PacRim coal mine permitting suspension leaves some simmering debate

Although a plan to strip-mine coal from beneath the Chuitna River’s west Cook Inlet tributaries is done for the moment, elements of controversy may continue to ricochet.

 

For opponents, the Chuitna Coal Project’s eleven years of permitting were a weary battle against the dewatering of salmon spawning streams. For proponents such as Alaska Mining Association executive director Deantha Crockett, it was a regulatory and legal “death by a thousand cuts.” After Monday’s announcement that Delaware-based PacRim Coal, the Chuitna project’s parent company, was halting its quest for permits, both groups see lingering fights.

Coal Regulatory Manager Russell Kirkham of the Alaska Department of Natural Resources — which led state agencies permitting the project — learned of the company’s withdrawal on March 31.

“The only reason they gave was that it was a decision by the owners to not continue permitting,” Kirkham said. “They indicated that they were looking for a partner and that did not come through.”

PacRim’s statement said the company’s partners “have decided to suspend pursuit of (PacRim’s) permitting efforts,” and “invest in other projects outside of Alaska.”

The lead federal permitting agency, the Army Corps of Engineers, had stopped considering PacRim’s applications in November 2016 because the applications had “insufficient information necessary to allow for informed public comment and the Corps’ review of the proposed discharges,” according the Corps’ statement.

Celebratory press releases came from the council of the Native Village of Tyonek, about 12 miles southeast of the mine site, and the nonprofit legal firm Native American Rights Foundation (NARF), which represented the tribal government’s opposition before state and federal regulators. Tyonek called PacRim’s permitting suspension “great news” and quoted Tribal President Arthur Standifer as saying, “Our salmon, our way of life, and our land are safe.”

NARF attorney Wesley Furlong, who worked on the Chuitna regulation, leavened his optimism.

“The attorney in me always wants to be conservative about celebrating things when you read a letter that says ‘suspend pursuit of permitting efforts’ rather than giving them up completely,” Furlong said. “There’s an air of, ‘that just means we can pick them up where they’re at.’ And the Army Corps and the state have both indicated that is certainly true. So I definitely have some cautious optimism about how big this is.”

However, Furlong said the timing of the investor’s decision — coming as a new presidential administration shows enthusiasm for coal — suggests an underlying lack of economic viability in the current market.

The International Energy Agency’s Dec. 2016 Coal Market Report noted that in 2015, global coal consumption dropped 15 percent — the largest annual decline on record — with coal being displaced by natural gas in the U.S energy market and China, source of half the global demand, also shrinking coal use.

“In an environment of low and decreasing prices, capital expenditures are minimized and very few projects move ahead: this has been the case for the last few years,” the market report states.

History

The prolonged PacRim battle was the latest episode of a debate that’s occupied those concerned with the Chuitna watershed — either its salmon or its coal — since the 1970s.

PacRim has estimated that 242 million metric tons of coal lie between 20 to 100 feet under the Chuitna region’s layers of glacial gravel. Alaska land records show that Texas oil billionaire William Herbert Hunt and rancher, businessman, and Utah ski resort owner Richard Bass have held part ownership in the area’s state mining leases since 1975. The two worked with various partners in the PacRim project and in previous efforts to develop the deposit. Bass died in 2015.

The family-owned Hunt Energy Corporation was a 50 percent partner with the Diamond Shamrock petroleum company in the previous effort to develop the mine, according to a 1981 New York Times article. The Diamond Shamrock-Chuitna Coal Joint Venture applied for its state permits in 1985 and received them from the Alaska Department of Natural Resources in 1987, as well as permits from the EPA in 1990, following an environmental impact statement.

As with PacRim, opposed activists joined the process. The Anchorage-based nonprofit environmental law firm Trustees for Alaska twice appealed DNR’s granted permits, and in 1992 the Alaska Supreme Court supported some of the group’s objections.

