ALASKA STATE LEGISLATURE  HOUSE RESOURCES STANDING COMMITTEE  April 12, 2017 2:20 p.m. MEMBERS PRESENT Representative Andy Josephson, Co-Chair Representative Geran Tarr, Co-Chair Representative Dean Westlake, Vice Chair Representative Harriet Drummond Representative Justin Parish Representative Chris Birch Representative DeLena Johnson Representative George Rauscher Representative David Talerico MEMBERS ABSENT  Representative Mike Chenault (alternate) Representative Chris Tuck (alternate) OTHER MEMBERS PRESENT  Representative Jennifer Johnston COMMITTEE CALENDAR  HOUSE JOINT RESOLUTION NO. 9 Urging the United States government to continue to work with the government of Canada to investigate the long-term, region-wide downstream effects of proposed and existing industrial development and to develop measures to ensure that state resources are not harmed by upstream development in British Columbia. - HEARD & HELD HOUSE BILL NO. 197 "An Act relating to the duties of the commissioner of natural resources; relating to agriculture; and relating to community seed libraries." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 211 "An Act requiring a nonresident to be accompanied by a guide or resident spouse or relative when hunting certain caribou; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 217 "An Act relating to the Alaska Food, Drug, and Cosmetic Act; relating to the sale of milk, milk products, raw milk, and raw milk products; and providing for an effective date." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 218 "An Act relating to the state veterinarian and to animals and animal products." - SCHEDULED BUT NOT HEARD HOUSE BILL NO. 177 "An Act relating to the response to, and control of, aquatic invasive species; establishing the aquatic invasive species response fund; and relating to the provision of information about aquatic invasive species to users of the Alaska marine highway system." - SCHEDULED BUT NOT HEARD PREVIOUS COMMITTEE ACTION  BILL: HJR 9 SHORT TITLE: CANADIAN MINES ON TRANSBOUNDARY RIVERS SPONSOR(s): REPRESENTATIVE(s) ORTIZ 01/30/17 (H) READ THE FIRST TIME - REFERRALS 01/30/17 (H) FSH, RES 03/16/17 (H) FSH AT 10:00 AM GRUENBERG 120 03/16/17 (H) -- MEETING CANCELED -- 03/28/17 (H) FSH AT 10:00 AM GRUENBERG 120 03/28/17 (H) 03/30/17 (H) FSH AT 10:00 AM GRUENBERG 120 03/30/17 (H) -- MEETING CANCELED -- 04/06/17 (H) FSH AT 10:00 AM GRUENBERG 120 04/06/17 (H) Moved CSHJR 9(FSH) Out of Committee 04/06/17 (H) MINUTE(FSH) 04/07/17 (H) FSH RPT CS(FSH) 3DP 2NR 2AM 04/07/17 (H) DP: KREISS-TOMKINS, TARR, STUTES 04/07/17 (H) NR: CHENAULT, FANSLER 04/07/17 (H) AM: EASTMAN, NEUMAN 04/10/17 (H) RES AT 1:00 PM BARNES 124 04/10/17 (H) -- MEETING CANCELED -- 04/12/17 (H) RES AT 1:00 PM BARNES 124 WITNESS REGISTER REPRESENTATIVE DAN ORTIZ Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Speaking as the sponsor, introduced HJR 9 and answered questions. KIRSTEN SHELTON-WALKER, Project Manager McDowell Group, Inc. Juneau, Alaska POSITION STATEMENT: Provided a PowerPoint presentation entitled, "Economic Impacts of Southeast Alaska Transboundary Watersheds." CAROLINE HAMP, Staff Representative Dan Ortiz Alaska State Legislature Juneau, Alaska POSITION STATEMENT: Speaking on behalf of Representative Ortiz, sponsor, answered questions during the hearing of HJR 9. JILL WEITZ, Spokesperson Salmon Beyond Borders Juneau, Alaska POSITION STATEMENT: Testified in support of HJR 9. CHRIS ZIMMER, Alaska Campaign Director Rivers Without Borders Juneau, Alaska POSITION STATEMENT: Testified in support of HJR 9. JERRY MCCUNE, President United Fisherman of Alaska Juneau, Alaska POSITION STATEMENT: Testified in support of HJR 9. MIKE SATRE, Manager Government and Community Affairs Hecla Greens Creek Mine; President Council of Alaska Producers; Vice President Alaska Miners Association Juneau, Alaska POSITION STATEMENT: Speaking on behalf of the Alaska Miners Association, urged the committee to amend HJR 9. ACTION NARRATIVE 2:20:47 PM CO-CHAIR ANDY JOSEPHSON called the House Resources Standing Committee meeting to order at 2:20 p.m. Representatives Josephson, Drummond, Parish, Rauscher, Tarr, and Westlake were present at the call to order. Representatives Birch, Talerico, and Johnson arrived as the meeting was in progress. Also present was Representative Johnston. HJR 9-CANADIAN MINES ON TRANSBOUNDARY RIVERS  2:21:15 PM CO-CHAIR JOSEPHSON announced that the first order of business would be HOUSE JOINT RESOLUTION NO. 9, Urging the United States government to continue to work with the government of Canada to investigate the long-term, region-wide downstream effects of proposed and existing industrial development and to develop measures to ensure that state resources are not harmed by upstream development in British Columbia. [Before the committee was CSHJR 9(FSH), which was read across the floor on 4/7/17.] 