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R E V I E WRESOURCE

Mining Perception 1, 4-5

Legislative Review 3

Session Perspectives 6-7

NPRA Amendments 8

ANWR Production 9

Wetlands Rulemaking 9

Wilderness Studies 10

Pogo Gold Project 11

A PERIODIC PUBLICATION OF THE RESOURCE DEVELOPMENT COUNCIL FOR ALASKA, INC. www.akrdc.org

PERCEPTION IS REALITY:Alaska’s Image Is Slipping InThe World Mining Industry

The Greens Creek Mine in Southeast Alaska near Juneau isprimarily underground with miles of tunnels extendingmore than 1,000 feet below the surface. It produces silver,zinc, gold and lead. It is owned by Kennecott Minerals andis a major contributor to the Juneau economy.

By Curt Freeman

My daughter’s fourth-gradeclass at Pearl Creek ElementarySchool in Fairbanks recently noticedthat the current edition of HarcourtBrace Social Studies’ IntermediateStudent Atlas was missing the world’slargest zinc deposit, the Red DogMine, from the Alaska land use and resource map. Her teacher encour-aged the class to notify the companyabout its error.

This oversight underscores a signifi-cant fact regarding Alaska in generaland its mineral resources in particular:perception is reality. To virtuallyevery other primary school student inthe country, the information in theIntermediate Student Atlas is reality.To Alaskans, it is not.

Perception departs from reality not

only in the classroom, but also in theboard room where corporate execu-tives often take a different view ofAlaska and its minerals industry.

On the plus side of our mineral in-dustry ledger, Alaska is elephant coun-try, endowed with some of the mostimpressive mineral deposits on earth.The Red Dog zinc-lead deposit is theworld’s largest. Greens Creek is oneof the world’s most prolific silvermines. Fort Knox is Alaska’s largestgold mine. The coal deposits nearHealy and in the Colville andMatanuska basins are some of thelargest in North America. And theDonlin Creek gold deposit hosts atleast 27 million ounces of gold, makingit the 16th largest discovery in theworld.

The fact that all of these deposits,except the coal fields, were discovered

in the last 30 years indi-cates the state is highlyu n d e r p r o s p e c t e d .Alaska’s vastness is wellknown, but few outsidethe state realize thatlands open to mineralentry here exceed what isavailable throughout therest of the United Statescombined. In fact, morethan 190 million acres inAlaska are open to min-eral entry, an area as largeas Chile and twice thesize of Nevada, two of

(Continued to page 4)

The Red Dog Mine, operated by Teck Cominco and owned by NANARegional Corporation, is the largest zinc producer in the world.

Resource Review is the official periodic publication

of the Resource Development Council (RDC),

Alaska's largest privately funded nonprofit economic

development organization working to develop

Alaska's natural resources in a responsible manner

and to create a broad-based, diversified economy

while protecting and enhancing the environment.

Resource Development Council121 W. Fireweed, Suite 250Anchorage, AK 99503Phone: (907) 276-0700Fax: (907) 276-3887E-mail: resources@akrdc.orgWebsite: www.akrdc.org

Material in this publication may bereprinted without permission providedappropriate credit is given. Writer & Editor Carl Portman

Executive Committee OfficersPresident Charles W. JohnsonSr. Vice President Mark HanleyVice President John ShivelySecretary Uwe GrossTreasurer Stephanie MadsenPast President Robert B. Stiles

StaffExecutive Director Tadd OwensDeputy Director Carl R. PortmanProjects/AMEREF Coordinator Jason BruneFinance/Membership Billie Rae Gillas

Page 2 June 2003 Resource Review www.akrdc.org

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A MESSAGE FROM THE EXECUTIVE DIRECTOR

(907) 276-0700 June 2003 Resource Review Page 3

HEADWAY MADE IN PERMIT REGIME,

LITTLE PROGRESS ON FISCAL FRONT

RDC’s top legislative priorities remained the same this year— streamline the State’s permitting processes and institute along-term fiscal plan.

Specifically, RDC advocated for reform of Alaska’s permit-ting processes while maintaining the state’s high environmen-tal standards, and for a long-term fiscal plan based on budgetdiscipline, new uses of Permanent Fund earnings and, if necessary, the institution ofa broad-based tax.

The good news isGovernor Murkowski andthe Legislature made a greatdeal of headway in reshap-ing Alaska’s permit regimeduring the recent legislativesession. Unfortunately,very little progress wasmade to balance the state’sbooks over the long run.

Executive Orders 106and 107, and Senate Bill 142completely restructure theState’s permitting organiza-tion. Now both theDivision of GovernmentalCoordination and theHabitat Division reside inthe Department of NaturalResources. These changes not only allow for a more efficientallocation of State resources, but also provide the regulatedcommunity with one point of contact when permitting a development project. Most importantly, these changes do notalter or compromise Alaska’s rigorous environmental standards.