The court ruled that DNR would have to consider impacts of the mine’s port, housing, conveyor, and gravel pit in the permitting along with the mine itself, and required that DNR calculate a new bond amount and make the bond’s release contingent on Diamond Shamrock successfully restoring habitat disturbed by the mine.

The court denied a fourth objection Trustees made: that Diamond Shamrock’s plan to restore the strip-mined stream beds and wetlands didn’t adequately prove the company’s ability to recreate the original hydrology, habitat, and ecological function of the area.

“DNR’s assessment of the adequacy of the wetlands restoration plan is necessarily speculative and it involves complex subject matter which is within the expertise of the agency,” the court’s ruling states.

The habitat plan — which PacRim modified for its plan to restore successive strips of mined land in two-year increments while diverting water into the Chuitna from upstream areas — would become one of the most controversial elements of both mine proposals. In 2007 and 2010, Trustees for Alaska would unsuccessfully petition DNR to designate the Chuitna watershed as unsuitable for mining, alleging that it isn’t technologically feasible to restore a once-removed stream ecology.

After the permitting effort, the Diamond Shamrock project wasn’t built, “due to, among other factors, a downturn in the global market demand,” according to PacRim’s account of the history.

PacRim, the second manifestation of Hunt and Bass’s investment, announced its existence in 2006 by noticing the EPA of its refreshed mine plans. As DNR started permitting the new Chuitna project, opposition also renewed, including among residents of the west Cook Inlet village of Beluga, about 6 miles north of the planned coal terminal.

Water reservations

In 2009 the Beluga-based activist group Chuitna Citizens Coalition applied to DNR for water reservations in three tributaries of the Chuitna River, intending to preserve them from mining. DNR delayed the applications to be processed alongside competing PacRim applications, but Chuitna Citizens Coalition and conservation nonprofit Cook Inletkeeper sued for their processing, represented by Trustees for Alaska. In 2013 an Alaska Superior Court judge ruled in their favor.

Though water reservations for government and industry entities are a staple of ecological permitting in western states, Alaska is one of the few that let private parties reserve water. Nonetheless, the state had never before granted a private water reservation. In addition to its novelty and the environmental concern, the Chuitna Citizens Coalition’s application was the subject of an activist campaign that featured public presentations and a touring documentary film, drawing an unprecedented 7,500 public comment letters sent to DNR regarding the application.

When DNR decided the applications in October 2015, Chuitna Citizen’s Coalition was awarded one of the three reservations it had applied for. The others were subject to competing applications from PacRim.

Within 20 days, the granted water reservation was appealed by PacRim and nine other groups. Most were trade organizations that represent mining, oil and gas, and seafood processing, as well as the general business advocate Alaska Chamber.

The granted water reservation lay below the mine’s footprint, andgave Chuitna Citizens Coalition legal grounds to bring complaints to DNR if the stream flow were to drop below a certain level — a flow PacRim planned to maintain with diverted water. Valerie Brown, a Trustees for Alaska attorney who represented Chuitna Citizens Coalition, said the water right is unlikely to have been a factor in the economic reasoning of PacRim’s permitting withdrawal.

The objections cited in the ongoing appeal focus less on the reservation itself than on its implications as Alaska’s first water reservation to a private group.

“Private citizens can use reservations for the inappropriate objective of stopping or severely hindering a project, rather than the legitimate objective of protecting fish and wildlife habitat,” wrote consultant Karen Matthias, representing the oil and gas trade group Alaska Producer’s Association, to DNR in an October 26 appeal letter. “Not only does this increase operational risk for the PacRim Coal project, it sets an extremely negative precedent that could be used to disrupt other community and resource development projects in Alaska.”

Crockett said the majority of private water rights applications waiting adjudication by DNR are from conservation activist groups.

DNR Chief of Water Resources Dave Schade, who granted the Chuitna Citizens Coalition water right, said his department hasn’t received other private applications for water rights in the last four years.

