RESOURCEJuly2006 REVIEW A PERIODIC PUBLICATION OF THE RESOURCE DEVELOPMENT COUNCIL FOR ALASKA, INC. www.akrdc.org

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T H E A L A S K A he Resource Development Council’s (RDC) statewide Board of DirectorsT is working diligently to formu- late the organization’s position on the gas pipeline contract negotiated between the G A S P I P E L I N E State of Alaska and the North Slope producers – BP, ConocoPhillips, and ExxonMobil. RDC has engaged in a number of meet- RDC TAKES CLOSE LOOK AT CONTRACT ings and work sessions with additional activities scheduled in the weeks ahead. The Board hopes to finalize its position by July 24, the close of the extended pub- lic comment period. At work sessions in May and June, the Board received a detailed sectional analy- sis of the contract from the administra- tion and the producers, and also met with key legislators and former Department of Natural Resources employees – Commissioner Tom Irwin, Deputy Commissioner Marty Rutherford and Oil and Gas Director Mark Myers. The Board also heard from affected RDC members, independent oil and gas companies and a local utility. Other di- rectly impacted RDC members, includ- ing local communities, continue to participate. RDC’s Board encompasses all of (Continued to Page 4)

I NSIDE

Gas Pipeline 1, 4-5 Oil Production Tax 3 Ballot Measure 2 6 Pebble Project 7-8 RDC Annual Meeting 8-9 Cruise Ship Initiative 10 RDC News Digest 11 Contract Services: 907.677.7501 Medevac Services: 888.283.7220

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Resource Development Council Executive Committee Officers 121 W. Fireweed, Suite 250 President John Shively Resource Review is the official periodic publication Sr. Vice President Rick Rogers Anchorage, AK 99503 of the Resource Development Council (RDC), Phone: (907) 276-0700 Vice President Wendy Lindskoog Fax: (907) 276-3887 Secretary Tom Maloney Alaska's largest privately funded nonprofit economic Treasurer Stephanie Madsen E-mail: [email protected] development organization working to develop Website: www.akrdc.org Staff Alaska's natural resources in a responsible manner Material in this publication may be reprinted without permission provided Executive Director Tadd Owens and to create a broad-based, diversified economy appropriate credit is given. Deputy Director Carl Portman Writer & Editor Carl Portman Projects Coordinator/AMEREF E.D. Jason Brune while protecting and enhancing the environment. Finance/Membership Deantha Crockett