In addition to organizational changes, the Legislaturepassed several bills with positive impacts on Alaska’s permit-ting system. House Bill 160 reforms the State’s air permit pro-gram. The bill accomplishes three major goals — it makesDEC’s program consistent with the federal program; it

differentiates between major and minor source permits andstandardizes the requirements for minor permits; and it restructures the program’s schedule of fees.

Senate Bill 74 makes a simple change to the renewal periodfor oil discharge and contingency plans from three to fiveyears. Increasing the time between renewals makes Alaska’sprogram consistent with the federal program and allows the

state to focus its resourceson site inspections ratherthan the office work associ-ated with plan reviews.

House Bill 145 does awaywith public interest litigantstatus except for claims that“establish, protect, or enforce” a right under theAlaska Constitution or theU.S. Constitution. The billalso prevents courts fromwaiving the bond require-ments when a group seeks aninjunction to stop a develop-ment project. This legisla-tion levels the playing fieldwhen it comes to litigatingover a development project.

Time and time again lead-ers throughout the business

community have warned that Alaska’s fiscal imbalance andregulatory morass were becoming barriers to private sectorcapital investment. While Alaska businesses face a host ofchallenges and uncertainties in their efforts to remain competitive, regulatory and fiscal policy are the two areaswhere government can make meaningful contributions.

The Governor and the Legislature demonstrated courageand leadership in reorganizing and reforming much of theState’s regulatory system for development projects. Theyshould apply the same qualities next session in solvingAlaska’s budget crisis.

A contingent of the RDC Board of Directors met in Juneau this past session with legislators and members of Governor Frank Murkowski’s administration on a wide range of issues. The RDC Board focused on legislation important to Alaska business and industry, as well as state fiscal issues. Above, Board members meet with Ernesta Ballard, Commissioner of theAlaska Department of Environmental Conservation.

Nearly 100 Anchorage teachers enrolled in anAMEREF training session held this April. Teachersearned professional education credits, which arenecessary to maintain their certification, whilelearning about Alaska’s mineral, energy, and for-est resources. Each participating teacher left witha resource kit full of Alaskan specific educationmodules, books, videos, and the very popular

mineral identification set. Training sessions are held regularly through-out Alaska and are free to anyone interested. If you know a teacher that

would like to receive a kit or participate in these training sessions, pleasecontact us at (907) 276-0700.

AMEREF is a partnership between the State of Alaska Department ofEducation and private industry whose mission is to provide Alaska students with the required resource background necessary to make in-formed and objective decisions concerning the management and development of Alaska’s natural resources. The curriculum is structuredto assist students in meeting current state education standards. RDC administers the AMEREF program with the support of private donations.

100 TEACHERS SIGN UP FOR AMEREF TRAINING

Page 4 June 2003 Resource Review www.akrdc.org

the mining industry’s favorite haunts.

Another plus for Alaska isits talented and experiencedlabor pool. And unlike manyother parts of the world,Alaska’s Native corporationshave been in business formore than 30 years and havea long history of partneringand working with the miningindustry. Today they repre-sent one of the industry’sstrongest business partners.

Alaska’s exploration trackrecord is another plus for thestate. The mining industryhas been extraordinarily successful at finding new re-sources here. For example,gold resources within thestate’s borders have grown

from just a few millionounces in 1980 to over 77million ounces in 2002, anenviable discovery rate of 5.5million ounces annually since1994. Perhaps more impor-tant is the fact that gold discovered during that sameperiod has been found at acost of less than $5 per ounceor about 25% of the world-wide average discovery cost.

On the minus side of theledger are things Alaskanswould rather not discuss.For example, over the last tenyears, about 75% of the annual exploration dollarsspent in Alaska come from

the corporate coffers ofCanadian companies. Forthese companies, puttingmoney in Alaska is a hardsell, given the significant taxincentives available toCanadian companies that in-vest in Canada and the US-Canadian dollar exchangerate.

Alaska’s “elephant coun-try” status belies the fact thatthere are virtually no mid-tier mines and, with the exception of a small anddwindling number of placergold operations, there are nosmall mines in the state. Ithas been pointed out by

detractors of Alaska that ele-phants are extremely difficultto find. Since no other sizedeposits appear to be eco-nomic, there is little reason toexplore in Alaska. The factthat Alaska is under-prospected can be attributedin large part to its lack ofroads and power facilities. Ifyou can’t get there, you can’tfind it!

