Legislature(2009 - 2010)BUTROVICH 205

03/19/2010 03:30 PM RESOURCES

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03:38:00 PM Start
03:38:28 PM Preliminary Review of the Board of Fisheries Request for a Comprehensive Evaluation of Large-mine Permitting and Standards for Protection of Fish and Game Habitat in the Bristol Bay Watershed.
05:17:27 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Joint w/ (H) Fisheries Committee TELECONFERENCED
Preliminary review of the Board of
Fisheries request for a comprehensive
evaluation of large-mine permitting and
standards for protection of fish and game
habitat in the Bristol Bay watershed.
-- Testimony <Invitation Only> --
+ Bills Previously Heard/Scheduled TELECONFERENCED
Scheduled But Not Heard
                    ALASKA STATE LEGISLATURE                                                                                  
                         JOINT MEETING                                                                                        
              SENATE RESOURCES STANDING COMMITTEE                                                                             
              HOUSE SPECIAL COMMITTEE ON FISHERIES                                                                            
                         March 19, 2010                                                                                         
                           3:38 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
SENATE RESOURCES                                                                                                                
 Senator Bill Wielechowski, Co-Chair                                                                                            
 Senator Hollis French                                                                                                          
 Senator Thomas Wagoner                                                                                                         
HOUSE FISHERIES                                                                                                                 
 Representative Bryce Edgmon, Chair                                                                                             
 Representative Charisse Millett                                                                                                
 Representative Cathy Engstrom Munoz                                                                                            
 Representative Robert L. "Bob" Buch                                                                                            
MEMBERS ABSENT                                                                                                                
SENATE RESOURCES                                                                                                                
 Senator Lesil McGuire, Co-Chair                                                                                                
 Senator Charlie Huggins, Vice Chair                                                                                            
 Senator Bert Stedman                                                                                                           
 Senator Gary Stevens                                                                                                           
HOUSE FISHERIES                                                                                                                 
 Representative Wes Keller, Vice Chair                                                                                          
 Representative Craig Johnson                                                                                                   
 Representative Scott Kawasaki                                                                                                  
OTHER LEGISLATORS PRESENT                                                                                                     
 Representative Austerman                                                                                                       
COMMITTEE CALENDAR                                                                                                            
PRELIMINARY  REVIEW  OF THE  BOARD  OF  FISHERIES REQUEST  FOR  A                                                               
COMPREHENSIVE EVALUATION  OF LARGE-MINE PERMITTING  AND STANDARDS                                                               
FOR  PROTECTION OF  FISH  AND  GAME HABITAT  IN  THE BRISTOL  BAY                                                               
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
ED FOGELS, director                                                                                                             
Office of Project Management and Permitting                                                                                     
Department of Natural Resources (DNR)                                                                                           
Anchorage, AK                                                                                                                   
POSITION STATEMENT: Invited panelist.                                                                                         
DR. DAVID CHAMBERS, president                                                                                                   
Center for Science in Public Participation (CSP2)                                                                               
Bozeman, MT                                                                                                                     
POSITION STATEMENT: Invited panelist.                                                                                         
JOHN SHIVELY, CEO                                                                                                               
Pebble Limited Partnership                                                                                                      
POSITION STATEMENT: Invited panelist.                                                                                         
Senator Halford                                                                                                                 
Former Alaska Senate President Halford                                                                                          
Eagle River, AK                                                                                                                 
POSITION STATEMENT: Invited panelist.                                                                                         
ACTION NARRATIVE                                                                                                              
3:38:00 PM                                                                                                                    
CO-CHAIR  BILL  WIELECHOWSKI  called  the joint  meeting  of  the                                                             
Senate  Resources  Standing  Committee   and  the  House  Special                                                               
Committee on Fisheries to order at  3:38 p.m. Present at the call                                                               
to order were Representatives Millet,  Munoz, Edgmon and Senators                                                               
French, Wagoner and Wielechowski.                                                                                               
^PRELIMINARY  REVIEW OF  THE  BOARD OF  FISHERIES  REQUEST FOR  A                                                               
COMPREHENSIVE EVALUATION  OF LARGE-MINE PERMITTING  AND STANDARDS                                                               
FOR  PROTECTION OF  FISH  AND  GAME HABITAT  IN  THE BRISTOL  BAY                                                               
3:38:28 PM                                                                                                                    
CO-CHAIR WIELECHOWSKI  said the  Alaska Board of  Fisheries (BOF)                                                               
heard  a lot  of  concerns, particularly  from  residents of  the                                                               
Bristol  Bay  region,  that   the  standards  guiding  permitting                                                               
agencies are  not adequate to  ensure that Pebble Mine  will only                                                               
be  developed if  fisheries  can  be protected.  He  read from  a                                                               
letter written by the BOF requesting that the Legislature:                                                                      
     Conduct  a comprehensive  evaluation of  the permitting                                                                    
     protections  and standards,  including regulations  and                                                                    
     statutes,    which     provide    safeguards    against                                                                    
     environmental   damage.  After   such  evaluation,   we                                                                    
     further   request  that   the  legislature   enact  any                                                                    
     additional safeguards  which are considered  prudent to                                                                    
     provide  strict  protections  to   the  fish  and  game                                                                    
     habitat  of  the drainages  to  prevent  any chance  of                                                                    
     environmental damage.                                                                                                      
CO-CHAIR WIELECHOWSKI  said he  would like  to hear  from today's                                                               
panelists  on whether  or not  the Legislature  should embark  on                                                               
such  an analysis.  He explained  that four  questions have  been                                                               
given to each panelist to  help the Legislature get a preliminary                                                               
sense of what to do in response to the BOF's request.                                                                           
REPRESENTATIVE  EDGMON said  polls  have repeatedly  demonstrated                                                               
that the  Bristol Bay region  is concerned about the  Pebble Mine                                                               
being  in place  right  next  to the  last  great sockeye  salmon                                                               