Page 2 July 2006 Resource Review www.akrdc.org A MESSAGE FROM THE EXECUTIVE DIRECTOR TADD OWENS “Coupled with federal taxes and other state taxes EXERCISE CAUTION IN CRAFTING PPT, ROBUST OIL and royalties, a 20/20 PPT results in AND GAS INDUSTRY KEY TO ALASKA’S ECONOMIC HEALTH a total government Beginning July 12, during this summer’s second special current fiscal year. The main take of nearly 60 session, the Alaska Legislature will have another opportunity argument for retroactivity percent — the to dramatically overhaul the state’s oil severance tax system by appears to be the need to pay highest rate in finally striking a compromise on Governor Murkowski’s for this year’s gargantuan capi- petroleum production tax (PPT) proposal. Those who have tal budget. If that is indeed the North America.” followed PPT since the governor’s original bills were intro- case, the business community duced on March 22 know it is a politically controversial and has truly failed in its efforts to promote fiscal stability. technically complicated issue. How it is resolved will be A tax floor is absolutely counter to one of the main prem- critical to the future of Alaska’s oil and gas industry. ises of a net profits tax — the idea of shared risk. Industry is The Legislature and the public have been inundated with willing to share profits when prices are high knowing the state numbers — base tax rates, tax credits and deductions, cost has shared in the risk of exploring for and producing oil by definitions, progressivity factors and price and revenue fore- providing tax credits for investments. It is an appropriate casts to name a few. And they have heard from various balance especially given the state will continue to be buoyed independent consultants and a host of directly impacted stake- by revenue from corporate income taxes and royalties when holders. Access to all that information and opportunity for prices are low. months of debate has not, however, resulted in a bill accept- What has become known as “progressivity” is nothing more able to a majority of legislators. Rather it has generated than a windfall profits tax. A net profits tax such as the stalemate and allowed election-year politics to creep into play. governor’s original proposal is, by definition, progressive. As RDC recognizes the need to restructure the ELF system. profits increase so does the state’s share of the revenue However, we find the direction the Legislature is heading with generated from a healthy industry. A windfall profits tax will PPT extremely problematic. We are very concerned the base cap the upside for industry in Alaska and depress future tax rate remains too high. In addition to the base rate, the investment leading to less revenue for the state. Legislature seems intent on enacting a number of other If any or all of these provisions are included in a new sever- troubling provisions. ance tax structure, they will work against the stated goals of The Legislature’s refusal to view Alaska’s severance tax as growing the industry and its corresponding revenues to the one of a number of revenue streams from oil and gas produc- state. The Legislature will have made a clear choice in favor of tion has contributed to the deadlock. While the production short-term state revenue over long-term investment and tax is significant, it makes up only a fraction of the total private sector economic growth. revenue the state receives from the industry. In fiscal year RDC has argued from the beginning for the lowest possible 2005, the industry generated $2.8 billion in unrestricted tax rate. The governor’s 20 percent proposal was a doubling revenue to the state’s general fund. The production tax of the effective severance tax rate — a historic increase. equaled $860 million. The remaining dollars came from Although our industry members reluctantly accepted the royalties (including bonuses and interest), corporate income 20/20 compromise, they stated very clearly that it would have tax and property tax. a negative affect on investment versus the status quo. Coupled Despite the state being awash in cash, many legislators have with federal taxes and other state taxes and royalties, a 20/20 advocated for a series of provisions designed to turn the gov- PPT results in a total government take of nearly 60 percent — ernor’s 20/20 compromise with industry into a tax system des- the highest rate in North America. tined to have significant negative impacts on future RDC believes the Legislature should create a production tax investment. Legislators have proposed a retroactive effective system as easy to understand and administer as possible. We date for the tax, considered establishing a tax floor and even support a system that gives Alaska a competitive advantage for argued for increasingly onerous progressivity provisions. All capital investment and we support a conservative system that under the guise of “maximizing” benefits for Alaskans. errs on the side of long-term production, not short-term tax Of course, none of these provisions make sense when the revenue. PPT is viewed together with income from royalties, property The key to Alaska’s long-term economic and fiscal health is tax and corporate income tax. A retroactive effective date is a robust oil and gas industry. Don’t begrudge the industry for intended to be punitive to the industry, plain and simple. being profitable, but rather celebrate our shared good fortune. Even under the current, out-dated severance tax system the Profits equate to new investment, jobs and business contracts state generated more than $1 billion in surplus revenue for the for Alaskans and a healthy state revenue stream. (907) 276-0700 July 2006 Resource Review Page 3 tax provisions are an impor- GAS PIPELINE: BIG REWARDS, HIGH RISKS tant part of the overall pack- age and that at the end of the day investors need to know what the rules are before planning, financing and building a project with this magnitude of risk. They and the administration also con- sider the state’s 20 percent equity position in the project, as well as taking its royalty gas in kind, as core compo- nents of the contract that en- able the project to move forward. The cost of the pipeline is estimated at $19 billion to $27 billion, one of the largest An Alaska gas pipeline would not only provide America with a significant portion of its future natural gas needs, it would result in far-reaching benefits to Alaska, including $2 billion or more a year in revenues to the state, thou- construction projects ever sands of jobs, gas for Alaskans, new private sector business opportunities and encourage the development of a new planned. If built, it could gas exploration industry. It would also lead to new oil development, extending the life of the existing oil pipeline. bring Alaska thousands of jobs and more than $100 billion in revenue during the (Continued from Page 1) comment period on the con- ples the provision to lock in next 35 years, as well as ex- Alaska’s basic industries, in- tract to 75 days, Governor oil tax rates for the term of tend the life of the oil cluding oil and gas, mining, Murkowski said, “It is clear the contract, the decision to pipeline for an additional 20 fishing, timber and tourism. that many members of the take the state’s royalty and years, netting the state bil- The Board also includes public still have questions or taxes in-kind (in the form of lions of dollars in additional major construction compa- still need explanations re- gas) and the 20 percent state tax and royalty revenue. nies, labor organizations, garding the contract.” ownership interest in the With the 460-page con- Native corporations, local Under the Stranded Gas pipeline. tract, the administration has communities and a wide vari- Development Act, the ad- The administration has gone further than any other ety of supports firms. ministration is authorized to been pitching the contract toward making the long- “In many respects, the negotiate tax and other state during public meetings deferred project a reality. The RDC Board is a microcosm terms should the producers throughout the state and de- administration views the of the state and as such we’re decide to build a 2,100-mile fending the provisions that contract as a mechanism that viewing the contract from a pipeline from the North are aimed at offsetting some will finally help bring the variety of perspectives,” said Slope to Alberta or all the of the huge risks to the pro- pipeline project to life. RDC Executive Director way to Chicago (3,600 miles). ducers. However, legislative consult- Tadd Owens. “The Board is “We have done that part of The producers insist the ants and others have expressed working to identify and ana- the job,” Murkowski said. “It concerns about a lyze issues of importance to is now up to the Legislature Prudhoe Bay Gas Owners number of provi- the membership in order to to give its approval.” sions contained develop a well-reasoned The governor acknow- within the con- RDC position on the con- ledged the public and legisla- tract. State tract. The importance of a tors have identified several BP Specific con- ConocoPhillips gas pipeline project to the fu- areas of the contract that ExxonMobil cerns expressed Other ture of Alaska cannot be need revision, or better ex- by critics include overstated. The Board is planations. “Those that need the lack of a firm making sure RDC partici- it will be renegotiated with start date for con- pates responsibly in the pub- the producers,” Murkowski struction, the ab- lic process.” said. Prudhoe Bay gas ownership, excluding Pt. Thompson, sence of a project In extending the public Murkowski gave as exam- is shown above: ExxonMobil, 36.39%; ConocoPhillips, labor agreement, 36.07%; BP, 26.36%; State of Alaska, 12.5%; other, 2%.