2:21:31 PM REPRESENTATIVE DAN ORTIZ, Alaska State Legislature, sponsor of HJR 9, recalled U.S. Senator Dan Sullivan's address to the [Alaska State Legislature] on the value of Alaska's fishing industry to its economy, the fishing industry's prospects as a renewable resource, and the importance of protecting and enhancing said resource. House Joint Resolution 9 would declare that the legislature support federal measures to ensure Alaskans have their voices heard regarding transboundary mining issues. As the [Province of British Columbia (B.C.), Canada] expands its mining industry, Alaskans deserve to know how mining development affects transboundary rivers and, if necessary, to have protective measures to protect Alaska's watersheds. Representative Ortiz explained that currently, when a [spill damaging to Alaska's fishing industry occurs within another jurisdiction's boundaries], there are no legally binding protections or financial assurances; in fact, the [Statement of Cooperation on the Protection of Transboundary Waters (SOC)] and "the memorandum of understanding" between the state and B.C. call for shared information, monitoring, and potential cooperation in regard to mining. However, there are no protective assurances [for reclamation] in an event such as the [Mount Polley tailings dam breach in B.C. on 8/4/14]. Therefore, HJR 9 urges the federal government to investigate - with the government of Canada - the downstream effects of industrial development, and to develop measures to ensure the safety of Alaska's resources. Representative Ortiz related the resolution is supported by thousands of Alaskans and the governor and lieutenant governor, and that federal reforms on this issue are being touted by U.S. Senator Lisa Murkowski and Senator Sullivan. He urged for the committee's support of HJR 9. 2:25:39 PM REPRESENTATIVE BIRCH asked whether the state currently has the capacity to manage this issue through its existing departments. REPRESENTATIVE ORTIZ responded that the Alaska Department of Fish & Game (ADFG) and the Department of Natural Resources (DNR) have the ability to monitor waters within the boundaries of Alaska; however, the departments have no authority to monitor activities upstream, or the potential impacts of mining. Further, the state and B. Co. lack authority to sign financial agreements, which must be entered into by their respective federal governments. REPRESENTATIVE BIRCH was encouraged by the recent SOC executed between Alaska and B.C., facilitated by Lieutenant Governor Mallott and [British Columbia's Minister of Energy and Mines]. He noted his reluctance to involve the federal government in issues the state could resolve independently, although HJR 9 is "well-intended." REPRESENTATIVE ORTIZ agreed solving problems at local or state levels is best; however, issues involving transboundary waters must be addressed at federal government levels, and he pointed out Senators Sullivan and Lisa Murkowski have called for the proposed resolution. REPRESENTATIVE WESTLAKE shared Representative Birch's concern, and asked whether any mining companies [in Alaska or B.C.] are working with each other on these issues, or if Canadian fishing and mining industries are working together. REPRESENTATIVE ORTIZ expressed certainty that interests of Canadian fisherman have been heard, and affected Tribal groups have voiced their concerns to the B.C. [provincial] and Canadian federal governments. He was unsure as to whether American mining companies are in contact with Canadian mining companies. 2:31:20 PM REPRESENTATIVE WESTLAKE referred to [the Pacific Salmon Treaty of 1985] between the U.S. and the Canadian federal government pertaining to salmon in the Yukon River that traverse Alaska on their way to its headwaters, and said, "So in some instances - I'm loath to say this - the federal government can actually get something right every once in a while." REPRESENTATIVE DRUMMOND directed attention to a map entitled, "State of Alaska Trans - Boundary Watersheds Southeast Alaska and British Columbia," and asked whether the Unuk, Stikine, Taku Alsek, and Chilkat rivers have headwaters in Canada and outfalls in Alaska. REPRESENTATIVE ORTIZ said the Taku, Stikine, and Unuk rivers drain into Alaska waters. REPRESENTATIVE WESTLAKE asked whether the resolution applies to only three watersheds. REPRESENTATIVE ORTIZ said HJR 9 addresses issues that may develop from the mining projects at the headwaters of the Taku, Stikine, and Unuk rivers. He opined the resolution would have ramifications on related issues; however, the resolution is not antimining, but is pro-economic and pro-fishing. In fact, different types of proposed mines have plans for production that appear to be safer and economically sound, and thereby have earned his support. 