Another negative is thatAlaska’s land status is viewedby many as being ofByzantine complexity andmany remember the devas-tating and lasting effect thatthe Alaska National Interest

ALASKA’S MINING INDUSTRY AS

VIEWED FROM OUTSIDE THE STATE

The Usibelli Coal Mine, a family-owned mine located outsideHealy, is the only operating coal mine in Alaska. The mine produces coal for Interior Alaska communities and has been along-time exporter to South Korea.

23

48

50

71

71

74

75

76

77

78

79

81

85

87

87

0 20 40 60 80 100

B. C. (37th)Yukon (23rd)Alaska (21st)

MexicoArizona

SaskatchewanNew Mexico

OntarioQuebec

AustraliaNew Brunswick

ManitobaChile

AlbertaNevada

Percent Score

54

59

62

63

64

64

67

68

68

74

83

83

84

86

89

90

94

0 20 40 60 80 100

B. C. (17th)Yukon (15th)Alaska (12th)

RussiaChina

S. AfricaNunavut

BoliviaNW Ter.

MexicoBrazil

OntarioPeru

NevadaAustraliaQuebec

Chile

Percent Score

Overall Investment Attractiveness Index Policy Potential Index

(Continued from Page 1)

(907) 276-0700 June 2003 Resource Review Page 5

Lands Conservation Act(ANILCA) land withdrawalshad on the mineral industry.In short, Alaska lands arethought by some to be com-plicated and subject to gov-ernment confiscation. As ifall that is not enough, manyview Alaska’s labor pool asexpensive and of limitedvalue to the mining industry.The fact that only one inseven employed in Alaskaworks in the private sectordoes not help the cause (thenational average is one inthree).

Since most industry inter-

est in Alaska comes fromfirms domiciled outside thestate, it is critical that we un-derstand what those firmsthink about the Alaska mineral industry. The mostuseful tool for addressing thissubject is a yearly summaryby Canada’s Fraser Institute.

Each year the FraserInstitute publishes the resultsof its annual survey of mineral investment attrac-tiveness for various politicaljurisdictions around theglobe. The survey scorescome directly from miningcompanies and their execu-

tives. This year’s survey wasfilled out by 27 major and131 junior mining companieswith combined explorationexpenditures of about $480million.

They were asked to rate 47political jurisdictions that in-cluded Alaska, several west-ern U.S. states, the Canadianprovinces and a number ofmineral-rich foreign coun-tries. The questionnaire islengthy and results in threerankings: mineral potential,policy potential and an aver-age of these two which formsan overall mineral investmentattractiveness index. Alaskahas faired reasonably well inpast surveys — until thisyear.

In last year’s survey, Alaskaranked seventh worldwide inoverall mineral investmentattractiveness. This year itranked twelfth. The conclusion that must bedrawn is that Alaska’s mineral investment climatehas degraded significantly inthe last year.

Alaska’s ranking in the policy potential index waslikewise gloomy. The sur-

vey’s policy potential indexranks whether infrastructure,labor, land use, environmen-tal and regulatory issues aresignificant deterrents or in-ducements to mineral invest-ment. In this year’s survey,Alaska would have ranked animpressive third out of 47 jurisdictions if these issueswere ignored. Unfortunately,Alaska ranked 21st whenthey were included in thesurvey.

Again, the conclusion isinescapable: infrastructureand land use concerns, as wellas regulatory policies are asignificant deterrent to min-eral investment in Alaska.With two strikes againstAlaska, surely mineral poten-tial will save the day, won’tit? The answer is a surprisingand emphatic “no.” Last yearAlaska ranked fourth formineral potential, but thisyear the state suffered a dramatic fall to 11th place.

The perception thatAlaska’s mineral potential hassomehow fallen in the spaceof a single year should sendred flags flying and alarmbells ringing for anyone familiar with the state’s impressive mineral endow-ment. The survey results sentme back to the data to findout why Alaska’s mineral potential changed so drasti-cally and suddenly. Keep inmind this drop came duringthe same time frame in whichAlaska’s first 20-plus millionounce gold deposit was announced at Donlin Creek.Obviously Alaska’s mineralpotential did not in fact degrade, but what did take abig hit was the “perception”of that mineral potential.

If perception has dealtAlaska’s mineral potential anunwarranted blow, how didperception affect Alaska’sranking in the policy poten-tial portion of the FraserSurvey? The same negative

66

70

74

74

77

81

81

83

85

87

89

96

96

96

100

98

0 20 40 60 80 100

Yukon (13th)Alaska(11th)South Africa

B. C. (10th)Mexico

ChinaNW Ter.NunavutNevadaOntarioRussia

PeruBrazil

AustraliaQuebec

Chile

Percent Score

Mineral Potential Index

Located 25 miles north of Fairbanks, Kinross Gold Corporation’s Fort Knox Mine has been the largest gold producer inAlaska since its inception in 1997. The company also operates the True North gold prospect nearby. Both mines are important components of the Interior Alaska economy.