fishery in  the world.  The panelists  will offer  a well-rounded                                                               
conversation about the existing system  and whether or not, given                                                               
Pebble's  size  and  proximity to  Bristol  Bay,  a  third-party,                                                               
multidisciplinary assessment of the mine  is necessary to measure                                                               
the cumulative environmental and socio-economic impacts.                                                                        
3:41:29 PM                                                                                                                    
REPRESENTATIVE  EDGMON   added  that   the  Bristol   Bay  Native                                                               
Corporation, after  three years  of debate, has  reluctantly come                                                               
out in  opposition to  Pebble Mine. Concern  is warranted  and he                                                               
hopes the  meeting will help  determine if the Pebble  project is                                                               
more significant  than most  and an  outside entity  should study                                                               
its ramifications.                                                                                                              
CO-CHAIR  WIELECHOWSKI asked  the  panelists to  answer the  four                                                               
questions  in  sequential  order  in ten  minutes  and  said  ten                                                               
additional minutes for questions will be allowed.                                                                               
The questions provided to the panelists were:                                                                                   
     1.  You  are  very   familiar  with  the  environmental                                                                    
     setting and value  of fish and wildlife  of Bristol Bay                                                                    
     to Alaskans.  You are also  familiar with the  ore body                                                                    
     size,   the   minerals   to   be   mined,   the   water                                                                    
     appropriations  applied  for,  and   the  size  of  the                                                                    
     tailings dams  that have been discussed  for the Pebble                                                                    
     prospect. What are the biggest  risks, in your opinion,                                                                    
     of this mine in this setting?                                                                                              
     2. How  would you  compare the  Pebble prospect  to the                                                                    
     scale, character and setting  of other sulfide ore body                                                                    
     mines  in the  US  and  Alaska, and  what  are the  key                                                                    
     lessons learned from these other mines?                                                                                    
     3. What  areas of Alaska's statutes  and regulations do                                                                    
     you think are  most important for an  analysis to focus                                                                    
     on, given the  issues you see with  the Pebble prospect                                                                    
     and  the  possible impacts  it  could  have on  Bristol                                                                    
     Bay's fisheries?                                                                                                           
     4.  Do  you  support  choosing  the  National  Research                                                                    
     Council  [(NRC)] of  the National  Academy of  Sciences                                                                    
     [(NAS)]  to conduct  an evaluation  of the  adequacy of                                                                    
     Alaska statutes,  regulations, and  permitting capacity                                                                    
     to ensure  the mine  can be developed  while protecting                                                                    
     Bristol Bay's fisheries?  Why shouldn't the legislature                                                                    
     carry it  out on its  own? Why not an  Alaskan research                                                                    
     group such  as the McDowell  Group or the  Institute of                                                                    
     Social and Economic Research (ISER)?                                                                                       
3:43:58 PM                                                                                                                    
ED   FOGELS,  Director,   Office   of   Project  Management   and                                                               
Permitting,  Department  of  Natural Resources  (DNR),  said  his                                                               
office   is  responsible   for   coordinating  state   permitting                                                               
activities  for large  resource  development projects,  including                                                               
mining. His  office has  no regulatory authority  on its  own but                                                               
coordinates other agencies.                                                                                                     
MR. FOGELS  referred to Question 1  and said he is  familiar with                                                               
the ore deposit, the location,  the setting, the value of Bristol                                                               
Bay  fisheries and  the water  appropriations  permits that  were                                                               
submitted several years ago by  the Pebble Partnership. He is not                                                               
familiar with  the details of the  project, the size of  the dams                                                               
and the  exact amount of water  that will be used.  Those details                                                               
will be received  when Pebble applies for the  project; the state                                                               
has not received permit applications.  He feels the biggest risks                                                               
are with  water quality  which is driven  by the  geochemistry of                                                               
the tailings  and waste rock  facilities. Without  those details,                                                               
specific risk  evaluation is difficult.  The management  of water                                                               
must  be understood:  where it  will be  put and  how it  will be                                                               
treated.  Monitoring  systems around  the  project  must also  be                                                               
understood. He reiterated that the risk is about water quality.                                                                 
3:46:59 PM                                                                                                                    
MR. FOGELS  moved on to Question  2 and said the  Pebble prospect                                                               
is one  of the largest  ore deposits in  the world. The  class of                                                               
the ore deposit has been studied  and mined in other parts of the                                                               
world. Bristol Bay  is a unique setting, one of  the world's most                                                               
valuable fisheries.  Additional information about the  deposit is                                                               
needed  before evaluating  risks  and reviewing  permits. At  the                                                               
review stage, the focus will  be on how the acid-generating waste                                                               
material   in   the  rock   type   will   be  watched,   treated,                                                               
characterized and stored appropriately.                                                                                         
Paying careful  attention to the  geochemistry of the  rock type,                                                               
as this drives water quality,  is the biggest lesson learned from                                                               
similar mines  around the  world. Another lesson  is the  need to                                                               
tighten the  monitoring net  around a  mine including  ground and                                                               
surface  water monitoring  and  bio-monitoring.  Alaska now  does                                                               
environmental audits  on mines a  minimum of every five  years in                                                               
which a third party checks the mines and the agencies.                                                                          
3:49:53 PM                                                                                                                    
MR. FOGELS moved  on to Question 3 and said  federal statutes and                                                               
regulations must  be considered, not just  Alaska's. For example,                                                               
the Environmental  Protection Agency (EPA) administers  the Clean                                                               
Water Act  and issues permits  limiting pollutant  discharge. Any                                                               
waste  product deposited  in a  wetland needs  a permit  from the                                                               
