT replied yes. He qualified that he is not an engineering expert, but that there are people who have proposed different types of tailings dam constructions that would lower the risk for major impacts in the future. These include improvements such as dry tailings and different types of earthen dam construction that are more structurally sound than what is seen today. 10:47:52 AM CHAIR STUTES recalled seeing a presentation several years ago by professors from the University of Montana. The presentation pertained to a mine in Canada causing detrimental effects on a river going into Glacier National Park from a chemical that no one knew existed and a wastewater treatment plant built by the mining company has had no effect on that specific chemical. MR. SERGEANT offered his belief that the presentation may have been provided by Rick Hauer or a colleague of his at the University of Montana and was about the coal mining happening on the Elk River. Selenium was the element of interest because it was unknown that it was going to be such a negative pollutant on the system. CHAIR STUTES remarked that she found it very alarming because there was no idea at the time as to what even to look for. 10:49:26 AM MR. SERGEANT returned to his review of slide 6 and said [the second way] science could better aid decision makers is by improving data quality and transparency. For example, many of the mining reports or environmental assessments he has reviewed are overly long and structured in a confusing manner that doesn't follow usual scientific conventions, which makes it difficult for experts to review and confidently assess the presented data. Often data collection methods are not described in enough detail to assess whether they were collected in a defensible manner. In general, there is a need for a greater use of independent third-party environmental science experts to conduct research and monitoring activities for these projects. MR. SERGEANT said the third way that science can be improved to better aid decision makers is cumulative impact analysis. He noted that the Iskut River is the largest tributary to the Stikine River and multiple projects are taking place on this tributary. But, he continued, during the environmental assessment project, typically only the single project impacts are looked at. The question needs to be asked - What do five or six projects happening in an adjacent area do to a river or drainage area and how can those be assessed cumulatively? This is what is done in the National Environmental Policy Act (NEPA) process in the U.S. 10:50:52 AM MR. SERGEANT concluded his presentation by visualizing what low- grade ore mining looks like for a mine such as the KSM. Showing slide 7, he said environmental reports related to the KSM Mine state that the average yield per metric ton, or 2,200 pounds, of mined rock is 0.5 grams, or 0.02 ounces, of gold. Using a standard sea salt grinder purchased from a store, he demonstrated that 0.02 ounces of salt would be about two twists of the saltshaker and said that since salt is much lighter than gold it would be even less gold. Turning to slide 8, he drew attention to his wedding ring and reported that it would take about 23,520 pounds of rock to produce the 6 grams of gold in his ring and another 23,520 pounds for the 6 grams in his wife's matching ring. These tradeoffs need to be considered when talking about low-grade ore mining, which is associated with large open pits. He urged the committee to continue its support for the pursuit of rigorous, objective, and consistently applied science on both sides of the border to help protect the precious ecosystems that people depend on. 10:53:14 AM DAVID LANDIS, Mayor, Ketchikan Gateway Borough, testified that the Ketchikan Gateway Borough by resolution has repeatedly urged the State of Alaska and federal government to work with the Canadian government to ensure that Alaskan resources are not harmed by upstream mining development in British Columbia. The borough also requested that the concerns of salmon advocacy groups on these issues be heard and considered. These are significant issues for the coastal communities of Southeast Alaska given the region's local economies are deeply rooted in the seafood industry. Commercial fishing, processing, and marine support services directly comprise a large portion of the region's economies and virtually every business benefits from these commercial fishing dollars. Tourism is another large part of Southeast Alaska's economy that is connected to the region's pristine waters. As well there is the recreational, personal use, and subsistence way of life that the region's residents have enjoyed for many generations. MAYOR LANDIS related that the Ketchikan Gateway Borough believes the State of Alaska must seek enforceable protections through a binding framework between the U.S. and Canada. Alaska needs to do everything it can to protect Alaskans from the risks of potential contamination from the Canadian mines upstream. Since 2014 Canada has allowed two mines in transboundary river watersheds to begin operation - the Red Chris Mine in the Stikine watershed and the Bruce Jack Mine in the