SENATE RESOURCES COMMITTEE March 31, 1999 3:12 P.M. MEMBERS PRESENT Senator Rick Halford, Chairman Senator Pete Kelly Senator Lyda Green Senator Sean Parnell Senator Georgianna Lincoln MEMBERS ABSENT Senator Robin Taylor, Vice Chairman Senator Jerry Mackie COMMITTEE CALENDAR SENATE CONCURRENT RESOLUTION NO. 7 Supporting the responsible development of the Tulsequah Chief Mine through the cooperative effort of Alaska and British Columbia and urging Governor Knowles to withdraw his request for a referral of the Tulsequah Chief Mine to the International Joint Commission under the Boundary Waters Treaty. -MOVED CSSCR 7(RES) OUT OF COMMITTEE CS FOR HOUSE JOINT RESOLUTION NO. 13(FIN) Relating to using oil spill settlement funds to create a long-term research and monitoring endowment. -MOVED CSHJR 13(FIN)OUT OF COMMITTEE CS FOR HOUSE JOINT RESOLUTION NO. 11(O&G) Urging the United States Congress to pass legislation to open the coastal plain of the Arctic National Wildlife Refuge, Alaska, to oil and gas exploration, development, and production. -MOVED SCSHJR 11(RES)OUT OF COMMITTEE PREVIOUS SENATE COMMITTEE ACTION SCR 7 - See Resources Committee minutes dated 3/26/99. HJR 11- No previous Senate action. HJR 13 - No previous Senate action. WITNESS REGISTER Mr. Williams Atlin, British Columbia POSITION STATEMENT: Supported SCR 7. Mr. Bob Marmichael Atlin, British Columbia POSITION STATEMENT: Supported SCR 7. Senator Drue Pearce State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Sponsor of SCR 7. Mr. Mike Conway, Director Division of Air and Water Quality Department of Environmental Conservation 410 Willoughby Ave., Ste 105 Juneau, AK 99801-1795 POSITION STATEMENT: Commented on SCR 7. Mr. Ken Taylor, Director Division of Habitat P.O. Box 25526 Juneau, AK 99802-5526 POSITION STATEMENT: Commented on SCR 7. Ms. Wilda Rodman, Staff Representative Therriault State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Commented on HJR 13 for Representative Therriault. Ms. Molly McCammon Exxon Valdez Trust Council 645 G Street, Ste. 401 Anchorage, AK 99501 POSITION STATEMENT: Supported HJR 13. Ms. Wendy Redman University of Alaska POSITION STATEMENT: Supported HJR 13. Ms. Judy Jordan, Aide Senator Gail Phillips State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Commented on HJR 11. Representative Gail Phillips State Capitol Bldg. Juneau, AK 99811-1182 POSITION STATEMENT: Commented on HJR 11 for Representative Phillips. Ms. Julie Raymond Yakoubian P.O. Box 84666 Fairbanks, AK 99708 POSITION STATEMENT: Opposed HJR 11. Mr. Brenden Raymond Yakoubian P.O. Box 84666 Fairbanks, AK 99708 POSITION STATEMENT: Opposed HJR 11. Mr. Willy Dunne P.O. Box 15043 Fritz Creek, AK 99603 POSITION STATEMENT: Opposed HJR 11. ACTION NARRATIVE TAPE 99-20, SIDE A Number 001 CHAIRMAN HALFORD called the Senate Resources Committee meeting to order at 3:12 p.m. Present were Senators Green, Pete Kelly, Parnell, and Halford, Chair. Senator Pearce, sponsor of SCR 7, was also present. CHAIRMAN HALFORD announced several people would be participating via teleconference from Atlin, British Columbia. SCR 7-TULSEQUAH CHIEF MINE MR. WILLIAMS, testifying from Atlin, stated he believes the Tulsequah Chief Mine project will benefit the communities from Whitehorse to Skagway. He stated he represents about 40 people who support the project. CHAIRMAN HALFORD noted the committee received a petition signed by a number of people who support the project, and the petition has been entered into the record. MR. BOB CARMICHAEL, a local contractor and former road superintendent, testified from Atlin in support of the Tulsequah Chief Mine project as it will provide year-round employment for local people and allow them to stay in the community. SENATOR PEARCE informed committee members she sent a memo to both Commissioners Rue and Brown asking them to describe their continuing concerns about the project related to the response received from the British Columbia Ministry of Environment, Lands and Parks(BCMELP) in November about the Alaska Department of Environmental Conservation's (ADEC) and the Alaska Department of Fish and Game's (ADFG) environmental concerns. She noted neither department responded to the BCMELP response. She asked both Commissioners to bring the concerns that they do not believe can be resolved directly with the BCMELP to the Alaska Legislature. She explained her ongoing concern is that Alaska should not try to impose its permitting process on to another government and she believes the Administration has taken a position that will ultimately disable the project from moving forward. MR. MICHAEL CONWAY, Director of Statewide Public Service Division of DEC, stated he is involved in the coordination of permitting and overview of the Tulsequah Chief Mine. He stated one outcome of the