2:35:04 PM CO-CHAIR JOSEPHSON opened [invited] testimony. 2:35:10 PM KIRSTEN SHELTON-WALKER, Project Manager, McDowell Group, provided a PowerPoint presentation entitled, "Economic Impacts of Southeast Alaska Transboundary Watersheds." She informed the committee McDowell Group is an economic consultant firm that was tasked by SalmonState, an initiative with offices in Juneau, Anchorage, and Homer, to conduct an economic analysis of Southeast Alaska's transboundary watersheds. McDowell Group studied the Taku, Stikine, and Unuk rivers, and completed a preliminary analysis of the Nass River and Skeena River, which do not flow into Southeast, but salmon therein do migrate into Alaska waters [slide 2]. She said economic impacts include job and labor income generated from businesses operating within the watersheds, spending by watershed-related businesses, spending by employees, visitor spending, tax benefits for communities, and the present value of future benefits [slide 3]. River economics are activities such as recreation and fishing, the visitor industry, and others [slide 4]. For the Taku River watershed, commercial salmon fisheries, sport fishing, visitors, and tax revenue totaled annual spending of $33 million, labor income of about $13 million, average annual employment was 260 jobs, and a thirty-year present value was $650 million. Ms. Shelton-Walker explained present value of future benefits is based on resources kept intact in perpetuity, such as commercial fishing [slides 5 and 6]. For the Stikine River watershed, the total annual spending was about $13 million, labor income was almost $6 million, average annual employment was 117 jobs, and thirty-year present value was $250 million [slides 7 and 8]. For the Unuk River watershed, total annual spending was $2.5 million, labor income was $1.2 million, average annual employment was 24 jobs, and thirty-year present value was $50 million [slides 9 and 10]. Slide 11 was a summary of the total economic impacts of all three watersheds as follows: 400 jobs, labor income of $20 million, and $48 million in economic impact. Ms. Shelton-Walker concluded that with appropriate management, Southeast Alaska's transboundary watersheds - when combined - generate economic benefits in a thirty-year period of just under $1 billion, and a fifty-year period present value of over $1.2 billion [slide 12]. 2:40:12 PM REPRESENTATIVE BIRCH referred to the previously identified map and asked whether the foregoing economic assessment encompasses the entire watershed, or just the watershed "that falls within the State of Alaska and U.S. territory." MS. SHELTON-WALKER said the study looked at the U.S. boundaries of the watershed within Alaska. REPRESENTATIVE BIRCH pointed out 90-95 percent of the Taku River watershed is in Canada, as is at least 95 percent of the Stikine River watershed. A watershed does not stop at a boundary, and the assessment is only of the economic impact on the 5 percent of the watershed lying within the U.S. MS. SHELTON-WALKER stated the study was of the impacts on Southeast Alaska, and McDowell Group did not measure any economic impact outside of the state or within Canada. REPRESENTATIVE BIRCH said watershed boundaries are not arbitrary, but are well-defined by geography and topography. Based on his background in mining engineering, Representative Birch expressed his concern that the study presented is of the economic impact on a series of transboundary rivers that does not reflect the economic opportunities on the other side [of the national boundary], which is a shortsighted and narrow focus; in fact, what is presented is not a full picture, and committee deliberations should not ignore the economic impact of 95 percent of the Stikine River watershed. CO-CHAIR JOSEPHSON asked whether Alaska should be concerned with Canada's economic welfare. REPRESENTATIVE BIRCH characterized Alaska and Canada as "joined at the hip," which is why Alaska's lieutenant governor is engaged in conversation with Canadian officials. He opined measuring