Unuk River watershed. In addition, the Canadian federal government is in the planning and permitting stages of several other projects in these watersheds, including the Taku. Alaskans deserve to be confident that there are enforceable measures in place to prevent the contamination of shared Alaska-British Columbia transboundary watersheds. Alaskans also need to know that emergency response plans and financial assurances to compensate fishermen and communities are in place if the waters do suffer damage. These enforceable protections and financial assurances can only be secured through a binding international framework. MAYOR LANDIS added that in his professional career he has conducted several risk assessments for companies and programs as part of their best business practices and therefore tends to view many issues through that lens. He requested committee members to imagine an X-Y axis graph with one axis being the likelihood of occurrence and the other axis being the severity of the impact. If something has a very low likelihood of occurrence and a low impact, then those activities could be viewed as having acceptable risk. At the other end of the spectrum are issues which have a high likelihood of happening and severe impact, and those are the highest risk areas that should be addressed with the highest priorities. The other quadrants, then, of this graph are risks that need to be addressed with various degrees of management and monitoring efforts. The transboundary mine development, he submitted, is squarely in the categories with very severe impact and a moderate likelihood for that occurrence. While he would like to say that there is a low likelihood for having problems, the evidence does not bear that out. Given a risk profile such as this, it would be appropriate to secure enforceable protections and financial assurances through a binding international framework. 10:57:48 AM FRANCES LEACH, Executive Director, United Fishermen of Alaska (UFA), related that UFA is a statewide commercial fishing trade organization representing 36 commercial fishing groups and hundreds of fishermen and crew members throughout Alaska. Since 2012 UFA has been involved in transboundary issues in Southeast Alaska. Thirteen of UFA's member group organizations represent fishermen who fish for salmon, shrimp, crab, and other species in the waters of Southeast Alaska. Southeast fishermen employ hand troll, power troll, driftnet, purse seine, longline, pots, and dive gear to harvest their catch. United Fishermen of Alaska is increasingly concerned with the potential impacts to fish habitat in water resources from at least 12 large-scale open pit and underground metal mines in British Columbia that are abandoned, permitted, or operating in the headwaters of transboundary rivers that flow downstream into Southeast Alaska. The transboundary Taku, Stikine, and Unuk rivers are world class salmon producing rivers contributing $48 million to Alaska's economy and producing 80 percent of Southeast Alaska's king salmon. These rivers are integral to the overall $1 billion annual salmon fishing industry and the $1 billion annual visitor industry in Southeast Alaska. MS. LEACH stated UFA strongly urges that [Alaska's] government officials work with the government of British Columbia to ensure that substantial and appropriate financial assurances, impact assessments, and long-term monitoring plans are established and funded prior to the issuance of permits for mining projects. Financial assurances must include provisions to compensate fully the State of Alaska and its fishing industry in the face of catastrophic or accumulative impacts. The State of Alaska has previously requested that British Columbia require companies operating mines within the transboundary watershed to post a full reclamation bond prior to permitting as the State of Alaska currently requires. United Fishermen of Alaska continues to support this request to ensure that the state's resources are not harmed by Canadian large-scale mining developments in the headwaters of transboundary salmon rivers. United Fishermen of Alaska asks that this work continue, and this important message carried forward in future engagements with British Columbia. 11:00:36 AM NIKKI SKUCE, Director, Northern Confluence, stated that Northern Confluence is an initiative whose mission is to conserve the salmon watersheds that sustain communities, economies, and shared futures. To do that, Northern Confluence is working on things like modernizing the Federal Fisheries Act and trying to create better mining policies for this region because many mines are operating, proposed, or under exploration in Northwest British Columbia. Mining has a long history in BC and continues to play an important role in many BC communities. However, mining can also cause catastrophic and long-lasting impacts to fish, water, wildlife, and human health. The industry can also impose massive economic liabilities on taxpayers if mining laws are not strong enough. MS. SKUCE said mines in British Columbia need careful regulation to ensure that mining companies adopt sound environmental practices and pay for their position