October 28, 2014  by tperry

Regulation & Environment: Alaska mining battle and its impact on oil and gas

Regulation & Environment: Alaska mining battle and its impact on oil and gas

By Tim Bradner | October 27, 2014 12:01 AM 

Regulations between mining and oil and gas often spill over. That’s what the industry is worried about in Alaska, as Tim Bradner discusses in this week’s column, Regulation & Environment.

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Alaska producers are watching a legal battle between a mine developer and the US Environmental Protection Agency over the agency’s move to preempt mining across a 268-square-mile area of southwest Alaska before the company has defined its project or applied for permits.

Kara Moriarty, director of the Alaska Oil and Gas Association, said her industry is worried about the preemption because it usurps the US Army Corps of Engineers’ role in wetlands permitting under the federal Clean Water Act. “It would set a dangerous precedent,” Moriarty said.

EPA plans to use its authority under Section 404c of the Clean Water Act to ban a large-scale mine in the Bristol Bay region. The authority is used occasionally to protect parcels of sensitive habitat, typically while a permit is being processed by agencies like the corps.

Ed Fogels, Alaska’s deputy natural resource commissioner, said the proposal is an unprecedented expansion of the 404c authority because it covers such as large area.

“It covers state and privately-owned lands and federal lands, too,” Fogels said. The 404c power is typically used to protect smaller sections of habitat, he said.

EPA’s immediate target is Pebble, a large undeveloped metals deposit near Iliamna, southwest of Anchorage. The typical process in getting the project approved would be for Pebble Partnership Ltd., the developer, to file its permit applications, the Corps of Engineers would then begin an Environmental Impact Statement that would include a detailed science-based assessment by federal agencies including EPA, according to John Shively, Pebble Partnership’s chairman.

The EPA 404c preemption, which Shively said is not backed by good science, essentially blocks the permits being filed, he said.

EPA spokeswoman Hanady Kader said the decision to initiate a 404c process, “reflects the unique nature of the (Bristol Bay region) as one of the world’s last prolific wild salmon resources and the threat posed by the Pebble deposit, a mine unprecedented in scope and scale.”

“This is an authority we used sparingly for exceptional situations and that is what we have with Pebble,” Kader said.

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Oil and gas operators fear they could be next in EPA’s cross-hairs, AOGA’s Moriarty said.

One project that EPA might target is ConocoPhillips’ plan to build an 8-mile road across wetlands into the National Petroleum Reserve-Alaska to its planned GMT-1 oil project. The wetlands affected support prime waterfowl habitat.

Federal agencies including EPA are pushing the US Bureau of Land Management to require a “roadless” development for GMT-1, requiring supply and support by air, and industry fears EPA will attempt to use a 404c threat as a lever to get it. ConocoPhillips said a roadless rule would kill the project economics.

EPA considered using 404c preemption in a related NPR-A project, on a bridge and road for ConocoPhillips’ CD-5 oil project, but the agency backed away due to procedural problems. The Corps of Engineers eventually approved the bridge and road.

Another assertion of 404c would likely come if the state succeeds in its efforts to conduct seismic exploration in the Alaska National Wildlife Refuge, citing authority in federal law allowing continued evaluation of ANWR’s potential resources. That is being fought by the US Fish and Wildlife Service.
American Petroleum Institute president Jack Gerard said his association is also watching the issue because oil and gas operators need a stable regulatory regime. EPA’s expansion of 404c undoes that, Gerard said in an interview.

Alaska Gov. Sean Parnell said he is outraged by evidence that EPA has coordinated its proposed action with outside groups that oppose the Pebble mine.

“We now have copies of emails, obtained through our intervention in the lawsuit, that EPA staff was working with opposition groups on a preemption plan as early as 2008,” Parnell said in an interview. EPA announced its possible preemption in 2013, claiming it was asked to do so by Native tribes, but Parnell said it’s clear that EPA staff prompted the tribes to make the request.

This has now prompted another lawsuit by Pebble Partnership, filed Sept. 3, in which the company asserts EPA violated a federal law prohibiting an agency from allowing outside groups undue influence in a regulatory move.

Pebble Partnership has also asked the EPA’s Inspector General to investigate the agency’s unusual process in preparing the preemption. “We do know that the Inspector General is working on this, and we believe the matter is taken seriously,” said Shively, the Pebble chairman.

Holland dismissed Pebble’s initial lawsuit, which challenges EPA’s authority on the preemption, but only because the agency has not yet formally initiated the action.

 

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