Read RDC's Comment Letter

Comment deadline was 5:00 p.m. on April 9, 2015

Overview:
The State of Alaska Department of Natural Resources (DNR) is accepting comments on an in-stream flow reservation (IFR) application filed by the Chuitna Citizen’s Coalition. The application is a pre-emptive effort to halt the permitting process for the potential PacRim Coal, LP (PacRim) project before the process can fully evaluate the project.

RDC is concerned this precedent-setting action will be used to delay or halt this and other responsible resource development projects in Alaska. IFRs have been “on the books” in Alaska for years, but questions concerning how IFRs should be addressed in the face of competing uses have not been resolved. RDC is further concerned anti-development groups will consider IFRs as a tool they can use to pre-emptively stop community and resource development projects beyond mining.

In June 2009, Trustees for Alaska filed an application on behalf of a group now called the Chuitna Citizens Coalition (CCC). The application covered three overlapping IFRs on a specific reach of Middle Creek, a tributary of the Chuit River, in an effort to block the proposed Chuitna Coal Mine. That application has been separated into three overlapping applications.

In 2011, CCC sued DNR and won, forcing the agency to begin processing the IFR applications. DNR has also received, and must consider, water rights applications from PacRim for some of the same water. The agency is required by law to evaluate competing applications to determine the most beneficial use when competing applications are submitted for the same water. Contrary to what CCC alleged, the judge in the case ruled that the mere filing date of the applications does not give CCC a priority over subsequent water right applicants - such as PacRim.

In November 2013, PacRim filed seven applications for the water right appropriations for the purpose of diverting the water around the proposed mining operations and returning it to Middle Creek below the proposed mine area to maintain seasonal flows. Portions of these applications compete with portions of the CCC IFR applications.

DNR has accepted the PacRim water rights applications and intends to process them along with the other state and federal permits as part of the overall project permit review process that is underway. However, the PacRim water rights application review will only be after DNR proposes to make decisions on CCC’s IFR applications.

Many statewide business associations, including RDC, are asking DNR to reject the IFR, and allow the permitting process to properly evaluate the project and determine proper water designations.

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

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

For more information about water and in-stream flow reservations, visit:
http://dnr.alaska.gov/mlw/water/instream.cfm

Action requested:
Please submit written comments discouraging DNR from approving all In-stream Flow Reservation applications. In your comments, remind DNR that approval of the CCC IFRs would undermine existing regulatory processes and set a dangerous precedent for community and resource development projects across Alaska. Investment in Alaska should not be jeopardized by pre-emptive actions to stop community and responsible resource development.

Send an email to: kimberly.sager@alaska.gov

By Fax: 907-269-8904

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

Points to consider for your comments:

• DNR should consider all uses of water in the IFR application process. Granting, or even evaluating, an IFR without considering competing water right applications is not in the public interest. Without evaluating both, DNR cannot truly weigh and balance the economic and public interest of the competing applications, nor mitigation measures.
• The assessment and potential actions would undermine the permitting process and set a dangerous precedent for future projects. If DNR does not reject the IFR, anti-development groups could use this action as a new tool to stop projects, or at a minimum, introduce significant uncertainty and delay, chilling Alaska's business climate.
• CCC’s IFR application is fundamentally flawed. CCC has requested a reservation of water that exceeds the amount of water in Middle Creek over 50% of the time as established by extensive actual flow data from gage stations in the stream.
• Water reservation adjudications are premature. The project has not yet been finalized and updated detailed plans and environmental mitigation strategies are still being submitted to government agencies. As a result, the current IFR would pre-emptively deprive government agencies and stakeholders of the specific information, science, and rigorous reviews that would come out of the multi-year process.
• The proposed mine will provide economic benefits to Alaskans, and the construction cost is estimated at $750 million. After construction, the mine is expected to employ 350 people with an average annual payroll of $35 million, pay an estimated $300 million in royalties to the Alaska Mental Health Trust over the life of the mine, and pay millions in taxes to the State and the Kenai Peninsula Borough. In contrast, DNR estimates the commercial value of the fish in the stream to be between $1,500 and $10,600 per year. Moreover, the mine proposes to protect these fish resources so they are not lost.
• The mine proponent is designing plans to construct new fish habitat, and following mining, a plan to reclaim the original habitat with a resulting overall increase in fish habitat. Approving the CCC IFR applications could essentially result in less fish habitat in the long run.
• The proposed PacRim Coal LP project is on State of Alaska, Mental Health Trust Authority lands. The State of Alaska depends on the responsible development of natural resources on its lands to diversify and support its economy.
• CCC does not have land rights near the IFR application. While adjoining ownership or land rights is not required by law, approving the application would diminish the value of the land to the owner (the Mental Health Trust Authority) by granting the IFR water right to a third party.
• Every project, no matter the size or location, should have an opportunity to go through the existing, extensive permitting processes. In the case of mining, there are more than 60 major permits and hundreds more from local, state, and federal agencies that must be successfully obtained. The process will determine the best use of water and will address and consider mitigation, such as re-routing water away from project areas until reclamation can be done. The process will not permit one industry or resource to advance at the expense of another.

Comment deadline was 5:00 p.m. on April 9, 2015