costs. Nongovernmental organizations, academics, and community organizations have identified that British Columbia's regulatory system for mining needs comprehensive reform. This is supported by a growing volume of evidence for systemic failures in the current system, starting with the 2014 Mount Polley Mine disaster, which deposited about 10,000 Olympic sized swimming pools' worth of mine waste into one of the most productive salmon systems in the Fraser watershed. It has resulted in zero fines or charges against the company and no compensation to impacted communities. MS. SKUCE related that a 2016 report by the auditor general found British Columbia's enforcement and compliance regime for mining to be woefully inadequate. It is also known that there is taxpayer liability of more than $1 billion in mine cleanup costs across British Columbia. A hiker recently discovered that the government has not inspected a closed Jordan River mine for over 20 years, allowing the unprotected ongoing destruction of the once-productive salmon river. Public awareness is growing about potential impacts that mining can have on fisheries in British Columbia's watersheds, as well as ongoing permitting of wastewater into lakes and river systems. MS. SKUCE said many mining conflicts arise because [British Columbia's] mineral tender system allows for claims to go on private property or to go through without First Nations Free Prior Informed Consent and often ignores land use plans. The Tulsequah Chief Mine's legacy is decades of ongoing acid mine leakage into the Taku River system. There is selenium leaching in the Elk Valley, as well as others. Growing evidence shows the serious systemic shortcomings of British Columbia's mining regulatory regime that undermines public confidence in government's ability to protect the public interest and to assure that companies pay the cost of their pollution. 11:04:10 AM MS. SKUCE announced the impending launch of the BC Mining Law Reform [Network] comprised of academics, NGOs, and community- based groups, which will include releasing a platform of several mining law reform briefs. The network has identified three main priorities that it will push for change. The first priority is to encourage the British Columbia government to enforce and reform its laws to make sure that mining companies and their shareholders pay for cleaning up all the environmental damage they cause. Mining reclamation policy is a commitment that was made post-Mount Polley and there is some progress that is likely to come in the next couple months and pressure is being applied now to hopefully ensure that it raises the bar. The second priority is to look at an industry fund for victims of mine pollution disasters and insufficiently cleaned up sites. It is thought that this could also be a potential opportunity that would include states and regions beyond British Columbia. The third priority is to look at ensuring that mineral exploration laws shift to respect modern values so that no-go zones are respected, and Free Prior Informed Consent of indigenous people is required. The third priority is about getting more protection for BC's waters and communities from mining waste. MS. SKUCE noted that there are different ways of mining and the Mount Polley recommendations push for encouraging backfill, dewatering, and/or dry stack tailings. However, the needle has not been moved much in this regard. While some minerals and resources mined in BC are going to be needed to transition to a better energy future, the task is to do it right, and Alaskans should be concerned with the state of BC's mining laws and enforcement in the shared salmon watersheds. She expressed her hope that everyone can help create the conditions for positive change to move toward more responsible mining in BC. 11:06:47 AM REPRESENTATIVE TARR asked whether Smithers' remoteness affects Ms. Skuce's ability to have political influence with her work. MS. SKUCE replied that the sparse populations of Southeast Alaska and British Columbia are part of their beauty and value that allow these ecosystems to live. However, she allowed, it does make organizing a lot harder. She said Smithers is along the Highway 16 corridor and has lots of ongoing mining, which gives her a unique perspective to ground things in reality and to hear from people working in the industry. Smithers is represented by the Ministry of Forests, Lands, and Natural Resource Operations and Rural Development, which is helpful in terms of political influence. But, creating greater influence or pushing for change requires allying with others and that was part of the motivation in forming the mining law coalition comprised of people from throughout the province. 