(Continued to page 10)

Page 6 June 2003 Resource Review www.akrdc.org

GUEST OPINION

The story of this legislative session is more remarkable forwhat did not happen, then for what did.

Governor Murkowski and the Republican majorities rodeto victory on the twin platforms of resource development andno new taxes – and the assurance that with the stars aligned,the fiscal gap would be solved. Major resource developmentremains elusive, the fiscal gap yaws, ready to send the economy into a tailspin, and efforts to close out the budgetwithout Democratic participation led to a series of contortions and gamesmanships that put partisan politics before Alaskan needs. That’s why political astronomers admitthat they may need new telescopes. Certainly, the myth that aone-party state is good for Alaska has now been dispelled.

Democrats have said repeatedly that we would entertain afiscal plan that was fair, that added up, and that protected theAlaskan economy. We began this session respect-ing the mandate of the last election and allowedthat we would give the Governor every chance tosucceed.

We watched and waited for GovernorMurkowski to propose a comprehensive fiscalplan, but he never did. As far as the fiscal gap goes,Governor Murkowski never really engaged thelegislature, never demonstrated commitment to hisideas for the fiscal gap, and never provided theleadership needed to solve the problem. His ideaslacked coherence, being a grab bag of random taxesand user fees and budget cuts targeted more at thebottom line in the budget than in delivering the level and qual-ity of service necessary for government to best serve the state’sneeds. The Administration’s style further complicated theissue – alternating between complete lack of involvement,threats to recalcitrant legislators, and untimely interventionthat upset precarious legislative balance.

A desperate last minute bid to impose a sales tax founderedbecause the Senate never embraced the idea, the Governor remained lukewarm until the waning moments of session, andmost crucially, because the plan itself was flawed, both politically and economically.

The primary political failure came because the plan largelyneglected to take into account the revenue needs of the 97Alaskan communities that already have a sales tax and becauselegislative leaders rejected discussion of any other proposals.Economically, the sales tax offered had not been subjected torigorous analysis as to its impact on the economy. In addition,the tax should have been the product of expert consultationand advice – and was not. The trajectory of this failure wasobvious since its launch, which is why Democrats have insisted that we need “a plan for a plan”, leading to a compre-hensive fiscal plan for the state, one that integrates state and

local revenue raising measures.Rather than put in the hard work needed to arrive at a fiscal

plan, the Administration has chosen to inflict deep cuts on thestate budget. Legislative acquiescence to cuts of this scaleamounts to an abdication of responsibility and does injury tothe notion of checks and balances central to our system ofgovernance.

Importantly, the economic consequences of withdrawingseveral hundred million dollars from the state’s economy aredire – and the costs to maintaining critical services and thequality of life are irresponsible.

For example, in a state severely lacking in venture capital, itis folly to eliminate the Alaska Science and TechnologyFoundation. Breaking the promise of the Longevity Bonusraises questions of the state’s credibility that will take a gener-ation to repair – as does incomplete funding of the state’s ob-ligation regarding bond debt reimbursement. It constitutes amoral and ethical failure to sacrifice credibility for budgetaryexpedience.

Democrats offered approximately $700 million of revenueraising measures. Unfortunately, these proposals have largelybeen ignored. Carbon sequestration, an emerging global market that would allow Alaska to sell pollution credits whilesimultaneously encouraging forestry and heavy oil recovery,could raise upwards of $400 million. Sale of state assets,amounting to a consolidation of the state’s bonding entities,also could assist to the tune of $150-200 million. Better use ofthe railroad’s bonding authority could ease pressure on thecapital budget. Efforts to reduce pipeline tariff costs similarlycould decrease state costs while stimulating oil production.

We are only marginally closer today to resolving the fiscalgap than we were at the beginning of session. This is anAlaskan problem that defies partisan solution. I look forwardto the time when Republican leaders offer all Alaskans ameaningful place at the table and show an open mind to inno-vative approaches and solutions to the fiscal gap.

Until then, the instability of government budgeting ripplesinto the resource development community, adding risk anduncertainty to businesses that already operate on thin margins.Already, we skate too close to a dangerous tipping point.

LEGISLATIVE SESSION WAS

A “FISCAL FIASCO”

“Democrats have said repeat-edly that we would entertain afiscal plan that was fair, thatadded up, and that protected theAlaskan economy. We began thissession respecting the mandate ofthe last election and allowed thatwe would give the Governorevery chance to succeed.”

By Representative Ethan Berkowitz, Minority Leader

(907) 276-0700 June 2003 Resource Review Page 7

The challenges facing Alaska in the 21st Centuryare not new. It is no longer enough to hold our-selves out as ‘open and ready for business’— it’stime we change the way we do business in our state.The elections of 2002 put into place a new governor,state senate, and state house that can work cooperatively and constructively toward addressingthe obstacles blocking our way.