government to government interaction that has benefitted both sides has been the ability to continue a dialog about the standards. The Canadians have reviewed Alaska's water quality standards and find their own to be comparable. ADEC and ADFG have told the BCMELP they are not interested in permitting the project but they want assurances that the resources at risk are protected. BCMELP has worked directly with Alaska permitting staff to exchange information. SENATOR PEARCE asked Mr. Conway to address ADEC's concerns in the order contained in the response from BCMELP. She pointed out it is her understanding that the response from BCMELP addressed each concern raised by the federal government and ADEC and ADFG. MR. CONWAY said ADEC and ADFG are in agreement with the points made in that response. He discussed the Summary of Technical Responses on page 3 as follows. The first issue is about the tailings impoundment. The USEPA is handling the tailings impoundment issue and continuing government to government negotiations between the Canadian government and Region X of EPA are ongoing. CHAIRMAN HALFORD asked if EPA Region X requested mediation. MR. CONWAY replied that he believes the request made was a consolidated effort by state and federal agencies. SENATOR 236 SENATOR PEARCE stated her concern is that it is unnecessary to use channels in Washington, D.C., and that Alaska officials can pick up the phone and call the Canadian officials. She asked Mr. Conway why the Administration is pushing state department intervention when he just said ADEC does not have any specific disagreements with the Canadian government's response. She emphasized there is no point in escalating problems with British Columbia unnecessarily, and that anytime the U.S. government and Ottawa get involved the issue gets more confusing and less is accomplished. MR. CONWAY replied ADEC is speaking directly with BC government officials so a direct process is ongoing. CHAIRMAN HALFORD asked Mr. Conway to continue discussing ADEC's specific concerns. MR. CONWAY stated monitoring long term enforcement has not been an issue with ADEC and the Migratory Bird Act issue is either an ADFG or US Fish and Wildlife concern, not ADEC's. MR. CONWAY referred to page 8 of the BC government's response to the development of design specifications covering mixing zones. BCMELP has reviewed the Alaska mixing zone regulation and agrees with the proposed remedy as it relates to the decision on the waste management act permit. CHAIRMAN HALFORD affirmed ADEC and the BC government are in agreement on that issue. MR. CONWAY said that is correct. MR. CONWAY stated ADEC and the BC government also agree on number 2(b) of the response, entitled "Chronic Mine Effluent Toxicity," which reads: Canada and BC agree with the three items identified in the remedy as it relates to the issuance of the waste management act permit and the approach to be undertaken is summarized below. MR. CONWAY referred to 2(c) on page 9, entitled, "Turbidity and Sedimentation," and read the following: BCMELP agrees with the two items identified in the remedy and the approach to the undertaking as summarized below. He said there is no disagreement here, nor with 2(d). MR. CONWAY summarized that, in essence, the Canadians have agreed to work with us to get information. The remaining issues we have pertain to getting the opportunity to review the actual information. They have agreed on the approach by working with us several times a week on exchanging information. There are about a dozen items the Division still needs to get information on even though DEC is busy permitting Alaska projects. CHAIRMAN HALFORD asked if DEC felt the IJC was necessary. MR. CONWAY answered that he didn't know since good progress is being made. But prior to the Governor requesting the referral, we were being left out of the discussion. He noted that the way Canada permits their projects, they do a different level of prepermitting and getting the permit out. Once the project starts, they go back and make changes and redesign the project. They have a lot of monitoring and oversight enforcement. Number 342 SENATOR PEARCE said she thought they used the same process to develop other mines in our joint watersheds in Southeast. She asked Mr. Conway if there was anything he had asked for that they had flat out said "No" to. MR. CONWAY answered no. SENATOR LINCOLN asked if there are major concerns on his list that feels won't be addressed. MR. CONWAY explained that most of the tasks on his list will take months to accumulate the information. Some of them require three or four months like the risk assessment which requires looking at the representative samples of the effluent. We also need mixing zone calculations which they call dilution. We haven't asked them to adopt Alaska's