11:09:00 AM ROBYN ALLAN, Independent Economist, specified she has a 40-year career in senior executive positions in the public and private sectors and her expertise is in risk management, insurance, public policy, and energy economics. She was the president and CEO of the largest auto insurer in Canada and she authored the 2016 report, "Toward Financial Responsibility in British Columbia's Mining Industry." She cautioned that the State of Alaska cannot rely upon the Province of British Columbia to protect downstream interests threatened by upstream mining activity. The environmental assessment, monitoring, compliance, and financial assurances regime in British Columbia is effectively dysfunctional. The environment and the public on both sides of the Canadian and U.S. border face serious long- term risk, loss, and cost because of BC's substandard system. MS. ALLAN said her focus today is on full funding of liabilities as a key feature of an environmentally and commercially responsible regime. For a financial assurances regime to work there are three steps. The first step is to ensure mine reclamation estimates, the estimate that is made to calculate the cost of returning the environment to the state it was before the mining permit was granted. Mine reclamation estimates must be accurate and reliable - this is not the case in British Columbia. The second step is to ensure that reclamation liabilities are fully funded - this is not the case in British Columbia. Finally, the risk of unintended events, such as a tailings pond breach, must be evaluated upfront and the mine operator required to prove access to financial resources to respond and compensate for unintended damage - this is not the case in British Columbia. British Columbia's financial assurances regime fails on all three accounts. 11:11:26 AM MS. ALLAN stated that mine reclamation liabilities in BC are underestimated and most mining companies are not required to provide full funding for the reclamation obligations that are estimated. For example, Teck Resources is BC's single largest mining owner with more than a dozen mines. This is where the selenium issue identified by Chair Stutes comes in and it is very relevant. Teck Resources has selenium discharge challenges and because the company doesn't understand how to deal with it the company doesn't estimate it in the liability requirement. "You can't price what you don't see and that's the first major problem we're dealing with in BC," she said. She pointed out that Teck Resources owns the Red Dog Mine in Alaska. Red Dog is expected to require water treatment in perpetuity. Water treatment costs are incorporated in its reclamation estimate. Teck has fully funded the $563 million obligation at Red Dog by posting a bond with the State of Alaska. Teck's reclamation liability for its more than a dozen BC mines totals $1.7 billion, but BC requires only $789 million in funding. Teck's underestimated and unfunded obligation is almost $1 billion and that is what can be seen. This funding gap puts taxpayers at risk and incentivizes business decisions that fall short of best practices. MS. ALLAN advised that the Province of British Columbia would only need to adopt the Alaskan model that requires full funding of reclamation to bring its system more in line with a comprehensive and robust approach. British Columbia already has the regulatory authority to do so since funding requirements are at the discretion of the Chief Inspector of Mines. Why is BC dragging its heels? If there were one step that the State of Alaska could take to protect its environment and therefore its economy, it would be to work to ensure that BC introduces a financial assurances program on par with Alaska's; that BC require full funding of accurately estimated reclamation liabilities throughout the lifecycle of every existing and future mine. CHAIR STUTES thanked Ms. Allan for her very enlightening testimony. 11:13:50 AM REPRESENTATIVE TARR asked whether financial assurance means the comprehensive financial responsibility for all the upfront items for any risk, the full reclamation, and ongoing monitoring. MS. ALLAN replied, "Yes, absolutely." For example, in Alaska the analysis in perpetuity is done with a discounted cash flow formula and therefore the money is expected to be there to meet the obligations - forever. British Columbia doesn't have that system. It is full funding of obligations that are permitted, so it is the intended harm that occurs when mining activities take place - that is estimated and must be fully funded upfront. Through the lifecycle of the mine there can be reclamation undertaken and therefore maybe obligations fall, but the money is always in reserve so that taxpayers and the environment aren't left on the hook. When it comes to unintended results like the Mount Polley event, the first thing to be understood is that if there is full funding of reclamation obligations, businesses make better decisions to avoid those kinds of events from happening in the first place. If best practices are followed, the likelihood of accidents or unintended harm is much lower. Secondly, by having a best practices program in place an estimate is made as to the likelihood of unintended events even if all the best decisions possible have been made. Upfront needs to be assurance or other mechanisms in place to make sure that financial resources are there if those accidents happen. That was not the case with Mount Polley. So, it is through the lifecycle and for both intended and unintended harm. 11:16:05 AM REPRESENTATIVE TARR noted that a criticism of Alaska's system is that the state's