Reject In-stream Flow Reservation Applications Prohibiting Mining

April 9, 2015

Department of Natural Resources
Attn.: Kimberly Sager
550 West 7th Avenue, Suite 1070 
Anchorage, AK 99501

Via email to: kimberly.sager@alaska.gov

Re: In-stream Flow Reservation applications for Middle Creek

Dear Ms. Sager:

The Resource Development Council for Alaska, Inc. (RDC) is writing to oppose approval of the In-stream Flow Reservation (IFR) applications filed by the Chuitna Citizens Coalition (CCC) currently before the Department of Natural Resources (DNR).

RDC is an Alaskan 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.

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.

RDC asks 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 also purports the applications by CCC are flawed. CCC has requested a reservation of water that exceeds the amount of water in Middle Creek over 50% of the time as established by extensive actual flow data from gage stations in the stream. These gage stations have been installed operated by PacRim Coal, LP (CCC has not collected ANY data contained in its application), some for over 20 years.

The Middle Creek water reservation adjudications are premature. The project has not yet been finalized and updated detailed plans and environmental mitigation strategies are still being submitted to government agencies. As a result, the current IFR would pre-emptively deprive government agencies and stakeholders of the specific information, science, and rigorous reviews that would come out of the multi-year process.

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.

The proposed PacRim Coal LP project is on Alaska Mental Health Trust Authority 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. Furthermore, 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).

The Chuitna Coal Project, located in the Beluga Coal Field of Southcentral Alaska, consists of three major components, the proposed Chuitna Coal Mine, a coal transport system and export terminal, and a supporting infrastructure component. The cornerstone of the development is 5,000 acres of Mental Health Trust leases with measured reserves of ultra low-sulfur coal in excess of around 300 million tons. The Chuitna Coal Project is currently in the permitting process, with anticipated draft permit decisions in 2015 - 2016.

The proposed mine will provide significant economic benefits to Alaskans, including an estimated construction cost at $750 million and employ up to 500 workers over the two year construction phase. After construction, the mine is expected to employ 350 people with an average annual payroll of $35 million, pay an estimated $300 million in royalties to the Alaska Mental Health Trust over the life of the mine, and pay millions in taxes to the State and the Kenai Peninsula Borough. In contrast, DNR estimates the commercial value of the fish in the stream to be between $1,500 and $10,600 per year. Moreover, the mine proposes to protect these fish resources so they are not lost.

The mine proponent is designing plans to construct new fish habitat, and following mining, a plan to reclaim the original habitat with a resulting overall increase in fish habitat. Approving the CCC IFR applications could ironically result in less fish habitat in the long run.

RDC urges DNR to reject the applications, which could potentially undermine the permitting process and set a dangerous precedent for future projects across Alaska’s resource sectors, including oil and gas. If DNR does not reject the IFR, anti-development groups could use this action as a new tool to stop projects, or at a minimum, introduce significant uncertainty and delay, chilling Alaska's business climate.

Thank you for the opportunity to comment on this important issue.

Sincerely,
Resource Development Council for Alaska, Inc.