water quality standards, but have asked for something comparable. They are responding with what they say is an equivalent. Base line data is needed and spring is the best time to do that. Toxicity testing needs to be done for both acute and chronic toxicity. We haven't seen the data Mr. Ringstad referred to showing that the trout all survived after 36 hours (LC50 test). SENATOR LINCOLN asked if there was anything to keep the Canadian group from continuing their project and are we slowing it up with our list. MR. CONWAY said he didn't believe we were slowing them up. This project requires follow-through as with any U.S. mine. After four years of work, a U.S. mine is about ready to go; whereas the Canadian project is behind because their process is a bit different. SENATOR PEARCE clarified that no one alleged that the permitting process was stopping the project, but that going to the IJC would likely take two years which would slow down the mine. SENATOR LINCOLN wanted to make sure that the things they are requesting do not hold up the project. Number 420 MR. KEN TAYLOR, Director, Division of Habitat, said his concerns are primarily related to salmon and salmon habitat. The Taku is a producer of all five species of salmon in the Pacific and is the largest producer in Southeast, producing as much as 2 million salmon annually. About 400,000 are cohos, 300,000 are sockeyes, 100,000 king salmon, 1 million pinks, and about 50,000 chums. This river's production compares very evenly with the Copper River, the Susitna, and the Yukon Rivers. They would be asking the same questions and seeking the same assurances if a project were proposed in any of the other large rivers. The economic value of the Taku salmon resource is really large. The commercial gillnet fishery is worth about $2.8 million to about 100 permit holders and the commercial troll harvest of coho for 460 permit holders is worth about $1 million with an average catch of about 58,000 cohos. These don't include the value of the salmon to the seafood processors in local communities. Sport angling on the Taku is also extremely important, contributing about $6.4 million in direct spending to the Juneau economy. In high years, as many as 10,000 kings are taken - about 40 percent of which are from the Taku; about 50,000 cohos - about 40 percent from Taku; and about 32,000 anglers receive benefits from this system. In the US/Canada Salmon Treaty process, both countries have committed to special enhancement and conservation measures for trans boundary stocks that include the Taku River sockeyes. The State's special concern for Taku River salmon is consistent with our position in other treaty negotiations. MR. TAYLOR said our major concerns now are with the 75 miles of road that would access the mine site and the many river crossings. If they are not designed, constructed, and maintained properly, we are going to lose spawning habitat. We have very limited field studies documenting sockeye spawning adjacent to and immediately down stream of the mine site; this applies to juvenile coho, sockeye, and king salmon just downstream of the mine, as well. Most extensive thorough surveys are expected to document additional salmon spawning and rearing areas at stream crossings and in areas potentially affected by the effluent. The proposed tailings disposal site is on an active alluvial fan and adequate base line data and detailed engineering are not yet available to assure the State there will not be water quality problems. MR. TAYLOR said he thought it was reasonable that critically important concerns be resolved prior to permitting, but the Canadians have a different process. We are not asking them to adopt our process, but we do want to be involved in the critical decisions that should be made before the overall decision is made. The toxicity of mixing zones to fish is still unknown for several reasons and this is being worked on with DEC. The Tulsequah ore body is very similar to that of the Britannia Mine which has destroyed the salmon run in Britannia Creek and further impacted Howe Sound. Contingency plans for emergency closure of the mine and the level of government inspections and enforcement capability is one of the things we think should be finalized as part of the mine approval process, not something that should happen afterwards, he said. Our involvement in the Canadian review process has been constructive and we have been making progress. We still have numerous concerns regarding fish habitat protection. Many of these concerns have been protected in the response we got from Canada. The response is still fairly vague because there are a lot of unknowns. Our Canadian technical counterparts have agreed our resource concerns are legitimate ones. In discussions with Canada, MR. TAYLOR said, we