Alaska’s permitting system has needed a completereview and overhaul for some time. Developedpiecemeal over the 43 years since statehood, ourstate’s process for approving development projectsbecame an increasingly lengthy and disjointed onethat confused the public, agencies, and applicantsalike. Industries from across the state stepped forward andasked for clarity, consistency, and timeliness. Action wastaken in four specific pieces of legislation:

• House Bill 191 reforms the Alaska Coastal ManagementProgram. Local coastal plans will now have to be clear, con-cise, and contain objective, measurable standards.

• Senate Bill 142 designates the Department of NaturalResources as the lead state agency in permitting projects.

• Senate Bill 74 extends the period of time between renewalsfor oil discharge and contingency plans (C-plans). This willallow agencies more time to enforce the terms of such plans.

• House Bill 160 implements the findings of the Air PermitsWork Group and a benchmark study that will bring Alaska upto date with the national permit regime.

It is important to note that for far too many projects, permitapproval has not been the signal to proceed, but the openinggun in lengthy, costly litigation. The threat of litigation hashad a chilling effect on investment in Alaska. For these reasons, the Legislature passed two pieces of legislation thatwill make it more difficult for sound projects to be held up:

• House Bill 145 abrogates the judicially-created public interest litigant doctrine that shields those who wish to stopprojects through litigation. The bill shifts that legal protectionto claims that preserve, enforce, or establish a right under theUnited States Constitution or the Alaska Constitution. Onlythat portion of a claim devoted to such rights will be affordedthe protections given under the former doctrine.

• House Bill 86, introduced by Representative Fate, createsa civil liability for malicious claims against state permittedprojects. It also limits standing to bring claims under theAlaska Coastal Management Program to applicants, affectedcoastal resource districts, and those who bring constitutionalclaims.

While many steps were taken to improve the regulatory climate in Alaska, it is also important to recognize the need forcapital investment in resource-based industries. If we want industry to invest scarce capital, we must be willing to reward

GOVERNOR, LEGISLATURE WORK TOWARD

BETTER BUSINESS CLIMATE IN ALASKA

GUEST OPINION

“Much was accomplished thislegislative session. Alaska’sgovernor and Legislature trulyare changing the way we dobusiness in Alaska. Removingobstacles to the development ofour natural resources is a highpriority for all of us.”

such actions so long as they present a reasonable chance of in-creasing the value or production of our resources. This pastsession, two measures passed the Legislature that will advancethis goal:

• House Bill 90, introduced by Senator Gary Stevens, provides a salmon product development tax credit for thepurpose of developing value-added salmon products.

• Senate Bill 185, introduced by Senator Waggoner, offersan oil and gas production tax credit to companies that per-form exploration work from July 1, 2003 through July 1,2007. The credit will bring the cost of exploration in Alaska inline with other places around the world.

With all of these changes to the way we do business inAlaska, there remains one more impediment to investment inAlaska—fiscal uncertainty within the State’s budget.Industries are wary of investing additional capital in projectsthat might be made uneconomic if taxes have to be raised tomake up our shortfall.

The Alaskan public has demanded that we get governmentcosts and growth under control before they will be willing toaccept broad-based taxes. The Legislature passed numerouspieces of legislation to do just that, thereby reducing the pres-sure for additional state revenue. In addition, the Trustees ofthe Alaska Permanent Fund have again brought forward apercent of market value (POMV) proposal for considerationon the 2004 election ballot. The Senate Judiciary Committeewill continue discussion of that concept throughout the stateduring the interim.

Much was accomplished this legislative session. Alaska’sgovernor and Legislature truly are changing the way we dobusiness in Alaska. Removing obstacles to the developmentof our natural resources is a high priority for all of us.

Reflecting on the conclusion of the first session of the 23rdAlaska State Legislature, I am proud of the work that wasdone this year and look forward to renewing our efforts nextJanuary.

By Senate President Gene Therriault

Page 8 June 2003 Resource Review www.akrdc.org

The Bureau of LandManagement (BLM) is mov-ing forward with plans toamend its 1998 land use planfor 4.6 million acres in thenortheast corner of theNational Petroleum Reserve-Alaska (NPRA). The agencyis considering leasing previously closed areas as geologists believe as much as2 billion barrels of oil mightexist in areas currently off-limits to development.

“We’ve learned a lot duringthe past four years,” saidBLM Alaska State DirectorHenri Bisson. “We know thatwe can safely explore thisarea without significant impact to sensitive wildlifeand subsistence resources.We also believe that we candevelop critical hydrocarbonresources in a manner thatprotects these same values.”

