Resource Development Council

Polar bear critical habitat poses threat to

North Slope residents and Alaska’s economy

By Joel Whitley and Teresa Imm

The North Slope of Alaska is a harsh and beautiful land, blessed with both natural resources and abundant wildlife. The North Slope is also home to thousands of people, of which approximately 69% are Alaska Natives. The Iñupiat Eskimos have lived and thrived on the North Slope for thousands of years, and they intend to remain for generations to come. But the ability of the Iñupiat and future generations to remain on their ancestral land is being threatened. A series of decisions by the U.S. government threatens to negatively impact the rural peoples of the North Slope and their ability to preserve and maintain their culture.

For thousands of years, the Iñupiat have maintained a traditional subsistence lifestyle of hunting and whaling, and over the past 30 years, responsible development has allowed the Iñupiat to achieve better health, education and welfare for their families. Most recently, however, environmental groups and outside special interests have succeeded in pressuring the U.S. Fish & Wildlife Service (USFWS) to propose and in some cases implement laws and regulations that threaten the economic viability of the North Slope, and, in turn, the viability of continued residence on the North Slope. Certain of these regulations have taken the form of critical habitat designations for threatened and endangered species, including polar bears.

In May 2008 and in response to a suit brought by the Center for Biological Diversity, polar bears were listed as “threatened” by the USFWS. Last month, after further pressure by environmental groups, the USFWS finalized a critical habitat designation (CHD) for polar bears consisting of 187,157 square miles – an area larger than the State of California. The CHD means that every project within the designated area that involves federal funds, permits or activities, including oil and gas exploration and development, will be subject to additional review and potential delay and regulation by the federal government.

The USFWS’s economic analysis concluded that the incremental cost of CHD would be only $677,000 to $1.21 million. While recognizing the potential for litigation and delay, the USFWS’s economic analysis concluded that those costs were “too speculative to quantify.”

Unfortunately, the government’s analysis ignores the realities of the North Slope economy and the challenges faced by rural Alaskans in the Arctic. The economic engines of the North Slope and its villages – jobs from development activities, jobs from support services, cash dividends from royalties, and the lion’s share of all tax revenues on the North Slope – all have two critical things in common.

First, all of these financial benefits are contingent upon the successful pursuit of development activities in the region. Any disruption in those activities disproportionately harms Alaska Natives that rely on them for basic income. If these jobs and other benefits are stripped away, the villages will be financially devastated. There will be little money for roads, infrastructure, basic medical services, police, or any of the other core services that every community needs.

Second, these financial benefits are all essential to the survival of Alaska Natives’ cultural practices in the region. The ability of the Iñupiat to maintain cultural traditions and pass them on to the next generation depends in large part on their ability to remain in their ancestral villages. If you cannot afford to live in one of the villages, you miss out on the subsistence hunts, the Nalukataq (the whaling festivals), the sharing of maktak, the oral storytelling traditions, and the core Iñupiaq values that are reinforced and shared on a daily basis in the villages of the North Slope.

In reality, an independent economic analysis has shown the potential economic impacts to the North Slope are much greater than $677,000 or $1.21 million. It is a near certainty that environmental groups will rely on the CHD to file lawsuits in an effort to stifle development activities on the North Slope, given their long track record and their public statements confirming their intention to do so. The Center for Biological Diversity has already filed a lawsuit alleging that certain pesticides were adversely impacting polar bears and their critical habitat. This litigation, of course, could take months and years, and the costs of delay and of reduced oil and gas output resulting from such delay are staggering.

For example, a one-year delay in production for a relatively small North Slope oil field (190 million recoverable barrels) could equate to a loss of more than $200 million in royalties and tax revenues over 15 years to the State of Alaska, Arctic Slope Regional Corporation (ASRC) and the North Slope Borough. For a one-year delay in a larger field of 700 million barrels, lost royalties and tax revenue to the State, ASRC and the North Slope Borough could reach nearly $580 million. A five-year delay for a large oil field could lead to total lost royalty and tax revenues of up to $2.6 billion.