have begun to agree on reasonably mine development standards, but so far it's informal and voluntary and relies on Canada's continued invitation to us to participate. In summary, Alaska has enormous economic interest in this watershed and we're proud of the fact that our salmon stocks are healthy including those in the Taku River and we want to keep them that way. Quite frankly, we look south across the border and are less than impressed with British Columbia's commitment to healthy and productive salmon fisheries. The bottom line is when we look at the cost and benefits of the Tulsequah Chief mine, it appears that the costs are all on our side of the border and the benefits are on the Canadian side, but we have never said no to the mine and we are looking to get answers to serious questions. We are asking to have a specified meeting for a role in the permit process. Because the mine is in a different country, we have had to use different tools to protect our vitally important salmon resources. CHAIRMAN HALFORD asked if there was any point at which the Department expects to have access to an evaluation on-site of raw data and information and actually look at potential stream crossings. MR. TAYLOR answered that he wasn't sure when that point would be, but when they get to the point of design, he hoped we would be involved since we have quite a bit of expertise in the Division on design and construction to mitigate or prevent damage to spawning habitats. He understands there are nine major stream crossing and probably as many as 200 culverts that will be necessary in this system. If they are not designed properly, they will cut off a lot of spawning habitat. CHAIRMAN HALFORD commented that it will take a lot of finesse not to look like a direct attack on the sovereignty of the country. MR. TAYLOR agreed and said they don't have any direct funding to do these kinds of things. We are working in cooperation with California, Washington, and Oregon on culvert designs that will benefit the spawning salmon. This is the cutting edge of construction design that will benefit everybody. If the Canadians are not interested now, they will be soon. SENATOR PEARCE asked if there are specific questions the Canadian government haven't addressed. MR. TAYLOR answered one of the problems we are having is in the mixing zone design. We are dealing with a river that changes channels quite a bit. The mixing zone requires a certain amount of water to accomplish the detoxifying of the effluent. We don't know, at this point, what will happen if the river changes channels and they have their mixing somewhere else. These types of questions need to still be addressed. SENATOR PEARCE asked if we are requiring cleaner effluent than the intake water like we do in our own state. MR. CONWAY answered that we are not requiring anything, but we are asking for the data they have on it. If it got to a situation where we had some concerns about that level of effluent, we would have a technical discussion about it to see if we could solve that dispute. We haven't gotten to that point, yet. We would not require them to have a higher standard than we have in Alaska. We have agreement on them doing mixing zone calculations and getting that information. We haven't seen the data. CHAIRMAN HALFORD asked who's in charge of mixing zones. MR. CONWAY answered that Division of Water Quality. CHAIRMAN HALFORD asked if he would be in charge of the migration of the mixing zone with the migration of the mixing stream. MR. CONWAY said that is correct; they would do modeling of it and set up a sampling plan that would show how it's moving according to that model. The Alaskans and Canadians have agreed to this, but in authorizing a mixing zone, there are a number of things people need to show. He also regularly consults with ADF&G to make sure they are comfortable that the habitat and biota are protected. Number 570 SENATOR PEARCE moved to adopt a conceptual amendment adding the name of the member of the BC Assembly from the Taku area to the list of people this resolution will be sent to. There were no objections and it was adopted. SENATOR PARNELL moved to pass CSSCR 7(RES) with individual recommendations. There were no objections and it was so ordered. TAPE 99-20, SIDE B Number 590 HJR 13-UNIVERSITY ENDOWMENT FOR RESEARCH CHAIRMAN HALFORD announced HJR 13 to be up for consideration. MS. WILDA RODMAN, Staff to Representative Therriault, said HJR 13 supports the recent action of the Exxon Valdez Oil Spill Trustees(EVOS) to create a long term research and monitoring endowment using $115 million of the expected reserve. The resolution also encourages the Trustee Council to endow chairs in the Sciences at the University of Alaska and supports trustee efforts to work with the congressional delegation to