Legislature(2007 - 2008)BARNES 124
04/30/2007 01:00 PM House RESOURCES
| Audio | Topic |
|---|---|
| Start | |
| HJR17 | |
| SB109 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 17 | TELECONFERENCED | |
| + | SB 109 | TELECONFERENCED | |
| *+ | HB 94 | TELECONFERENCED | |
| + | 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.
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