bond amounts are too low, so not enough is in place to fully cover the cost of reclamation and full recovery. She asked whether Ms. Allan thinks Alaska could be successful in getting the financial assurances for the full amount. MS. ALLAN responded that that speaks to the need for rigorous liability estimated frameworks. She said there is no question that the estimation of the liabilities could be enhanced. For example, in BC the full funding is not had, which is a double- stage problem. When estimation processes are more rigorous and the bonding requirements go up because all parties agree in the polluter pay principle, if the financial resources couldn't be put in place then the mining activity shouldn't take place because the long term cost/benefit suggests it is going to cost the economy, the environment, and the communities more than it's worth. She said she absolutely endorses more rigorous estimation processes, but the very first step and significant benefit would be if there was a level playing field with the bonding first at the least, even if that is in the process of also looking at estimation. 11:18:20 AM REPRESENTATIVE VANCE referenced a previous slide that showed one of the areas was 59 percent covered with mining leases. She further recalled a previous committee hearing about [aquaculture farms] and that [an aquaculture farm] cannot take up more than one-third of the area of a bay to ensure access to other users of the bay. She inquired whether there is something like this for mining in a region, such that there would be limitations on the scale. CHAIR STUTES stated it might be a difficult thing to get through and she doesn't know if anything like that exists. MS. ALLAN pointed out that Representative Vance's question is speaking to the cumulative impact analysis, which is not rigorous enough to recognize that eventually if the model is taken to the extreme there is nothing left in terms of the land base. She said the cumulative impacts that were spoken to earlier today would help to address the problem identified by Representative Vance. MS. WEITZ added that cumulative impacts are not a requirement for the environmental assessment process in BC. So, when an exploration permit or development permit is applied for, British Columbia looks at it on a project-by-project basis rather than a watershed scale. That is absolutely one of the things that Salmon Beyond Borders finds inadequate within that process and one in which SBB is working with partners to get improved. REPRESENTATIVE VANCE inquired whether Alaska's process includes the practices of cumulative effects. MS. WEITZ answered yes. 11:21:12 AM REPRESENTATIVE TARR referred to the map provided by Mr. Sergeant that depicted the past producers, exploratory mines, and developing mines using orange circles and yellow crosses. She asked whether something occurred politically that so many mines are happening right now. MS. WEITZ replied that completion of the Northwest Transmission Line in 2014 brought power to this region. There are about 2,000 people in Northwest British Columbia, whereas there are 75,000 people in Southeast Alaska. Thus, power is generating to a very mineral rich region where there aren't many people to organize and have a voice, and there is the productivity shown on that map. 11:23:22 AM JASON DION, Lead Researcher, Canada's Ecofiscal Commission, provided a presentation titled "Financial assurance for mining in British Columbia." Addressing slide 3, he explained that Canada's Ecofiscal Commission is a policy thinktank in Canada comprised of experienced, policy-minded economists from across Canada. The commission focuses on environmental issues of all types, but particularly those where there is the scope for taxes, or pricing, or markets to deliver solutions that make sense for both the environment and the economy. The commission provides advice to governments of all stripes and is a fully independent not-for-profit organization. MR. DION turned to slide 4 and said the commission released a report last year titled "Responsible Risk" for which he was the lead researcher. The report focused on risks to the environment from economic activity and how they can be managed and addressed. Mining was looked at as a case study and approaches to it in five Canadian jurisdictions. In particular, the tool of financial assurance was looked at as a way of putting a price on risk as a way of managing it. He is currently engaged on a new report, "Mining Risk and Responsibility: How Putting a Price on Risk Can Help BC Manage Disasters," which focuses on British Columbia's policy. MR. DION moved to slide 5 and stated there are two types of environmental risk that are different problems that call for different solutions: 1) the risk of non-remediation of a mine, and 2) the risk of disasters. Showing slide 6, he elaborated that when it comes to remediation the likelihood is very high, or 100 percent, of some degree of environmental damage. It is known that harm will occur, and the risk is who will pay for it, how large it will be, and whether it gets cleaned up. But it is different with a disaster where the disaster is not expected to occur