obtain authority to increase the earnings on remaining settlement funds. Over the years, EVOS' funds have been used largely used to purchase lands for habitat preservation, but has been lacking in the area of research. This has left a critical gap in our understanding of this spill and how to respond in the future. An endowment would fulfill the intent of the Exxon Valdez oil settlement, a mission of the Trustee Council. MS. MOLLY MCCAMMON, Executive Director, EVOS, supported HJR 13 as it ties in very well with the long term plans of the Trustee Council to use the majority of the remaining funds for a long term research foundation. Number 562 CHAIRMAN HALFORD asked what the status was on negotiations on the Karluk and Sturgeon Rivers. MS. MCCAMMON answered that negotiations are ongoing and we don't have a deal with Koniag Corporation, yet. She hoped to reach a conclusion by some time this summer. CHAIRMAN HALFORD asked what value range she was talking about. MS. MCCAMMON said that it would not take a substantial portion of these funds to get a deal with Koniag. They have a disagreement on the value of long term protection of the Karluk and Sturgeon Rivers. The last offer of $24 million was rejected by Koniag. CHAIRMAN HALFORD asked if that were not successful and there was $170 million remaining, would there still be only $115 million transferred to the foundation. MS. MCCAMMON answered that the Council committed that by 2002 an additional $55 million would be committed to habitat protection. That would include Koniag and any additional small parcels. The remainder of the funds would go into a long term fund for research and monitoring. They anticipate that amount being $115 million. MS. WENDY REDMAN, Vice President, University of Alaska Statewide System, supported HJR 13. The Board of Regents along with the Public Advisory Committee have long been advocates of setting aside a research endowment from the very beginning. She encouraged the Trustees to use a portion of the research reserves to set up some additional endowments for some chairs at the University. A lot of work needs to be done with the results that have been generated through the money that has been expended so far - a lot of information on spill technology, restoration methods, ecosystem prevention. This provides them with an opportunity to endow a chair in perpetuity which takes about $2 million. SENATOR GREEN asked what was the impact on the University when a chair is endowed. MS. REDMAN explained that endowments are held by the University of Alaska which is a separate private corporation. They do all the investment and provide the University with the earnings of the fund for use. It shows up in the University budget as University receipts. SENATOR KELLY moved to pass SJR 13 from committee with accompanying fiscal notes with individual recommendations. There were no objections and it was so ordered. HJR 11-ENDORSING ANWR LEASING CHAIRMAN HALFORD announced HJR 11 to be up for consideration. MS. JUDY JORDAN, Aide for Representative Gail Phillips, noted that her sponsor statement was in their packets. Similar legislation has passed in previous legislatures and Representative Phillips wanted to reaffirm this legislature's support and give the opportunity to new legislators to express their support for it. She was concerned, also, that new members of congress understand that Alaska is strongly behind opening of ANWR. MS. JULIE RAYMOND YAKOUBIAN, Fairbanks resident, opposed HJR 11. The coastal plain is important to protect. It has a few hundred species of birds and has musk oxen, polar bears, and the Porcupine caribou herd. The coastal plain is important culturally for the people who depend on the Porcupine caribou herd. MR. BRENDEN RAYMOND YAKOUBIAN opposed HJR 11. He wanted them to keep three words in mind when thinking about oil development in the Alaska Arctic. The first is economy. It makes little sense to drill oil because it subjects us to the boom and bust cycle of the oil market. The second "e" is ecology. Scientists the world over have proved time again how crucial the Arctic's physical environment is to the rest of the planet. The third "e" is ethnocentrism. Largely euro-American legislative bodies have ignored the situation of its cognitive first peoples. This is illogical and immoral. CHAIRMAN HALFORD asked him if he had ever visited the ANWR. MR. YAKOUBIAN said he and Julie hadn't been beyond the Brooks Range. They have been to Cold Foot and have read extensive literature by people who have been in the operating areas for various reasons. CHAIRMAN HALFORD said his statements are unfortunate and unfair especially since he had never been to the areas. The description of garbage all over the place is not true. MR. YAKOUBIAN responded that Kuparuk was a lot different