economic assessment, divorced from that of Canada, is unrealistic and without understanding that the bulk of the river systems lie in Canada. He suggested the report should indicate, "This only represents 5 percent of the watershed that, that resides in the U.S." CO-CHAIR JOSEPHSON opined the close relationship between Alaska and Canada is the reason for the resolution. MS. SHELTON-WALKER clarified that if in any of the watershed economic activities, such as mining operations, were occurring that employed Alaskans, or that benefitted Alaskans, that value would have been part of the analysis; any activity within a watershed on either side of the boundary was taken into account. Not reported was the economic impact on Canada. REPRESENTATIVE BIRCH stressed the report should clearly indicate that no economic impacts on Canada were reported - which is a significant shortcoming if the goal is to weigh the merits of the watersheds. REPRESENTATIVE WESTLAKE asked what is similar, or dissimilar, in comparing Canadian and American mining discharge permits related to pollution issues. He restated his question, adding that mining discharge permits [regulate] affluency and asked, "Is there something on the Canadian side that we're unaware of or that we've got a major concern about that could hurt my friends in the fishing industry? Is there something that prompted this?" 2:46:52 PM CAROLINE HAMP, Staff, Representative Dan Ortiz, Alaska State Legislature, responded that the permitting and financial assurances required of mines differ between Canada and the U.S. REPRESENTATIVE TALERICO inquired as to whether side-by-side comparisons are available. MS. HAMP directed attention to documents provided in the committee packet [entitled, "Canadian Mines on Transboundary Rivers," and dated 3/16/17, and entitled, "Deficiencies in Post- Mt. Polley Reclamation Changes: BC Financial Surety for Mines BC Mine Reclamation Code Changes] that are related to financial assurances and mining permits. 2:49:09 PM JILL WEITZ, spokesperson, Salmon Beyond Borders, informed the committee she previously served as a statewide compliance and enforcement officer for the Division of Water, Department of Environmental Conservation. She said robust watershed management is in response to concerns in Southeast Alaska. Salmon Beyond Boards is an initiative driven by commercial and sport fishing gear groups, concerned citizens, municipalities, conservation organizations, business owners, and tour operators throughout the region, including from B.C. Members of Salmon Beyond Borders have been working for the past three years to defend and sustain the Taku, Stikine, and Unuk river watersheds which provide culture and history, and contribute to Southeast Alaska's annual billion-dollar commercial fisheries and tourism industries. She expressed the support of Salmon Beyond Borders for HJR 9. More than ten large-scale, open-pit, and underground mines are in development in the watersheds flowing from B.C. that create the entire spawning habitat in Alaska. The three rivers provide livelihoods in communities and there is widespread support for HJR 9 from Alaskans and the Alaska congressional delegation. Ms. Weitz said the Salmon Beyond Borders campaign appreciates the administration's attention to this matter; however, the 2015 amended memorandum of understanding (MOU) and the 2016 SOC between Alaska and B.C. are nonbinding voluntary agreements that do not possess the authority to address international disputes. In addition, the SOC does not provide federal commitments or funding. REPRESENTATIVE BIRCH observed that the aforementioned ten mines in development are not reflected in the economic impact report on the watersheds, but they would provide many jobs and economic potential. He asked for their locations. MS. WEITZ said the mines can be found on the "B.C. mining industry map" which shows an array of underground, open-pit, and coal projects. 