but is probabilistic. The two types of risk also differ in the severity of costs. Remediation can be a broad spectrum of costs from small to very large, while disasters tend to be much more severe when they do occur. However, these two types of risk are treated quite differently in financial assurance policy in British Columbia: remediation is covered, although there are shortcomings, and disasters are completely uncovered. While that is quite common when it comes to different jurisdictions' approach to mining sector polity, it is very uncommon when it comes to sectors that pose a risk of environmental disaster. Sectors like offshore oil and gas, pipelines, nuclear power, and tanker traffic typically must provide some degree of financial assurance. So, it is quite unusual that that doesn't occur in the mining sector. 11:26:30 AM MR. DION displayed slide 7 and stated that policy focused on environmental risk is made complicated because there are three separate and competing goals at play. Finance assurance policy is no different, he added. The first goal is deterrence. Policy makers want to create incentives for companies to reduce the risk they might pose to the environment. The second goal is compensation. Should harm occur, policy makers want to make sure that the public doesn't get stuck with the bill. The third goal is economic activity. Policy makers want to encourage production investment in order to benefit from the jobs and income it creates. The tension is that these three goals can sometimes be at odds with each other. MR. DION showed slide 8 and defined financial assurance as any requirements where firms must promise or commit funds against their environmental liabilities, whether those are expected or potential environmental liabilities. The importance of this is that it gives companies a financial incentive to reduce risk to the environment. The commission's report breaks financial assurance into five main types: 1) Hard firm-level assurance where companies provide cash or bonds that are held in trust against a risk; 2) Soft firm-level assurance where companies pledge assets or guarantees, which aren't as certain or stable in value and can become unavailable in certain conditions; 3) Pooling instruments, or third party assurance, where insurers, banks, or other lenders or capital providers are brought in to provide insurance, letters of credit, or surety bonds; 4) Sector-level assurance where the sector comes together as a whole to pool their risks through mutual insurance or using industry funds; and 5) Public assurance where public insurance or public funds are used. He noted that public assurance has the potential to pool risk not only within a sector but across several sectors. 11:28:31 AM MR. DION turned to slide 9 and addressed the effects of the five types of financial assurance on the three policy goals. He advised that none of the financial assurances provide strong outcomes across all three policy goals and therefore, when pursuing financial assurance policy, it is always a matter of striking a balance across these competing priorities. MR. DION moved to slide 10 and discussed British Columbia's current approach to mining sector financial assurance policy. He said the Chief Inspector of Mines in BC has broad authority to require financial assurance from mining firms; BC has a "polluter-pay" policy in place; and in BC mining companies are required to provide financial assurance against the risk of non- remediation, but not against disasters. On paper, he continued, those three points taken together suggest there is a scope for British Columbia to have some stringent and meaningful financial assurance. However, the problem as highlighted by the Auditor General of British Columbia [in 2016] is that in practice the stringency tends to be limited, largely due to the province's practice of phasing in financial assurance requirements over a mine's life. Earlier in a mine's life it might be providing those softer forms of assurance, such as good credit and good standing of a company, which isn't necessarily as reliable as holding a bond or other types of security. MR. DION displayed slide 11 and said two conclusions can be drawn about British Columbia's current approach to mining sector financial assurance policy. First, when it comes to mine remediation in BC, there is no guarantee that the polluter will pay, despite the polluter-pay policy that is in place. Second, if a Mount Polley-like disaster were to occur again in BC and the responsible company was bankrupted, a large share of those costs would likely fall to the public. The problem with these two findings is that when a company knows it might not bear all the costs of a risk it poses in terms of the harm it might cause, the company has less of an economic incentive to reduce that risk, which is a very important shortcoming. 