Army Corps  of Engineers. Several  state permits  and regulations                                                               
apply  to   water  quality  including   those  overseen   by  the                                                               
Department  of Environmental  Conservation (DEC),  the Integrated                                                               
Waste Management Program,  DNR and Alaska Department  of Fish and                                                               
Game (ADFG).                                                                                                                    
3:52:09 PM                                                                                                                    
MR. FOGELS  moved on  to Question  4 and said  Alaska has  a good                                                               
mine  permitting  process  which   is  obvious  from  looking  at                                                               
operating  mines.  ADFG  has been  looking  at  fish  populations                                                               
downstream  of each  mine  and all  reports are  on  the web.  He                                                               
suggested the Legislature  consider a few things  if embarking on                                                               
a study.  If the state's  large mine permitting process  is going                                                               
to be  studied, what  will happen  while the  study is  going on?                                                               
Will permitting  have to be stopped?  If a study is  done for the                                                               
Pebble Project, will a similar  study be required for every other                                                               
mining or  resource development  project in  the state?  He hopes                                                               
that any study would help do the work.                                                                                          
3:54:39 PM                                                                                                                    
REPRESENTATIVE EDGMON  asked if  Mr. Fogels  was saying  that the                                                               
permitting process in place is  adequate to safeguard Bristol Bay                                                               
fisheries in perpetuity.                                                                                                        
MR. FOGELS replied that the permitting  process can do a good job                                                               
of  permitting a  project  such  as Pebble  -  going through  the                                                               
process and determining if Pebble  should be permitted or not. He                                                               
reiterated  that decisions  are  made on  many levels,  including                                                               
federal and  state agencies. The  Pebble project will take  a lot                                                               
more  staff and  resources to  go through  the documentation  and                                                               
permitting process.                                                                                                             
REPRESENTATIVE  EDGMON said  the range  in between  "good enough"                                                               
and 'no net  loss' is where concern arises.  Evidence is mounting                                                               
about the sensitivity of salmon  habitat and the homing instinct.                                                               
Certainly some habitat will be  destroyed with the development of                                                               
the  mine.  The  concern  is  that "good  enough"  is  not  "good                                                               
enough".  He  noted  that  DNR has  some  reservations  about  an                                                               
outside, multi-disciplinary  review of  the Pebble project  if it                                                               
could encumber the process for  other large mines. Representative                                                               
Edgmon  felt enough  difference  exists between  Pebble, next  to                                                               
Bristol  Bay's watershed  and fisheries,  and other  large mines,                                                               
that DNR should think an outside study would have some merit.                                                                   
3:57:12 PM                                                                                                                    
MR.  FOGELS  replied that  he  had  explained DNR's  reservations                                                               
about a study but did not say a study would not have merit.                                                                     
SENATOR  FRENCH asked  Mr.  Fogels to  elaborate  on the  concern                                                               
about acid generating waste material.                                                                                           
MR.  FOGELS   responded  that  he   does  not  have   details  on                                                               
concentrations and  volumes at Pebble.  As rock is broken  up and                                                               
exposed to  oxygen and water,  water percolates  through, becomes                                                               
acidic  and  picks up  heavy  metals  which  can leach  into  the                                                               
environment. Some  mines have benign waste  material while others                                                               
have waste  rock that  is very prone  to generating  acidic water                                                               
heavy in metals.                                                                                                                
SENATOR FRENCH asked where, between  benign and highly acidic, do                                                               
the core samples of Pebble fall.                                                                                                
MR.  FOGELS replied  somewhere in  the middle  zone. There  is no                                                               
question that  materials will  have to  be carefully  handled and                                                               
managed. How and where the  materials are handled and disposed of                                                               
is the big question.                                                                                                            
4:00:04 PM                                                                                                                    
SENATOR WAGONER said  some metals will be suspended  in water and                                                               
in processed  material and  will have to  be disposed  of; that's                                                               
the reason  for the dams  and containment.  He asked how  long it                                                               
takes for the  chemicals and minerals to settle into  a base that                                                               
will solidify.                                                                                                                  
MR. FOGELS  replied that  those details  are different  for every                                                               
mine and  are unknown for  the Pebble  project. A classic  way to                                                               
dispose of tailings is behind a  dam with a water cap which keeps                                                               
the  oxygen from  getting into  the tailings.  Some mines  need a                                                               
water  cap maintained  in  perpetuity,  others neutralize.  These                                                               
details must be  modeled in the application and  addressed in the                                                               
Environmental Impact Study (EIS).                                                                                               
REPRESENTATIVE MUÑOZ asked if DNR  can require this type of study                                                               
as a condition for the required permits.                                                                                        
MR. FOGELS asked if Representative Munoz meant an NAS study.                                                                    
REPRESENTATIVE MUÑOZ replied yes.                                                                                               
MR.  FOGELS replied  that  he is  unsure if  DNR  would have  the                                                               
regulatory authority  to require  a study. DNR  normally requires                                                               
studies  upfront to  demonstrate  appropriate  evaluation of  the                                                               
materials. DNR  almost always hires  third party experts  to look                                                               
at the company's  information. DNR could probably hire  NAS to do                                                               
that; it comes down to having the funding to do so.                                                                             
REPRESENTATIVE MILLETT asked  if DNR needs a  plan of development                                                               
with the geochemistry in order  to go forward with the permitting                                                               
process and  evaluation. She asked  how far along the  process is                                                               
at this point in time.                                                                                                          
MR. FOGELS  replied that DNR  gets the geochemistry at  same time                                                               
as  the permit  applications. A  lot of  information comes  in at                                                               
once: a detailed  design of the project, how they  will mine, how                                                               