2:54:22 PM CHRIS ZIMMER, Alaska Campaign Director, Rivers Without Borders, informed the committee he has been working on transboundary river issues for 16 years. Mr. Zimmer stated his support for HJR 9, and said the resolution addresses not an environmental issue, but is an effort to protect Alaska jobs and resource from cross-border threats - an issue that has united residents across the region. Further, the issue is not how well Alaska manages its resources, but the resolution seeks to ensure Alaska resources are not harmed by activities across the border, where Alaska state agencies do not have authority. In fact, neither Alaska nor B.C. have exclusive jurisdiction for resource management, their respective federal governments hold the primary role for transboundary issues. Involved are an international border, several sovereign governments, and international treaties, all of which make this a federal issue. He encouraged use of the [Boundary Waters Treaty of 1909 (BWT)], in conjunction with the aforementioned SOC, and turned attention to the history of the Tulsequah Chief mine. Twenty years ago, Alaska fisherman called for the International Joint Commission authorized by the BWT to address the Tulsequah Chief mine that was abandoned in 1957 with no reclamation measures. Inspections at the site have found acid mine drainage and permit violations; however, the B.C. [government] continues to wait for a new owner to clean up the mine, and claims there is no emergency, even though toxic mine discharge continues to drain into salmon habitat and there is no commitment to clean up the site. Although B.C. Minister of Energy and Mines Bill Bennett promised to clean up the mine in 2015, there has been no result, indicating that B.C. water quality standards are not enforced, except in an emergency. Mr. Zimmer opined bonding in the B.C. mining industry is inadequate if a company declares bankruptcy, and there is weak enforcement of environmental laws, thus binding and enforceable protections are needed. He concluded that a coordinated state and federal approach - utilizing the BWT and the SOC - is best. 2:57:59 PM CO-CHAIR JOSEPHSON asked whether Mr. Zimmer believed the Canadian government is not enforcing its federal laws. MR. ZIMMER answered that the Canadian Federal Fisheries Act prevents deleterious substances from entering salmon habitat and although inspections have found deleterious substances are entering salmon habitat, no enforcement action has been taken. Furthermore, B.C. is not enforcing its mine permits, which direct both [previous owners of the Tulsequah Chief mine] to stop the discharge. REPRESENTATIVE RAUSCHER stated a resolution to [the U.S. secretary of state and the Alaska congressional delegation] is not a very powerful tool. REPRESENTATIVE WESTLAKE recalled testimony that there are 11 to 12 operating mines, and asked whether there are other abandoned mines. MR. ZIMMER clarified that there are 11 to 12 mines either operating or under development in this region. The Johnny Mountain mine is another abandoned mine that was not reclaimed; material was burned and buried at the site, and there is a potential for acid drainage. He warned that the current expansion of mining warrants federal authority. REPRESENTATIVE BIRCH expressed his support for the fishing industry. He suggested the mining industry should be engaged in this issue as - worldwide - the mining industry is compelled and interested in, "... doing the right thing by the, the community." Furthermore, it is more constructive for an economic impact report to include all the businesses in the studied watersheds, and to involve all the interested parties in Canada and Alaska. Representative Birch acknowledged that mines that were operated in the '50s and earlier need to be cleaned up. 3:03:07 PM REPRESENTATIVE PARISH asked whether the standards for mining permitting are more, or less, strict in Alaska, as compared to Canada. MR. ZIMMER advised in Alaska, a mining company is required to post a full bond to reclaim the proposed mine before beginning operations. Canada uses a risk-based approach, and the mining company posts a percentage - or a corporate guarantee - thus if the company is bankrupt, the bond is inadequate and there is no recourse. Also in Alaska, mixing zones in salmon habitat are prohibited; in B.C., for example, the proposed Kerr-Sulphurets- Mitchell (KSM) Project would use the Unuk River from the mine to the border as a mixing zone. He opined in general, because of the bonding requirement and mixing zone prohibition, Alaska standards are stronger; however, related to other activities, "It really becomes a mixed bag, where it kind of evens out ...." REPRESENTATIVE DRUMMOND inquired as to how Rivers Without Borders responded to the [Mount Polley tailings dam breach in B.C. on 8/4/14]. 