Bisson believes this is theideal time to re-evaluate thecurrent plan for the northeastcorner of NPRA. The freshevaluation would study newexploration and developmentopportunities that could provide access to significant

new oil discoveries and toconsider changing the currentprescriptive stipulations intoa mixture of prescriptive andperformance-based stipula-tions similar to those beingdeveloped for the northwestportion of NPRA.

The 1998 plan draftedunder the Clinton adminis-tration prohibited leasing onabout 600,000 acres in andaround Teshekpuk Lake, anarea considered to have highprospects for a major discov-ery of oil and gas. The planalso barred any surfacedrilling activity on another240,000 acres south and west

of the lake.Geologists believe the

Northeast portion of the reserve may contain 3.2 billion barrels of oil, with 2billion barrels in the lakearea.

Bisson said prescriptive

stipulations are very specificand in some cases inappropri-ate or needlessly restrictive.He said performance-basedstipulations often can accom-plish the same goal, but aremore flexible.

“For example, if oil and gasexploration is planned in thesame area that has sensitivewildlife habitat, it is possible

to allow exploration in thewinter when animals are notpresent,” Bisson said.

Geologists believe billionsof barrels of oil can be ex-tracted safely from the north-east portion of the reserve asadvances in technology havegreatly reduced industry’sfootprint. After three decadesof oil and gas development inthe Arctic, industry hasdemonstrated it is capable ofproducing oil while main-taining the highest regard forsafety and environmentalsensitivity.

BLM is now preparing asupplemental environmentalimpact statement and expectsthe entire process to be com-pleted by the end of 2004.

Since the original plan wascompleted in 1998, theagency has awarded leases onabout 1.4 million acres in thenortheast corner of the reserve and industry hasdrilled 14 exploratory wells.

Two other environmentalimpact statements for NPRAare underway. One covers aland use plan for 8.8 millionacres in the Northwest portion and a second is evaluating a proposal fromConocoPhillips for expand-ing production from Alpine.

Map courtesy of the Alaska Oil and Gas Reporter

The BLM is revisiting development restrictions imposed by the Clinton administration on the Teshekpuk Lake area ofNPRA. Geologists believe as much as 2 billion barrels of economically-recoverable oil might be in the area.

BLM REVISITS DRILLING

RESTRICTIONS IN NPRA

ConocoPhillips’ Puviaq prospect in NPRA is west of Teshekpuk Lake.

(907) 276-0700 June 2003 Resource Review Page 9

ANWR Energy Fact

RDC is supporting a pro-posed rulemaking by theCorps of Engineers and theEnvironmental ProtectionAgency to clarify what typesof wetlands fall under the jurisdiction of Clean WaterAct regulation.

Earlier this year, the Corpsand EPA issued an AdvancedNotice of ProposedRulemaking to obtain publiccomment on wetlands eligi-ble for federal protectionafter a U.S. Supreme Courtdecision in 2001 left federalregulatory jurisdiction oversome wetlands in question.

The goal of regulators is todevelop proposed regulationsthat will clarify which wetlands and waters are subject to Clean Water Act

jurisdiction. The proposedrulemaking is a direct resultof the Court’s decision elimi-nating the act’s oversight over isolated wetlands that are intrastate and non-navigable.

The impact of the decisionand subsequent regulatoryrevisions resulting from itcould be far-reaching inAlaska, given the 49th statehas more acreage in wetlandssubject to Corps jurisdictionthan the entire Lower 48states combined.

“It is imperative that clearregulations consistent withthe intent and spirit of theCourt’s ruling be developedand implemented,” RDC saidin comments filed with thefederal agencies this spring.“The Rulemaking is neces-

sary to restore regulatorycertainty, especially in Alaskawhere nearly 60 percent ofthe state is considered ‘juris-dictional’ wetlands under anoverly broad definition of

Waters of the United States,”RDC added. “Lack of a cleardefinition for jurisdictionalwetlands and Waters of theUnited States has resulted in

The Coastal Plain of the ArcticNational Wildlife Refuge (ANWR) isthis nation’s single greatest onshoreprospect for future oil discovery. Itcontains an estimated 5.7 billion to 16billion barrels of recoverable oil, witha mean estimate of 10.4 billion barrels. The estimated daily produc-tion from ANWR would exceed whatis now being produced in any individual state.

Energy conservation measures —including improvements in fuel standards for vehicles — combinedwith ANWR production, could off-set what this nation currently importsfrom the Persian Gulf region, sharplycutting dependence on foreign oil.

The 19 million acre ANWR isroughly the size of South Carolina.The Coastal Plain is 1.5 million acres.Development would directly impactless than 1/100 of one percent of therefuge.