they will  access the mine, how  the waste will be  disposed of -                                                               
all  base and  backup data  collected  over the  last five  years                                                               
including geochemistry data.                                                                                                    
4:05:04 PM                                                                                                                    
REPRESENTATIVE MILLETT  asked what  DNR is  doing to  prepare for                                                               
that information and how long it will take to process it.                                                                       
MR. FOGELS  answered that  DNR does  not know  when a  company is                                                               
going  to  submit  applications.  When  Pebble  applications  are                                                               
received,  his  division  will  assign  a  full-time  coordinator                                                               
position just  to Pebble.  Other divisions of  DNR, ADFG  and DEC                                                               
will all  have to  ramp up  and the company  agrees to  pay those                                                               
costs.  The problem  is finding  staff to  fill positions  at the                                                               
right  time.  Theoretically, the  funding  is  there to  ramp  up                                                               
immediately and hire third party contractors.                                                                                   
REPRESENTATIVE MILLETT asked if the  level of expertise needed is                                                               
readily available in the industry right now.                                                                                    
MR. FOGELS replied that finding  qualified people to work for the                                                               
state is  not easy. A  mining coordinator must have  good working                                                               
knowledge  of  the industry  and  state  and federal  government.                                                               
Those people are making triple the money in the private sector.                                                                 
REPRESENTATIVE BUCH joined the meeting.                                                                                         
4:07:56 PM                                                                                                                    
DR.  DAVID  CHAMBERS, President,  Center  for  Science in  Public                                                               
Participation  (CSP2) said  that CSP2  is a  non-profit providing                                                               
technical   advice  to   public   interest   groups  and   tribal                                                               
governments on the  environmental impacts of mining.  He spent 15                                                               
years working as an exploration geophysicist in the industry.                                                                   
DR.  CHAMBERS responded  to  Question  1 and  said  mines have  a                                                               
triple  bottom line:  economic considerations,  environmental and                                                               
social  considerations.  Consideration  of  the  economics  shows                                                               
almost  entirely benefits;  a mine  like Pebble  has hundreds  of                                                               
billions of  dollars of revenue. The  environmental consideration                                                               
is  almost always  a risk  analysis with  very few  environmental                                                               
benefits.  Social  considerations can  go  either  way with  both                                                               
benefits  and  risks.  Environmental  risks,  with  a  mine  like                                                               
Pebble,  center   on  water  and  aquatic   organisms  which  are                                                               
sensitive to  metals. Key considerations  are acid  mine drainage                                                               
and  hydrology,  or  where  does  the  mine  sit  and  where  are                                                               
contaminants liable to move.  Pebble's location poses significant                                                               
and unique issues.                                                                                                              
DR. CHAMBERS  moved on to Question  2 and said the  scale of this                                                               
mine makes risk analysis more  complicated. He showed a pie chart                                                               
depicting the total tons of ore  available from all the hard rock                                                               
mines  in Alaska,  including Pebble.  He added  that the  Bingham                                                               
Canyon mine, the largest mine  in North America, is one-third the                                                               
size of Pebble  based on the amount  of ore.  To give  a sense of                                                               
the  scale of  Pebble,  he showed  a slide  with  the outline  of                                                               
Pebble, as  it was in  the 2006 water rights  permit applications                                                               
and again in  press releases of February  2010, superimposed over                                                               
the city of Anchorage.                                                                                                          
4:13:10 PM                                                                                                                    
He said the tailings dams have  to be designed for perpetuity. To                                                               
illustrate  the large  scale  of  a dam,  as  proposed by  Pebble                                                               
Partnership,  he showed  a  slide of  the  dam superimposed  over                                                               
Elliot Bay in Seattle. Since  the mid-1970's, 75 percent of cases                                                               
involving mines like  Pebble (close to ground  and surface water,                                                               
with  sulfite  mineralization),   incorrectly  predicted  whether                                                               
metals  would  be  generated  and  could  be  controlled  through                                                               
mitigation.  He agreed  with Mr.  Fogels  that significant  gains                                                               
have been  made in predicting  impacts and how to  mitigate them,                                                               
but we are still not doing well and still have a lot to learn.                                                                  
DR. CHAMBERS  moved on to  Question 3 and said  Alaska's statutes                                                               
and   regulations  leave   room   for   improvement.  Access   to                                                               
information is lacking; the company  has not released significant                                                               
information since 2004.                                                                                                         
4:16:24 PM                                                                                                                    
Data collection and  analysis is better done in an  open and peer                                                               
review  environment  than  by an  interested  party.  Having  DNR                                                               
driving the permit review process  is a conflict of interest: DNR                                                               
is charged with responsibly developing  mineral resources but how                                                               
does that balance against fisheries  or subsistence resources? He                                                               
said it  is fundamental  problem that mining  is exempted  from a                                                               
Best Interest finding  that officials must issue  to some natural                                                               
resource developments in Alaska.                                                                                                
DR.  CHAMBERS  referred to  Question  4  and  said using  NAS  to                                                               
evaluate the process  is a good idea. NAS can  bring expertise to                                                               
the table and does not "have a  dog in this fight". He would also                                                               
welcome  a similar  review  by somebody  like  ISER because  some                                                               
aspects are unique to the state.   He suggested two studies could                                                               
be done.  He suggested that  the mine,  due to its  magnitude, be                                                               
looked at in addition to the regulatory process.                                                                                
4:19:32 PM                                                                                                                    
REPRESENTATIVE  BUCH said  that some  specific hydrology  testing                                                               
was going on. Scientists told  him they had specific water wells,                                                               
took samples during certain times  of the year at specific depths                                                               
and sent  them off  to a party  in Seattle and  one in  Oregon to                                                               