“We have been surprised we haven’t had more,” Schade said. “I think people are waiting to see how the process moves through.”

There’s been one other private water reservation granted since: on March 10, 2017 to the conservation nonprofit Nature Conservancy of Alaska for the Lower Talarik creek in the Bristol Bay watershed, for similar fish habitat protection. Schade said the group applied for the reservation on Feb. 7, 2000. The Alaska Department of Fish and Game, which has other reservations in the same area, had assisted the Nature Conservancy’s application.

“It takes five years of data collection so you can come to apply for a reservation, and you have to have two years done before you can apply,” Schade said of the water rights application process. “So we still get a number of water rights applications, but it’s from Fish and Game and Federal government agencies.”

A decision on the appeal will be issued by DNR Commissioner Andrew Mack.

Habitat permitting reform

While the water right appeal continues, Beluga resident and Chuitna Citizens Coalition co-founder Judy Heilman said the group had been waiting for the comment period of PacRim’s federal environmental impact statement before re-entering the public fight over the mine. Opposing activists have framed the issues of the Chuitna mine — and similar environmental concerns for Bristol Bay’s planned Pebble Mine — as questions of “coal versus salmon.” After a decade of such campaigning, Heilman said she’s hoping for the state to take a stronger stance on mining proposals that affect fish habitat.

“It needs to be put to bed,” Heilman said. “It needs to have legislation and law that says you can’t pollute the salmon stream, and you can’t pollute the rivers.”

The legislation Heilman referred to is House Bill 199, introduced to the Legislature March 27 by Rep. Louise Stutes (R-Kodiak) which would rewrite the Alaska Department of Fish and Game’s habitat permitting methods for the first time since statehood, according to Stutes’ sponsor statement.

Fish and Game’s present habitat permit — for which PacRim had submitted preliminary information but not a complete application — allows Fish and Game to approve construction or activities that would change an anadromous stream “unless the commissioner finds the plans and specifications insufficient for the proper protection of fish and game,” according to state code.

House Bill 199 would split this permit into two: a minor permit for non-industrial projects judged to have little impact to anadromous streams, and a major permit that would require mitigation and possible bonding for the restoring stream damage, as well as public notices and a 30-day public comment period. The bill would also expand the definition of anadromous fish habitat beyond Fish and Game’s existing anadromous streams catalog to “presume that a naturally occurring permanent or seasonal surface water body is important anadromous fish habitat” unless the Commissioner of Fish and Game releases a written finding to the contrary.

Crockett said PacRim’s permit withdrawal decision was made before HB 199 was introduced, but added that “these are the exact kinds of things that make an investor trying to permit a mine in Alaska decide that they’re going to spend their money elsewhere.”

Crockett said the Alaska Miner’s Association is currently surveying its member businesses about what plans of theirs could be made difficult under the proposed permitting. She said some mines have told her they’d be unlikely to have their existing permits renewed under HB 199. Crockett said activist litigation and regulatory difficulty were significant in PacRim’s decision, and that HB 199 would escalate those factors.

“There are a lot of things that are out of our control,” Crocket said. “We can’t control the markets, we can’t control commodity prices, but we as Alaskans can control the policies we have here. If we continue to put legislation up like HB 199, and we keep awarding private water reservations — if we keep making policy decisions that discourage investment, we’ll keep getting more Chuitnas leaving the state, more Shells leaving the state, more Statoils leaving the state.”

Reed Harris, a member of Stutes’ staff working with the House Fisheries Special Committee, said the bill had been developed with input from fisheries participants — it was drafted with encouragement the Board of Fisheries, who’d been pushed by the fishing-advocacy group Stand for Salmon — but wouldn’t say whether the Chuitna Coal Project was among the specific concerns they’d expressed.

HB 199 is scheduled for its first hearing April 11 in the House Fisheries Special Committee.

Reach Ben Boettger at ben.boettger@peninsulaclarion.com.

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