RDC Supports Rulemaking On Wetlands

Some 60 percent of Alaska is considered “jurisdictional” wetlands under anoverly broad definition of “Waters of the United States.” Most Alaska communities are built in and around wetlands.

(Continued to page 11)

(bpd)

Page 10 June 2003 Resource Review www.akrdc.org

Secretary of theInterior Gale Norton hasexempted Bureau of LandManagement lands in Alaska from further Wilderness studies.In her ruling, Secretary Norton recognized that Alaska al-ready accounts for 56 percent of the nation’s designatedWilderness and has tens of millions of additional acreage inland management prescriptions that preclude or restrict development.

The Secretary’s action is consistent with the Alaska NationalInterest Lands Conservation Act (ANILCA) which estab-lished a balance between preserving Alaska’s special places andthe need for economic development and multiple use oppor-tunities on other lands. New Wilderness reviews and designa-tions would violate the spirit of ANILCA, destroy the balanceit established and further restrict access and economic opportunities.

The prohibition on Wilderness reviews is a welcome recog-nition that Alaska already has preserved vast areas for futuregenerations and that new Wilderness designations are not necessary.

Beginning in 1971, Alaska’s federal lands were studied fortheir Wilderness values under Wilderness Act criteria. In 1980,ANILCA preserved approximately 150 million acres in specially protected conservation units. This acreage representsmore than 40 percent of Alaska and 60 percent of the federalland in the state. The act preserved 58 million acres as designated Wilderness.

In recognition of the sensitive and protracted negotiations

that ultimately led to the passage of ANILCA, Congressprecluded further study of

BLM lands in the State of Alaska for the establishment of single purpose “conservation system units, national recreationareas, national conservation areas or for related or similar purposes.” This “no more” Wilderness clause compelled theSecretary of the Interior, shortly after the passage ofANILCA, to adopt a policy not to conduct furtherWilderness studies as part of the BLM planning process inAlaska. This policy was in effect for 20 years until SecretaryBruce Babbitt rescinded it in 2001 — two days before leavingoffice.

Secretary Norton’s reinstatement of the longstanding policyhas been welcomed by Alaskans who believe the originalcompromises and balance struck in ANILCA should be hon-ored.

A Wilderness designation is not the only option for identi-fying and protecting environmental values. The land use plan-ning process provides many opportunities outside aWilderness alternative to recognize a broad range of interestsand to restrict land use activities.

The new policy accommodates the need for Alaskans to access BLM lands for multiple use activities and new eco-nomic opportunities in a responsible manner that protects theenvironment. In an effort to balance preservation and multipleuse, ANILCA left Alaska with more land in protected statusthan any other state. The Secretary’s action will preserve thatbalance.

NORTON MAKES RIGHT CALL

ON WILDERNESS STUDIES

perception pushed Alaska down the listcompared to previous years. In fact, thesurvey indicated Alaska’s mineral-related policies are perceived to beworse than places like Peru, Argentina,Bolivia and Mexico.

Forty percent of those surveyed saidAlaska’s environmental policies are astrong deterrent to mineral investment.Nearly 40 percent indicated that uncer-tainties surrounding protected areas area strong deterrent. Over 35 percentnoted Alaska’s lack of infrastructure as abig concern.

Perhaps even more telling is whereAlaska ranked in the overall investmentattractiveness index. The FraserInstitute Survey suggested Alaska is per-ceived to be a worse place to invest inmineral exploration and developmentthan Russia, China, South Africa,Bolivia, Peru and Brazil. Most Alaskans

do not believe this is true.Unfortunately, the perception of themining industry at large is that its in-vestment is less at risk abroad than inAlaska.

If that perception is in fact reality,Alaska’s mining industry has a big prob-lem to solve. If that perception is inerror, which I believe it is, Alaska’s min-eral industry faces the equally dauntingchallenge of changing worldwide per-ception.

So how can Alaska change this per-ception? There are a number of ways toapproach the problem and a multitudeof things that need fixing.

Alaska can start by streamlining itspermitting process to make it moretimely and cost effective. The state caneliminate “zero-liability” legal challenges that have plagued permittedprojects in the past. It can design and

build regional infrastructure hubs forroads and power lines. Alaska can con-tinue to invest in state-of-the-art air-borne geophysical surveys. We cancontinue to require science-based airand water quality regulations. The statecan regain control of its rivers and coast-lines. And perhaps most important ofall, Alaska can aggressively market itsmineral potential across the globe.

Easy to say, not so easy to accomplish,but we can change the future. BobKeller, Vice-President and Editor-in-Chief for Social Studies at HarcourtSchool Publishers, wrote back to mydaughter’s 4th grade class and admittedthat they had indeed left Red Dog offthe map. He thanked the class for point-ing it out and promised to rectify theerror in future editions. Think of it asone small step in a long journey that hasto start somewhere.