obtain  third party  verification of  analysis. He  asked if  Mr.                                                               
Chambers could comment on empirical protocol.                                                                                   
DR. CHAMBERS  replied that  testing samples  from those  wells is                                                               
standard. His  concern is  not about  present water  quality abut                                                               
about where  and how fast  the water moves. Predicting  what will                                                               
happen when a tailings pond is  built in the area requires, for a                                                               
start,  log  information about  material  that  has been  drilled                                                               
through and information about flows.  Pebble will be mining rocks                                                               
that are  potentially acid generating. Lining  the tailings pond,                                                               
which is  very big  and would  be expensive, is  not going  to be                                                               
done. That presents more problems.                                                                                              
4:22:13 PM                                                                                                                    
REPRESENTATIVE  BUCH  said this  seems  to  him  to be  the  most                                                               
enhanced base-line  study conducted  in Alaska.  He asked  if Mr.                                                               
Chambers considered it to be an adequate baseline study.                                                                        
DR. CHAMBERS  replied he  suspects it is  the most  extensive but                                                               
could not answer whether or not  it is adequate. The results have                                                               
not been  seen; until then, preliminary  feedback and suggestions                                                               
can't be made for further information or studies.                                                                               
REPRESENTATIVE  BUCH asked  if it  is standard  for all  compiled                                                               
data to  come in at  the onset of the  EIS. A department  will be                                                               
overwhelmed if  an assessment done  over four or six  years comes                                                               
in at  once. His  concern is that  adequate opportunity  is given                                                               
for discovery during the process.                                                                                               
DR. CHAMBERS  said he agrees and  would like to see  data flowing                                                               
when   collected.  Sometimes   mines  will   release  information                                                               
voluntarily but  regulatory agencies  cannot require it.  He said                                                               
he just finished  an analysis of a mine in  Minnesota for which a                                                               
huge  amount  of  information  had been  made  available  by  the                                                               
REPRESENTATIVE BUCH asked if statutes  exist in other states that                                                               
could be modeled if changes are made in Alaska statute.                                                                         
DR. CHAMBERS  said he  is not  aware of any  state that  has that                                                               
specific  authority  but said  he  could  research Minnesota  and                                                               
other states that do analysis more progressively.                                                                               
CO-CHAIR  WIELECHOWSKI asked  about the  track record  of sulfite                                                               
mines around the world in terms  of meeting water and air quality                                                               
DR. CHAMBERS replied  that Pebble is in a class  of mine that has                                                               
sulfitic  ore in  the ore  body and  is near  ground and  surface                                                               
water. About  75 percent  of the time,  these mines  exceed their                                                               
permit limits for water discharges; that is concerning.                                                                         
4:26:08 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI asked  what  the impact  would  be to  the                                                               
fishery and environment if there were  to be a [permit] breach at                                                               
DR. CHAMBERS replied that quantifying  the impact is difficult or                                                               
impossible. It boils  down to how much risk you  want to take and                                                               
what is  at risk. He  said this is  the last big,  healthy salmon                                                               
fishery in North America. Salmonids  are very sensitive to metals                                                               
in general and copper in particular.  Pebble could fall in the 25                                                               
percent of these mines that are ok but no one can know that.                                                                    
SENATOR  WAGONER  said  the  containment  dam  is  many  people's                                                               
biggest  fear. People  don't understand  that water  is only  the                                                               
cap,  not the  whole volume  behind the  dam. He  asked how  many                                                               
projects in  the world are contained  this way and how  many have                                                               
had a problem with a containment dam rupturing.                                                                                 
DR. CHAMBERS replied  that tailings dams are very  common in most                                                               
places in  the world. The  type of construction proposed  for the                                                               
tailings  dam  at  Pebble  uses   the  most  fundamentally  sound                                                               
engineering.  The  tailings are  largely  solid  behind the  dam;                                                               
unlike water, the  reservoir cannot be drained if  a problem with                                                               
the  dam develops.  The  dam must  be  maintained in  perpetuity;                                                               
conservative  assumptions  must  be made  about  earthquakes  and                                                               
other  factors. Worldwide,  a tailings  dam fails  once every  18                                                               
4:29:48 PM                                                                                                                    
SENATOR  FRENCH asked  how much  risk would  be mitigated  if the                                                               
mine were not an open pit mine.                                                                                                 
DR.  CHAMBERS  said he  has  as  much  concern for  the  proposed                                                               
underground mine  as for  the open pit  mine. A  technique called                                                               
block caving,  which structurally destroys  the rock, is  used to                                                               
mine  a low-grade  ore body  underground.  The process  fractures                                                               
material that is  mined and material all the way  to the surface.                                                               
The  rubble  contains sulfide  minerals  and  hydrology is  still                                                               
4:31:01 PM                                                                                                                    
JOHN  SHIVELY,  CEO,  Pebble Limited  Partnership,  started  with                                                               
Question 1.  He said water quality  is the first issue.  The mine                                                               
needs  to have  a water  handling  system that  works, a  tailing                                                               
facility  that holds  back the  tailings and  the water  and that                                                               
other water around the prospect  must be managed. The real danger                                                               
to the fish is water quality.  Pebble is not done engineering the                                                               
tailings facility and some questions cannot be answered yet.                                                                    
MR.  SHIVELY moved  on to  Question 2  and said  Pebble is  a big                                                               
prospect and  the current resource could  be mined for 80  to 100                                                               
years.  Pebble's intent  is not  to permit  the entire  resource,                                                               
however,  but  25  to  40  years. Red  Dog  is  smaller  but  its                                                               
mineralization is  25 percent, meaning  25 percent of  what comes                                                               
out of  the ground is  potentially acid generating. Pebble  has a                                                               
lot more  ore but it  ranges from .2  percent to 3  percent. Acid                                                               
drainage will have  to be dealt with but Pebble  does not have as                                                               
much sulfite.                                                                                                                   
