Mineral Order 1161

March 26, 2015

Brittany Smith
Department of Natural Resources 
Division of Mining Land and Water
550 W. 7th Ave., Suite 1050 
Anchorage, AK 99501-3579

Via email at: brittany.smith@alaska.gov

RE: Mineral Order 1161

Dear Ms. Smith:

The following comments are submitted on behalf of the Resource Development Council for Alaska (RDC) with regard to Mineral Order 1161 which proposes the closure of over 3.6 million acres of state owned and state selected uplands and submerged lands on the Alaska North Slope to mineral entry.

This vast area includes lands west of ANWR, east of NPRA and extending one mile beyond the southern boundary of oil and gas lease tracts, and north to the three mile nautical limit of state jurisdiction. I appreciate the time you took on March 19, along with Division Director Brent Goodrum and Brandon McCutcheon to meet with me along with the Alaska Miners Association state oversight committee to explain this proposal and answer questions.

RDC is a statewide, non-profit, membership-funded organization founded in 1975. The RDC membership is comprised of individuals and companies from Alaska’s oil and gas, mining, timber, tourism, and fisheries industries, as well as Alaska Native corporations, local communities, organized labor, and industry support firms. RDC’s purpose is to link these diverse interests together 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 strongly objects to this proposal for three fundamental reasons. First, the proposal erroneously suggests that oil and gas leases and locatable minerals are incompatible and mutually exclusive land uses. Second, DNR has failed to demonstrate examples of the “nuisance claims” the order is intended to remedy. And finally, DNR’s reliance on the utility easement exemption in AS38.05.300 is a gross misinterpretation of the statute.

MO 1161 erroneously suggests that oil and gas leases and locatable minerals are incompatible and mutually exclusive land uses.

RDC has long advocated for multiple use management of public lands, believing that it is in the best interest of the citizens of Alaska and consistent with the constitutional mandate of Section 8 of our State constitution. We disagree that there is a blanket incompatibility between the leasable oil and gas resources and locatable minerals on our public lands. While conflicts between uses can and do occur, to close an area to locatable mineral exploration that is larger than the state of Connecticut is counter to what we understand to be the long held policies of the State and the Department. It is not DNR’s role to preemptively close vast tracks of public lands to mineral entry to avoid a theoretic future conflict. Mineral owners must accommodate or compensate disruption of surface uses and property such as pipelines. If and when real conflicts arise, DNR has a role in helping adjudicate equitable solutions.

If this proposal in fact represents a shift in the long held policies of the State of Alaska to deem these various subsurface interests incompatible, then a broader discussion needs to be immediately undertaken. The consequences of such a policy shift are many, but for example, those with interests in locatable minerals might be encouraged to object to oil and gas lease sales out of fear of subsequent mineral closing orders. Other unintended consequences of such a policy are many.

DNR has failed to demonstrate examples of the “nuisance claims” the order is intended to remedy.

Because RDC membership includes interests in both locatable minerals and oil and gas interests, upon learning of proposed MO 1161, I immediately inquired with RDC members in the oil and gas industry regarding conflicts and nuisance claims referenced in the public notice as justification for this mineral closing order. The vast majority of oil and gas lease holders on the North Slope are RDC members, and our inquiry has not revealed one example where the oil and gas industry has experienced conflicts to justify this closing order. The proposal seems to be a solution looking for a problem.

DNR’s reliance on the utility easement exemption in AS 38.05.300 is a gross misinterpretation of the statute.

AS 38.05.300 requires that mineral closing orders greater than 640 acres in size require legislative ratification to remain in effect beyond 90 days in to the next legislative session. This statute is a clear expression of the policy in our first point, that declaring of incompatibility with locatable minerals on a large scale be subject to thorough vetting through the legislative process.

There is a statutory exemption to this requirement “ …for the development of utility or transportation corridors or projects or similar projects or infrastructure…”

In our meeting on March 19, you verified that the Department intends to rely on this utility exemption and not seek legislative approval of this closing order. While we have not researched the legislative history or administrative history regarding the purpose and reliance on this statutory exemption, upon a plain reading of this statutory provision, we find it an outrageous proposition that this provision would be relied on to avoid legislative oversight of such an expansive closing order. There are lands over 50 miles from the nearest infrastructure in this closing order. Should DNR proceed with this closing order, RDC will advocate for the required legislative review as outlined in AS.38.05.300.

In summary, RDC is troubled that this proposal went so far as it did to warrant this public notice. Either the internal oversight and controls within DNR are lacking sufficient internal oversight and review, or the policies of DNR regarding the management of the subsurface estate have been significantly altered from past practice.

If it is the first instance, then RDC encourages DNR leadership to review its internal communication of policies and review its management systems to ensure public notice proposals are consistent with policy. If in fact the Department now believes as a matter of policy that oil and gas leasing and locatable mineral entry are mutually incompatible, RDC is prepared to engage with the administration and if necessary the legislature to fully vet this very important policy matter.

Thank you for the opportunity to comment.

Sincerely,
Resource Development Council for Alaska, Inc.