11:30:36 AM MR. DION moved to slide 13 and stated that the commission's recommendation regarding financial assurance policy for mine remediation is that British Columbia should require hard assurance - full bonding - from firms. He said the province of Quebec is a strong example of the way that this can be done. Following some mining sector reforms in 2013 that were quite broad in scope, changes were also made to Quebec's financial assurance policy where firms must put up bonds within two years of commencing operations that are the full value of potential remediation costs. No distinction is made for financial risk, so big and small companies alike must provide that full bonding. Important about Quebec's example is that despite an initial dip Quebec has continued since then to rank strongly on economic activity indicators for mining. This shows that there is a clear precedent in Quebec for having more stringent financial assurance policy that doesn't necessarily have to be at odds with British Columbia's economic activity goals in this sector. MR. DION turned to slide 14 and reviewed the commission's recommendation regarding financial assurance policy for mine disasters, which is that British Columbia should implement a "tiered" scheme. This is where different types of financial assurance are brought in in tranches to cover against that risk. The firm itself might provide a measure of assurance against it. Beyond this, third party coverage would kick in, say, insurance coverage, that would eventually cap out at a certain level. And then beyond this, it could escalate to, say, industry funds or a public fund. Important about these higher tranches is that they can offer a way of covering "fat-tailed" - high severe cost potential events - that might be uninsurable in private schemes. Public instruments can provide an opportunity for pooling risk across sectors, the U.S. Superfund being an example. Valuable about this approach is that it can be built piece by piece, so all the tiers don't necessarily have to be in place in order to get something like this off the ground. From the commission's perspective the introduction of any tier would be an improvement from what is in place now. This kind of policy would address an important policy gap in British Columbia and such a policy would acknowledge that the risk of disaster can be uncertain and hard to insure. 11:33:48 AM REPRESENTATIVE KREISS-TOMKINS asked whether there is potential for federal action in terms of instituting these reforms or whether it is a province-by-province process. MR. DION replied that in Canada natural resources are the domain of a province, so it is up to British Columbia to choose what to do on this front. At the same time, when it comes to the instrument of pooling risk for disasters, there is a potential for provinces in Canada to come together to provide that broad pool that could lower the cost of coverage for members. The other advantage of provincial members coming together in that way, which would have to be voluntary under Canada's constitution, is that it can provide a way of covering these risks and lowering costs, but at the same time it creates an incentive for those provinces to harmonize their regulatory regimes and their broader financial assurance regimes and avoid that risk of a race to the bottom in requirements and regulations that can be a factor in trying to draw in mining investment internationally. While there are upsides to coming together, it would have to be voluntary and therefore he thinks it exists with the provinces in terms of taking initiative. CHAIR STUTES thanked Mr. Dion for his enlightening presentation. MS. WEITZ pointed out that each person who gave testimony today is available by phone to provide further information to committee members. 11:36:22 AM CHAIR STUTES closed the meeting by stating it is her sincerest hope that the Dunleavy Administration will engage with Alaskans, the legislature, and Alaska's Congressional Delegation in the same way or better than the previous administration. She said this will be part of the ask of this committee. This effort has nothing to do with mining companies in Alaska, it is not about resource development versus conservation. Alaska is simply asking its neighbor across the border to adhere to best and safe practices when mining in shared watersheds, which is clearly something [that British Columbia] has a poor track record with. This is about Alaskan families and Alaskan sport, commercial, and subsistence users. Chair Stutes further pointed the committee, the public, and the administration to the April 9, 2019, letter written to Governor Dunleavy from 22 legislators urging the administration to join in this effort in engaging with the federal government and the Province of British Columbia to help defend Alaska's transboundary watersheds. She said she is now on record officially asking as the chair of the House Special Committee on Fisheries that the administration engage wholeheartedly in this effort, continue the discussion and good work that was started by the previous administration on behalf of all Alaskans, and to produce some firm commitments to work on this issue. She noted her intention to follow up this request with a letter on behalf of the committee that her committee aide will provide to committee members. 11:38:17 AM ADJOURNMENT  There being no further business before the committee, the House Special Committee on Fisheries meeting was adjourned at 11:38 p.m.