MR.  SHIVELY  referred to  Question  3  and said  permitting  and                                                               
resource development in Alaska is  a much broader issue than just                                                               
Pebble. He  said the economy  must be considered and  he referred                                                               
to  Red Dog  being shut  down, Conoco  being turned  down for  an                                                               
[Alpine  West  CD5  404  permit]   and  Shell  facing  permitting                                                               
problems.  He  said  any  study  should  consider  not  just  the                                                               
statutes but  the process.  Whether Pebble  is permitted  or not,                                                               
things in the  economy do not bode well for  the future with both                                                               
state and federal issues.                                                                                                       
MR. SHIVELY moved  onto Question 4 and said  the National Science                                                               
Foundation is  well respected and  would do a good  job. Focusing                                                               
on  what  you  want  to  study is  important,  then  bringing  in                                                               
4:36:10 PM                                                                                                                    
He said he  is a former commissioner of DNR  and thinks the state                                                               
has a strong  permitting process that is  looked at independently                                                               
on a regular basis.                                                                                                             
REPRESENTATIVE EDGMON  said tributaries  feed off into  the major                                                               
salmon producing  areas of the  Bristol Bay salmon  fishery which                                                               
was worth  about $5  billion in  the last 20  years. He  asked if                                                               
Pebble can really  understand those water flows,  under and above                                                               
ground,  enough to  tell someone  down  river that  they will  be                                                               
protected in perpetuity.                                                                                                        
MR. SHIVELY  replied yes, Pebble's  water monitoring  studies are                                                               
extensive, go  beyond the project  itself and will  be available.                                                               
Over $100 million  has been spent getting information  and a fair                                                               
amount of that  is already available to the public.  Until a mine                                                               
is planned,  interpreting the meaning  of all the  information is                                                               
difficult. Any  problem will be close  to the mine and  has to be                                                               
dealt with there.                                                                                                               
REPRESENTATIVE EDGMON  said he  hears that  Pebble is  a proposal                                                               
with unknown  size and impacts, but  "there has got to  be a plan                                                               
somewhere". The Legislature doesn't know  what is going on behind                                                               
the  scenes.  He  asked  Mr.  Shively how  close  he  is  to  the                                                               
permitting process at this point.                                                                                               
MR. SHIVELY replied that Pebble has  ideas and concepts but not a                                                               
plan sitting  in London. Multiple  pieces must be  considered and                                                               
are  all  related:  hydrology, tailings  dam  design,  economics,                                                               
size, an 82 mile road, a port and power.                                                                                        
4:40:47 PM                                                                                                                    
In 2008,  Pebble Partnership said  it would be in  the permitting                                                               
process  at the  end of  2008;  now it  might be  in early  2011.                                                               
Pebble is not driven by a  date but by putting a project together                                                               
that meets the high environmental standards and is economic.                                                                    
SENATOR FRENCH  said Pebble  will be  transporting fuel  over the                                                               
next year  to drive equipment. Recently  a well-publicized diesel                                                               
spill occurred on  the way to the site. He  asked Mr. Shively for                                                               
the degree of  responsibility that Pebble is going  to assume for                                                               
that fuel transport.                                                                                                            
MR. SHIVELY replied,  "That was not our fuel spill  and that fuel                                                               
actually wasn't necessarily designed  for the project". Some fuel                                                               
might have  gone to the project  and some was being  delivered to                                                               
the  villages.   A  partner  of  Pebble's,   Iliamna  Development                                                               
Corporation was  transporting the fuel.  Their idea was  to bring                                                               
fuel  in over  the Pile  Bay road  then by  barge to  communities                                                               
around the lake,  substantially lowering the cost.  The spill was                                                               
unfortunate but not particularly environmentally damaging.                                                                      
SENATOR FRENCH  asked Mr. Shively  to talk about the  fuel Pebble                                                               
is  going to  transport and  how safe,  environmentally sensitive                                                               
transport will be ensured.                                                                                                      
MR. SHIVELY asked if Senator  French is asking about transporting                                                               
fuel now or if there is a mine.                                                                                                 
SENATOR FRENCH replied now.                                                                                                     
MR.  SHIVELY   answered  that  Iliamna   Development  Corporation                                                               
currently brings fuel  for Pebble into Iliamna where  they have a                                                               
fuel  storage  area.  Helicopters  are  fueled  there.  Fuel  for                                                               
drilling is flown  out in a fixed-wing plane to  fuel storage and                                                               
then  flown again  in double-hulled  containers  to the  drilling                                                               
SENATOR FRENCH  asked how Mr.  Shively sees  Pebble's involvement                                                               
in fuel  transportation and if  he is prepared to  avoid spilling                                                               
fuel into Lake Iliamna.                                                                                                         
MR.  SHIVELY replied  that if  diesel  is used,  a pipeline  will                                                               
probably go out of the port and  along the road. Fuel will not be                                                               
transported across Lake Iliamna.                                                                                                
SENATOR FRENCH asked about construction  to widen the road before                                                               
a pipeline  can be put  in. He said he  is concerned about  a lot                                                               
work being done  there, with heavy equipment,  already having had                                                               
a diesel  spill. He asked at  what level will Pebble  step in and                                                               
assume responsibility for  the handling of diesel  in a sensitive                                                               
4:45:19 PM                                                                                                                    
MR.  SHIVELY  said  Pebble  requires   that  fuel  carriers  have                                                               
insurance  and  reviews their  safety.  It  is part  of  Pebble's                                                               
responsibility  to   make  sure  transport  is   safe.  Who  will                                                               
transport fuel has not been decided.                                                                                            
REPRESENTATIVE  BUCH said  he is  not concerned  about a  lack of                                                               
information  but is  concerned that  if information  is presented                                                               
all at once it will overwhelm an agency.                                                                                        