The regional economic impact of delay leading to lost production could be even more devastating. For example, a 1% reduction in oil production within the CHD could lead to a loss of more than 200 jobs statewide, with a nearly $76 million impact on the North Slope Borough and a nearly $100 million impact statewide.

The CHD will also impact needed and necessary community development projects. For example, the North Slope Borough is currently experiencing the cost of delay required by additional consultation for the Steller’s Eider and its associated critical habitat designation. Thus far, a road project in Barrow (involving a road the U.S. Army Corps of Engineers has determined needs to be moved) has already been delayed for one year and, as a result, has experienced a 25% increase in costs to date.

All of this is even more galling since the new polar bear CHD will do nothing to protect or benefit polar bears. Polar bears were listed as “threatened” because of projected loss of sea ice due to a forecasted increase in Arctic temperatures. But the USFWS has admitted that the CHD will do nothing to address projected loss of sea ice due to global warming. By contrast, in the final listing rule for the polar bear species, the USFWS expressly determined that “onthe- ground” activities, such as oil and gas exploration, development and production, or Native subsistence uses, do not pose reasonably foreseeable threats to polar bears. Despite this fact, the USFWS has now finalized a CHD that has no impact on global warming or benefits for polar bears, and instead has created a mechanism for limiting activities that it has already determined have no impact on polar bears – unnecessarily threatening the livelihood, culture and lands of the people of the North Slope.

The CHD also fails to take into account the unique economic relationship of the Iñupiaq people to their ancestral lands as a result of the Alaska Native Claims Settlement Act of 1971 (ANCSA). ANCSA extinguished Alaska Native aboriginal land rights in exchange for the establishment of regional and village for-profit corporations owned by and for the benefit of Alaska Natives. ASRC is the Alaska Native corporation for the North Slope region, and it was authorized by Congress to use the North Slope’s natural resources to benefit its shareholders financially and culturally. As a result, on the North Slope ASRC is an employer, a landowner, a lessor of subsurface rights, a business partner for oil and gas companies working in the region and a public voice for its Iñupiat shareholders.

The Iñupiat live under ANCSA’s Congressional “deal,” even though they were not uniformly in favor of the settlement. But ANCSA “promised” to provide Alaska Natives with a capitalistic, free-market method for harmonizing western economic development with traditional subsistence and cultural traditions – leading to self-sufficiency while preserving Native cultures. To the extent ASRC and its Iñupiaq shareholders are prevented from accessing the natural resources on and under their lands on the North Slope without good reason, they are denied the ability to follow-through on the economic deal to which they submitted.

For many years, Alaska Natives have had a productive relationship with the USFWS and other government agencies. For example, Alaska Natives have shared their traditional knowledge and the biological specimens of polar bears with government scientists in an effort to expand knowledge about the species. Alaska Natives also voluntarily limit their subsistence take of polar bears, even though such take is exempt from statutory limits under the Endangered Species Act and Marine Mammal Protection Act.

Unfortunately, this productive relationship is in jeopardy. Ignoring the concerns of Alaska Natives, the USFWS has proposed and implemented an unnecessary critical habitat designation that has no benefit for the polar bear. The USFWS had an opportunity to exclude the impact of the CHD on Native communities, Native lands and proposed development areas, but the USFWS declined to implement those common-sense exclusions. Instead, the U.S. government appears to have decided that the agendas of outside special interest groups should trump the interests of the local people who live with and know most about polar bears and the Arctic. The U.S. government also appears to have forgotten that an essential element of ANCSA was continued access by Alaska Natives to the natural resources on and under their lands on the North Slope. Intentionally or not, the U.S. government, by its continued actions, is wrongfully burdening the livelihood, culture and lives of the Alaska Native peoples of the North Slope.

Joel Whitley is Senior General Counsel and Teresa Imm is Director of Resource Development for Arctic Slope Regional Corporation.

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