Story last updated at 5:59 PM on Wednesday, January 3, 2007

Opinion on state's liability in Pebble project draws fire

By Margaret Bauman

Developers who hope to build a massive copper-gold-molybdenum mine north of Iliamna Lake in Southwest Alaska continue to pour millions of dollars into the project as protests mount over environmental safety issues.

As 2006 drew to a close, Northern Dynasty had invested $126 million into its Pebble exploration project. Bruce Jenkins, chief operating officer for the Canadian mining firm, said he anticipates the company will spend another $30 million to $45 million in 2007.

Jenkins is emphatic that the mining company is entitled to due process. He asks how some groups and individuals can so strongly oppose a project that is not yet fully defined.

“We are doing everything legal and we have a right, particularly when we are on state land designated for mineral development.”

— Bruce Jenkins, COO

Northern Dynasty

“We are still exploring and we don’t know if we are going to have an open pit (mine),” Jenkins said in a recent interview. “Those are decisions we can’t make until we have drilled Pebble East, and that won’t be done until the end of 2007.”

Jenkins has said repeatedly the Pebble project is on state land designated for mining development. He said Northern Dynasty is not promoting a regional mining district, under which the federal Bureau of Land Management would open 900,000 acres of Southwest Alaska to mining. He also has said that water quality and fisheries would be protected.

There is no guarantee that Northern Dynasty will even get permitted for the mine, but the company wants the opportunity to put its science on the table to prove opponents’ concerns are wrong, Jenkins argues.

“We are doing everything legal and we have a right, particularly when we are on state land designated for mineral development,” he said.

Still, opposition is swelling from an eclectic group, which includes commercial, sport and subsistence fishermen, environmental organizations and others. In late November, 37 sport fishing industry leaders, including Scott Fly Rods, Orvis and the American Fly Fishing Trade Association, asked then-Governor-elect Sarah Palin, the state Department of Natural Resources and the federal Bureau of Land Management to halt development of the Pebble project, located at the headwaters of rivers critical to the multimillion-dollar Bristol Bay sockeye salmon fishery. The sport anglers, like many commercial fishing interests, want federal and state officials to permanently keep industrial mineral development out of the Bristol Bay watershed.

In mid-December. Rep. Paul Seaton, R-Homer, sought an opinion from the Alaska Division of Legal and Research Services to answer questions from constituents who want to stop the Pebble project at all costs.

Seaton told the Homer News the state advised him that reclassification of the land use of the area to make mining illegal, or regulatory or legislative action that imposed excessive requirements for necessary permits, could require the state to pay the area claim holder. That compensation, calculated by taking future value of the minerals in the ground minus expenditures required to dig them out, would likely cost the state billions of dollars, Seaton said.

Jeff Parker, an Anchorage attorney for Trout Unlimited, which opposes the Pebble project, also studied the state memo and had a different response.

Parker said what the agency wrote was simply a memo that addresses general principles of state and federal takings law. The memo says mining claims, per se, do not give a right to mine, Parker said. “The memo doesn’t address any particular bill. It is not a statement that anything in particularly is or is not a taking,” he said.

Parker cited the 1999 case of Beluga Mining Co. v. the state of Alaska Department of Natural Resources.

Beluga held mining claims, just as Northern Dynasty does, and Beluga wasn’t allowed to mine, Parker said. “The right to mine could not arise until the state issued permits to mine, so they have no right until they get those permits.”

The Alaska Supreme Court held that there is no right to mine simply because someone has a mining claim, he said. “The court said it is prospective and contingent on state permission to mine. That’s the essence of the case.”

Attorney Frances Raskin, who until recently represented Trustees of Alaska on Pebble issues, also cited another court case, Lucas v. South Caroline Coastal Council. In that case, a developer who owned property was denied the right to build two houses on that property because of enactment of erosion prevention measures.

“The government has the ability to regulate their activities even when they own their own land,” Raskin said. “They only get a Otaking’ (legal opinion of land rights taken away) if the regulations deny the property owner all economically viable use of his land.”

The controversy, which has gone on for months, shows no sign of ebbing. Late this fall, opponents of the mine said two polls, one conducted by Marc Hellenthal of Anchorage, and another paid for by the Renewable Resources Coalition, show the majority of residents of the area are opposed to the mine.

Northern Dynasty countered with its own statewide poll, taken by Dittman Research of Anchorage, which found 45 percent in favor of the mine, 31 percent opposed and 24 percent undecided.

In late November, the Bristol Bay Native Corp. fired off a letter to Robert Dickinson, chairman of Hunter Dickinson Inc. of Vancouver, British Columbia, parent firm of Northern Dynasty, critical of comments made by Dickinson at a mining, oil and gas conference in Dubai, United Arab Emirates.

BBNC criticized Dickinson for indicating “our Native neighbors also have had a vote recently for their input into responsible development. That group voted 78 percent in favor of responsible mineral development in their neighborhood.”

Hjalmar Olson, chairman, president and chief executive officer of BBNC, said that Dickinson was referring to an advisory resolution passed at BBNC’s 2005 annual shareholders meeting.

At that BBNC meeting in Anchorage, where an advisory resolution regarding environmentally safe mine development was put forth by shareholders, “of the 26 percent of BBNC shareholders who voted on the resolution, 78 percent of that group voted in favor,” Olson said. “This equates to roughly 20 percent of BBNC’s entire shareholder base who, at that time, voted in favor.”

Olson said the proposed Pebble project “is a very sensitive issue that we take seriously. It is our fiduciary responsibility to shareholders to protect our land and Native way of life. It is also our responsibility to understand resource development opportunities and to take advantage of those that are in line with our vision and mission.

“The shareholders of our company have a great deal at stake,” Olson said. “As your project moves ahead, BBNC will gauge its support based on the actions and behavior of your company in these early phases. Misleading statements from the upper management to shareholders of your company do not bode well for future relations for the project stakeholders.”

Margaret Bauman can be reached at margie.bauman@alaska