MR. SHIVELY responded  that Pebble will pay for  the review which                                                               
will be  done by more than  just state employees. The  state will                                                               
bring  in others  on contract,  such as  environmental consulting                                                               
firms. Information  needs to  be quality checked  and put  into a                                                               
readable  format  called   the  Environmental  Baseline  Document                                                               
(EBD). Pebble  is producing  that document now;  it will  have 53                                                               
chapters  and will  be available  to the  public. If  needed, the                                                               
state will ask for more money to get more people or more time.                                                                  
REPRESENTATIVE  MILLETT thanked  Mr.  Shively  for his  company's                                                               
investment in the  region so far. She said she  has fished for 20                                                               
years in Bristol Bay and understands  its dynamics and what is at                                                               
risk. She imagined that Mr.  Shively understood the value of that                                                               
region, as a former DNR commissioner,  and asked if he takes that                                                               
into the board  room. She asked if Pebble understands  what is at                                                               
risk and what conversations are like in the boardroom.                                                                          
MR. SHIVELY replied that it is  a big part of discussions and the                                                               
drive behind the engineering. He took  the job because he felt an                                                               
Alaskan perspective  was needed.  He has  friends in  Bristol Bay                                                               
who oppose the project and  others who see the potential economic                                                               
advantages. Everybody  realizes it is  about the fish.  If Pebble                                                               
cannot show that the fish will be protected, it will go nowhere.                                                                
4:50:02 PM                                                                                                                    
CO-CHAIR  WIELECHOWSKI said  he  heard the  power  needs for  the                                                               
project are enormous: 400 -500  megawatts, which is about half of                                                               
the peak load  of the Railbelt. He asked how  Mr. Shively expects                                                               
to generate power in that area.                                                                                                 
MR.  SHIVELY replied  that  about  250 -  300  megawatts will  be                                                               
needed. Natural  gas would be  the choice  but it is  not readily                                                               
available. A spur  or bullet line would need  industrial users to                                                               
make the  price of gas  reasonable without a large  state subsidy                                                               
and Pebble  could help. Without  a huge  find in Cook  Inlet, the                                                               
Nikiski LNG plant  will likely shut down and could  be flipped to                                                               
a receiving plant,  allowing gas to be brought in  for Pebble and                                                               
others.  Pebble would  ship that  gas across  the inlet.  Another                                                               
option is  LNG barges  that now  have regasification  capacity on                                                               
the barge.                                                                                                                      
He  noted that  if Pebble  gets reasonably  priced energy  to the                                                               
mine, it  would cooperate with the  state to take that  energy to                                                               
the western part of the region.                                                                                                 
4:52:10 PM                                                                                                                    
Senator  Halford [former  Alaska Senate  President Halford]  said                                                               
Pebble is different than other  mines he's dealt with, flown for,                                                               
advocated for or  worked on legislation for. He can't  think of a                                                               
place that  would be  more challenging  to develop  sulfite mine.                                                               
Pebble would have  incredible value and incredible  risk. He said                                                               
it is  located in  a saddle  at about 1000  feet and  the deposit                                                               
goes to  about 3000 feet below  sea level. He felt  Mr. Shively's                                                               
comment  about  not wanting  to  negatively  impact other  Alaska                                                               
mines by  what you do  in Bristol  Bay was valid;  Pebble's size,                                                               
type and location are different.                                                                                                
4:55:43 PM                                                                                                                    
He showed  a slide of Frying  Pan Lake which is  "ground zero" by                                                               
the  Northern Dynasty  plans and  would be  about 700  feet under                                                               
tailings. He showed another slide  looking from Cook Inlet toward                                                               
the  Pile  Bay  end of  the  Pile  Bay  road  and said  the  full                                                               
transportation  route  is about  100  miles  long. Another  slide                                                               
looked back towards  William's Port and one showed  the road from                                                               
William's  Port  toward Pile  Bay  which  can barely  accommodate                                                               
loads that are 14 feet wide.                                                                                                    
He said  the size  of the Pebble  project is  beyond imagination:                                                               
the largest mine  in North America would only fill  it about one-                                                               
third full. The  level of the review should  be commensurate with                                                               
the  size, risk  and duration  of  the transaction.  The size  is                                                               
astronomical, the risk is very high  and the term is forever. The                                                               
Legislature should have as much information as it can.                                                                          
4:59:12 PM                                                                                                                    
The  review  by  NRC  or  NAS  is only  one  piece  of  what  the                                                               
Legislature  should  be  doing.  It  should be  go  back  to  the                                                               
commissioners of  DNR, ADFG and  DEC and  ask them for  a capitol                                                               
project to beef  up their information gathering  ability. What is                                                               
done with this issue will be  specific to Pebble and Bristol Bay.                                                               
He  noted that  a major  dam  failure is  not the  only way  that                                                               
toxins can end up back in the water column.                                                                                     
He felt that no multi-national company  is going to mine any less                                                               
than  all  the mineable  ore.  The  application  might be  for  a                                                               
portion of  the ore,  but the project  and Legislature  should be                                                               
driven by the  size and scope of  what is there to  be mined. The                                                               
amount of sulfur in the  ore body, which is potentially damaging,                                                               
outweighs  the benefits.  A bulk  mining method  will have  to be                                                               
used. As  a low-grade,  high volume  operation, the  project does                                                               
not  have   the  financial   capacity  to   carry  some   of  the                                                               
environmental necessities.                                                                                                      
In  conclusion, Senator  Halford  encouraged  the Legislature  to                                                               
look at  NAS and the rest  of the Legislature's authority  to get                                                               
as   much   information   as  possible   and   to   empower   the                                                               
administration with the needed funding.                                                                                         
5:03:03 PM                                                                                                                    