Curt Freeman is geologist and Presidentof Avalon Development, a mineral consult-ing firm based in Fairbanks. He can bereached at avalon@alaska.net.

Mining: Perception Is Reality (Continued from page 5)

(907) 276-0700 June 2003 Resource Review Page 11

a continual process of ‘regulatory creep,’ allowingthe Corps to extend its reachand control over vast areas ofthe state and nearly all of theNorth Slope.”

Alaskans expected theCourt’s decision to bringmore clarity to the CWA definition of Waters of theUnited States and jurisdic-tional wetlands. Instead, localcommunities, industry andresidents are faced with having to comply with a pro-gram that is in a greater stateof flux and uncertainty. Sincethe Supreme Court ruling,various courts have appliedthe original decision in different ways, resulting inconflicting judicial interpre-tations that have added to theuncertainty and confusion.And although the higherCourt’s ruling calls into ques-tion more than two decadesof water and wetlands regula-tion, the agencies have donelittle to revise existing regula-tions, guidance documents

and policy statements. Despite clear direction in

2001 from the SupremeCourt, little has changed withrespect to how jurisdictionaldeterminations are made dueto continued reliance by theCorps and EPA staff on oldpolicy statements and guid-ance documents.

Given the high level of reg-ulatory uncertainty, RDCstrongly urged the EPA andthe Corps to develop clearand concise regulations tohelp fill the void.

“We believe it can nolonger be argued that theCWA confers jurisdictionover any water, swamp,muskeg, tundra, or wet pieceof land on the basis that it hasa mere hydrological connec-tion with navigable waters,”RDC said.

RDC requested that thedefinition of Waters of theUnited States be revised to beconsistent with the SupremeCourt’s findings that theClean Water Act grants juris-diction only over traditional“navigable waters” and re-jects jurisdiction over anywaters on the basis of havinga “substantial effect” on com-merce.

RDC also argued that theCorps should bring its policies and guidance docu-ments in line with the new jurisdictional boundariesdrawn by the SupremeCourt’s decision. It said thecurrent regulations are unfairto the regulated public, ineffi-cient for the regulatory agen-cies and provide littleenvironmental benefit.

The proposed Pogo Gold Mineproject in Interior Alaska receivedoverwhelming support in publichearings held in Fairbanks and Deltalast month.

RDC joined other business andtrade associations, corporations anddozens of local residents in urging theEnvironmental Protection Agencyand the State of Alaska to permit theproject.

“The Pogo project is good forAlaska, especially for the Interiorwhere it will boost economic activityand generate hundreds of new con-struction and permanent year-round

jobs,” testified Bill Brophy at theFairbanks hearing. Brophy, speakingon behalf of RDC, noted that Teck-Pogo — pending receipt of necessarypermits — is prepared to invest aquarter billion dollars to constructthe underground mine and its relatedinfrastructure. He said the projectwill bring new opportunities forAlaska businesses and residents andwill help sustain a healthy and grow-ing mining industry in the state.

The Teck-Pogo operation has beendesigned in such a way as to minimizeoperational impacts on the environ-ment. The project is designed to meetAlaska water quality standards and itwill not degrade the water quality ofthe Goodpaster River.

One issue yet to be resolved is along-term management plan for a 50-mile access road to the mine. TheDepartment of Natural Resources isconsidering two options for allowingpublic use of the road. One is openingthe first half of the road to the publicafter construction is completed. Thesecond option, the so-called

Alternative Management Option,would not open the first half of theroad until Teck-Pogo is finished min-ing the prospect. RDC, as well asmost testifying at the hearings, supported the latter option.

RDC believes it would be better tokeep the road classified for industrialuse only while mining is occurring.RDC cited safety issues and reducedshort-term impacts to subsistence andtrapping, as well as wetlands fromORV use.

If final permits are obtained, con-struction could begin in December onthe $250 million mine. The boards ofTeck Cominco and Sumitomo MetalMining Company, which own Pogo,are expected to make a final decisionon whether to go ahead with the proj-ect in September.

If it proceeds, Pogo will employ upto 500 workers during a two-yearconstruction period and about 300during production. Pogo has a goldresource of about 5.5 million ounces.It could produce about 400,000ounces of gold per year by late 2005.

POGO GOLD MINING PROJECT GETS

OVERWHELMING PUBLIC SUPPORT

WETLANDS

RULEMAKING

AIMS FOR

CLARITY IN

CLEAN WATER

ACT

JURISDICTION

(Continued from page 9)

Surveyors work at theportal site of the PogoGold prospect nearDelta. A final decision onwhether to move for-ward with the project isexpected this fall.Construction couldbegin as early asDecember once finalpermits are obtained.

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