3:05:23 PM MR. ZIMMER recalled the Mount Polley mine tailings dam failure in August 2014, which sent billions of gallons of mine waste downstream into salmon habitat, was notice to his organization that tailings dams - in many cases - are not constructed to last forever. Also, the failure demonstrated that mixing water with tailings meant the contaminants were carried downstream; without water, the dam failure would have resulted in "a small landslide." In response to Mount Polley, Mr. Zimmer said Rivers Without Borders instigated studies with a focus on major proposed mines that would use large tailings dams mixed with water, and supports "dry stack" technology which puts dry tailings behind a dam. Also, Rivers Without Borders is searching for a better design for building tailings dams, and is analyzing B.C.'s response to the Mount Polley dam failure. 3:07:30 PM REPRESENTATIVE DRUMMOND referred to a letter [addressed to the Honorable John Kerry, Secretary, U.S. Department of State, signed by the Alaska congressional delegation, and dated 5/12/16] and asked whether the actions requested therein, if in effect in B.C., would have affected the Mount Polley "outcome." MR. ZIMMER said, "It very well may have, because in the, there were a number of failures made in the construction and operation of that dam, and the maintenance of it." For example, too much water was introduced, the dam was not constructed properly, and the dam was constructed on a weak layer of glacial till soil. More oversight and involvement by Alaska in permitting processes, and federal engagement, may have prevented the failure at Mount Polley. 3:09:32 PM CO-CHAIR JOSEPHSON opened public testimony on HJR 9. 3:09:46 PM JERRY MCCUNE, President, United Fisherman of Alaska (UFA), said the Southeast members of UFA are very concerned about "what could happen on our side of the border." Jobs are important in Canada and Alaska, and UFA urges the Canadian federal government to consider better safeguards for new mines which - if they fail - can negatively affect jobs in Canada and Alaska. He noted members of UFA have been in touch with mining companies, and look at each [mining] project individually in order to open dialogue between jurisdictions. Mr. McCune pointed out an abandoned mine located in the important Taku River watershed has been leaking for years without action from the Canadian government, and said members of UFA support the resolution. 3:11:26 PM MIKE SATRE, Manager of Government and Community Affairs, Hecla Greens Creek Mine, President, The Council of Alaska Producers, and Vice President, Alaska Miners Association (AMA), said he is a lifelong Southeast Alaskan who is a member of the [State of Alaska Transboundary Working Group] representing AMA, and he is speaking on behalf of AMA. Mr. Satre said contrary to the resolution, industrial development of the transboundary [region] is not experiencing unprecedented rapid expansion, as one mine has been opened, one is under construction, and others are in inactive or exploration status. Although AMA supports Alaskans' interest in upstream development located in another country, asking for involvement by the federal government is a fallacy when the existing system is working. He urged the committee to amend the resolution to support the MOU and SOC signed by Governor Walker and Lieutenant Governor Mallott, because dismissing these agreements as nonbinding sends a message to B.C. that "we don't want to engage." Furthermore, even prior to the MOU and SOC, Alaska permitting agencies were able to facilitate permitting changes in the Canadian process, and will continue to do so. He said supporting the MOU and SOC furthers the Alaska congressional delegation as it seeks to protect the state's resources. Mr. Satre also referred to the letter [addressed to the Honorable John Kerry, Secretary, U.S. Department of State, signed by the Alaska congressional delegation, and dated 5/12/16] and advised four of the five requests therein are fulfilled by the MOU and SOC; the remaining request relates to the International Joint Commission authorized by the BWT, and he opined said joint commission is "a body that's outlived its usefulness." He remarked: We have the laws in place on both sides of the border, in fact, we have a treaty in place that says, "Thou shall not pollute waters across borders," so we already have the means to deal with the issues here. ... It's important that the legislature make its opinion known on issues like the transboundary. It's important that legacy issues like Tulsequah Chief are dealt with. ... However, we still believe this version of HJR 9 has multiple problems and needs significant amendments, but we think we can amend it and move it forward with everybody supporting it. [HJR 9 was held over.] 3:15:51 PM CO-CHAIR JOSEPHSON recessed the House Resources Standing Committee meeting at 3:15 p.m., to reconvene on 4/13/17 at 5:00 p.m.