He  pointed   out  that  Mr.   Fogels  said   "assuming  adequate                                                               
resources" and  talked about a  flexible process.  In  this case,                                                               
the maximum protection should be flexed and that is expensive.                                                                  
REPRESENTATIVE   EDGMON   asked   about  the   similarities   and                                                               
differences between  the Red Dog  Mine, which has provided  a lot                                                               
of income and jobs, and Pebble Mine.                                                                                            
SENATOR HALFORD replied  that the Pebble Project  is the opposite                                                               
in every way he  can think of from the Red Dog  Mine. The Red Dog                                                               
deposit,  rich  in  toxic  elements,  had  already  significantly                                                               
hampered the  water quality in  its area through  prospecting and                                                               
natural erosion. Red Dog had  very few conflicting resources. The                                                               
Red Dog mine  was incredibly rich with about 20  percent zinc and                                                               
5 percent  lead as opposed  to 1  percent average at  Pebble. Red                                                               
Dog is also on native land  which means it shares through all the                                                               
native  corporations  across Alaska  and  allows  for local  hire                                                               
provisions  that  are  not enforceable  otherwise.  Red  Dog  was                                                               
overwhelming   supported  by   people  of   the  area.   Opposite                                                               
conditions in  Bristol Bay have  resulted in  overwhelming public                                                               
He said  a decision should not  be postponed while waiting  for a                                                               
plan; the size,  location, ore type, and the necessity  of a bulk                                                               
mining method are known. An advocate  for Pebble might not show a                                                               
plan until he has worked through  the process as much as possible                                                               
and  can get  it  approved. Waiting  endangers  the resources  in                                                               
conflict,  the people  of Western  Alaska and  the advocates  for                                                               
every other mining project.                                                                                                     
5:06:54 PM                                                                                                                    
REPRESENTATIVE BUCH  said Pebble  is entirely  on state  land and                                                               
asked Senator Halford to further touch on the issue of taxes.                                                                   
SENATOR HALFORD  replied that  most mines  in Alaska  can't carry                                                               
anywhere near  the taxes  that the oil  industry, or  others, can                                                               
carry.  Negotiations  between  native  corporations  and  mineral                                                               
interests show agreement on reasonably  high royalties. The state                                                               
system is  based on profit  after all  expenses are taken  out. A                                                               
profits-based tax  is a  very small percentage  of a  net smelter                                                               
royalty  tax and  would be  somewhere in  the range  of 1  or 1.5                                                               
percent, not considering economic  activity and local or property                                                               
SENATOR FRENCH asked Senator Halford what  he would do if he were                                                               
"on this side of the table".                                                                                                    
SENATOR  HALFORD  replied  that getting  more  information  makes                                                               
sense. He  advised going  to every source  possible which  can be                                                               
difficult because "the other side  is very, very well armed. They                                                               
are very well paid, they are  very well educated, they have life-                                                               
long careers in  the companies they work for." The  state side is                                                               
elected and appointed and usually  have to hire experts from that                                                               
other side of  the table. He said he would  not wait for somebody                                                               
to bring science forth that has been bought and paid for.                                                                       
5:10:10 PM                                                                                                                    
SENATOR  WAGONER asked  about the  worst case  scenario and  what                                                               
percentage of the Iliamna fishery could be affected.                                                                            
SENATOR  HALFORD  responded  that  Iliamna is  one-third  of  the                                                               
entire  fishery  and is  one  of  the  five major  drainages.  He                                                               
offered  a sample  scenario while  just building  the road:  If a                                                               
sectional  tanker, with  four trailers  of  10,000 gallons  each,                                                               
came across the road and was  lost in the middle of Lake Iliamna,                                                               
four tankers could bubble for  years, corrode and fail. If filled                                                               
with separation chemicals, it would  be even worse than petroleum                                                               
products. He  said numbers are  beyond comprehension. He  said he                                                               
cannot answer Senator Wagoner's question.                                                                                       
CO-CHAIR WIELECHOWSKI closed the testimony.                                                                                     
REPRESENTATIVE EDGMON said  he has constituents on  both sides of                                                               
the  Pebble issue  but surveys  show the  majority are  extremely                                                               
worried.  He   feels  an   independent,  third-party   review  is                                                               
necessary. The project  is unique in size and proximity;  it is a                                                               
non-renewable project,  with many  unknowns, next to  a renewable                                                               
resource.  He  questioned  if  the state  has  the  resources  to                                                               
monitor the  project and  the liability  protections in  place in                                                               
perpetuity.  He  is  unsatisfied  with  qualified  responses  and                                                               
promises of protection and no  net loss. The Legislature needs to                                                               
pursue this  study, support DNR,  support the developer  in their                                                               
efforts and mostly support the Alaskans  that live in the area as                                                               
they are the ones who will experience the benefits or the risks.                                                                
5:14:53 PM                                                                                                                    
SENATOR WAGONER said  he has been a commercial  fisherman in Cook                                                               
Inlet and  said that salmon are  tough creatures. He is  in favor                                                               
of pursuing the mine the safest  way possible. Bristol Bay is the                                                               
last bastion where a person can  make a living fishing but Alaska                                                               
won't pump oil forever and needs to look at other job sources.                                                                  
CO-CHAIR WIELECHOWSKI  said this is  a situation where  we cannot                                                               
afford to be wrong and the  more information the better. He would                                                               
support additional information and  research from instate and out                                                               
of state.  An independent, unbiased  group would be a  good thing                                                               
for all  parties, to make  sure our statutes and  regulations are                                                               
good, strong and will protect the fishery and habitat.                                                                          
5:17:27 PM                                                                                                                    
Seeing  no further  business to  come before  the committee,  Co-                                                               
Chair Wielechowski adjourned the meeting at 5:17 p.m.                                                                           

Document Name Date/Time Subjects