than Prudhoe Bay. MR. WILLY DUNNE, Homer resident, opposed HJR 11. He disagreed that development of the ANWR oil fields would help offset our declining oil revenues. ANWR is federal property and we would not get much in the way of royalties from it. ANWR is no more owned by Alaskans than the Statue of Liberty is owned by the state of New York. It is a national treasure. At one point Senator Murkowski commented that ANWR should be called the Arctic Refuge, because it is a wildlife refuge. SENATOR LINCOLN proposed amending HJR 11 to add a phrase that may have been accidentally left out: "WHEREAS the state will ensure the continued health and productivity of the Porcupine caribou herd and the protection of land, water, and wildlife resources during the exploration of development of the coastal plain of the Arctic National Wildlife Refuge and..." Number 310 CHAIRMAN HALFORD announced it would go on page 2, line 31. There were no objections and the amendment carried. REPRESENTATIVE PHILLIPS directed their attention to a technical amendment on page 2, line 4 noting the word "imported" should be "imports". SENATOR PEARCE said that she had a letter from the Mayor of the North Slope Borough that was written to President Clinton regarding Secretary of Interior Babbitt's support of the proposed wilderness designation for ANWR that she wanted entered into the record. The point is that the people who live in the coastal plain and across the North Slope for thousands of years would prove that the Arctic is not an untouched wilderness never visited by man. People have called it home as long as the caribou have calved. They believe they best know how to work with the federal and state agencies on how to protect the coastal plain. An erroneous inference made, SENATOR PEARCE said, by a gentleman from Fairbanks that Alyeska was somehow hiding something by all the security they have at Pump Station 1 and along the pipeline. She explained that security is required by the U.S. Department of Transportation who has the oversight authority through the right- of-way permit for the pipeline and Alyeska would just as soon not pay for all their security which is primarily to insure there are no terrorist attacks. CHAIRMAN HALFORD asked because we have legislation pending making this area wilderness, would it be wise to not only state we would like to see the coastal plain of ANWR open for exploration, but also that we oppose the designation of the coastal plain portion of ANWR as wilderness. REPRESENTATIVE PHILLIPS responded that would be a perfectly logical amendment to put in. She would be glad to work up another resolution. CHAIRMAN HALFORD said they could add another "Further Resolved". He announced an at ease from 3:35 to 3:40 p.m. CHAIRMAN HALFORD announced there was a proposed amendment on page 3, line 7 after the request for opening to insert "and that the Alaska State Legislature is adamantly opposed to further wilderness or other restrictive federal designations in the area of the coastal plain of the Arctic National Wildlife Refuge." SENATOR PARNELL moved the amendment. SENATOR LINCOLN objected because the Arctic village of Venetie in her district depends heavily on the Porcupine caribou herd and she thought they would be in opposition to the designation of wilderness. CHAIRMAN HALFORD asked if she meant they support the designation of wilderness. SENATOR LINCOLN said yes. CHAIRMAN HALFORD said he respected that position and said she could check that with them before it comes to the floor for a vote. He asked for those in favor of the amendment to raise their hands. SENATORS PARNELL, GREEN, PETE KELLY, and HALFORD voted yes; SENATOR LINCOLN voted no and the amendment carried. SENATOR LINCOLN said she wasn't speaking on behalf of the Tanana Chief's Conference, but she did have a conversation in which they expressed their opposition to the resolution, but hadn't yet testified or written a letter to that effect. She added that she truly believed that Arctic Village and Venetie utilize the Porcupine caribou herd in every aspect of their lives. There is no question in her mind that the folks would die without that herd. CHAIRMAN HALFORD responded that he believed development on the coastal plain would not in any way harm that herd, but he understands their concern. History of oil development has proven that herds have not been significantly damaged, particularly when the proposed development is a smaller footprint than Washington National Airport. There is also a substantial opinion that development can occur with no negative impact on that herd and on calving in that area. SENATOR PARNELL moved to pass SCSHJR 11(RES) from committee with individual recommendations. There were no objections and it was so ordered. CHAIRMAN HALFORD adjourned the meeting at 4:55 p.m.