October 26, 2015

Commissioner Mark Myers
Alaska Department of Natural Resources
550 Wests 7th Avenue, Suite 1400
Anchorage, AK 99501

Via email to dnr.appeals@alaska.gov

Re: Instream Flow Reservation of Water for Stream 2003/Middle Creek – Lower Reach (LAS 27436)

Dear Commissioner Myers:

The Resource Development Council for Alaska, Inc. (RDC) is writing to request your reconsideration and denial of the Department of Natural Resource’s (DNR) decision to grant the Instream Flow Reservation (IFR) of Water for Stream 2003/Middle Creek – Lower Reach (LAS 27436) to Chuitna Citizens Coalition, a private party.

RDC is a statewide business association comprised of individuals and companies from Alaska’s oil and gas, mining, forest products, tourism and fisheries industries. RDC’s membership includes Alaska Native Corporations, local communities, organized labor, and industry support firms. RDC’s purpose is to encourage a strong, diversified private sector in Alaska and expand the state’s economic base through the responsible development of our natural resources.

RDC has consistently opposed the designation of public resources to private individuals, such as water rights designations. It is not in the public interest, and creates further uncertainty in the permitting process. Moreover, the State of Alaska (State) has never before granted an IFR to an individual or private party. The determination to grant the application undermines DNR’s authority and delegates responsibility to private individuals.

RDC Urges Reconsideration of the Decision that Creates Further Uncertainty in Permitting Process

One of RDC’s primary concerns is that approval of the IFRs would undermine existing regulatory processes and set a dangerous precedent for community and resource development projects across Alaska. Investment in Alaska should not be jeopardized by pre-emptive actions to stop community and responsible resource development.

Although DNR has indicated that it does not intend to pre-empt the permitting process, RDC reiterates concerns that anti-development groups will use this action as a new tool to stop projects, or at a minimum, introduce significant uncertainty and delay, chilling Alaska's business climate.

In the decision record, DNR states, “there may be significant harm to many people if other development industries are damaged by even a perception that a pre-emption of the permitting process can be gained by the use of a reservation of water,” further validating RDC’s concerns. In addition, the statement contradicts the granting of the IFR to a private party.

In a letter dated April 9, 2015, RDC wrote, “Every project, no matter the size or location, should have an opportunity to go through the existing, extensive permitting processes. In the case of mining, there are more than 60 major permits and many more from local, state, and federal agencies that must be successfully obtained. The process will determine the best use of water and will address and consider mitigation, such as re-routing water away from project areas until reclamation can be done. The process will not permit one industry or resource to advance at the expense of another.”

Furthermore, RDC requested “DNR to consider all uses of water in the IFR application process. Granting, or even evaluating, an IFR without considering competing water right applications is not in the public interest. Without evaluating both, DNR cannot truly weigh and balance the economic and public interest of the competing applications, nor mitigation measures.

RDC Opposes Delegation of Critical Public Resources to Private Citizens

RDC is concerned DNR has delegated critical public resources to private citizens. DNR is essentially giving away its authority, which is inconsistent with DNR’s obligations under the Alaska Constitution (Article VIII, Section 3), the public trust doctrine, and the public expectation that resources intended to benefit the people of Alaska, such as water to maintain fish habitat, should be managed by the representatives of the people – their agencies.

In addition, the nearby proposed mine project is on Alaska Mental Health Trust Authority (Trust) lands. The Trust acquired these lands specifically for the development of the coal and the royalties it will provide to the Trust. The Trust has a mandate to maximize revenues from the one million acres of land it was granted throughout the state.

The State of Alaska depends on the responsible development of natural resources on its lands to diversify and support its economy (Article VIII of the Alaska Constitution). It is not in the public interest, nor is it appropriate, for DNR to delegate authority of public resources to private citizens.

Additionally, the decision to grant the IFR to private citizens will likely cause confusion and interfere with management of all activities upstream of the Lower Reach that have any need for water. Specifically, RDC is concerned the grantees have been granted a legal right to the streamflow that does not naturally exist approximately one-third of the time. Thus, one-third of the time, the owner of reservation of water in the Lower Reach will be able, at their discretion, to go directly to court and demand that all junior water rights and temporary water use authorizations upstream of the Lower Reach cease, without a requirement to notify DNR. Delegating management of a watershed to a private party is just wrong. These resources should be held by state agencies that represent the people of Alaska, not private parties.

DNR itself explains (dnr.alaska.gov/mlw/water/instream.cfm), “If you have an instream water right, you have priority use of that water over people who file later for water rights. You can have legal standing in case of conflicting uses of water by people without water rights.” This further validates RDC’s concerns of confusion and interference.

Conclusion

RDC urges DNR to reconsider and deny the decision to issue approval of IFR of Water for Stream 2003/Middle Creek – Lower Reach (LAS 27436) to a private party. This decision potentially undermines the permitting process and ultimately sets a dangerous precedent for future projects across Alaska’s resource sectors, including oil and gas and community development. Additionally, RDC requests DNR clarify the process in which IFRs are to be managed and who IFRs can be issued to, and only then should existing and new applications be evaluated. Further, if DNR does not reconsider and deny the IFR, anti-development groups will use this action as a new tool to stop projects, or at a minimum, introduce significant uncertainty and delay, further chilling Alaska's business climate.

Thank you in advance for your consideration of our comments.

Sincerely,

Resource Development Council for Alaska, Inc.