Page 4 July 2006 Resource Review www.akrdc.org Key Milestones – Alaska Gas Pipeline

industry payments to local portunities, no gas for in- is engineered, designed and next decade. governments in lieu of taxes, state use, and no long-term permitted, substantial cost Once the “open season” and access and capacity pro- revenues associated with a overruns could make it un- (the period where shipping visions should new explorers new gas industry. economic. commitments are made) is discover additional gas. State lawmakers must ap- The project could also be concluded, a company can- Others say the contract con- prove the contract before it endangered if gas prices re- not back out of the project. If tains too many ways for the can be signed by the gover- turn to historically low lev- it does, it faces losing its oil producers to delay or back nor and the producers. Due els. Moreover, the rigorous and gas leases under the con- out of the project. to terms of the contract, they and time-consuming permit- tract’s nonperformance pro- The administration contin- must also hammer out an ting process and Canadian visions. ues to stress the importance agreement on the oil produc- regulatory authorizations While there are no short- of considering the balance of tion tax revision and change combine to make an absolute ages of opinions on the draft the proposal as a whole the state’s natural gas devel- starting date for construction contract, both proponents rather than targeting individ- opment act to address statu- highly uncertain at this stage. and critics agree that a ual contract elements. tory issues. They failed to do Once the final contract is pipeline would bring tremen- Proponents of the contract either during a 30-day special approved, the companies dous economic benefits to point out a gas pipeline has session this spring, however, would have 90 days to begin Alaska and is the key to es- been a dream of Alaska since the governor has announced the planning phase, followed tablishing a long-term gas in- the 1970s and they believe a second special session will by engineering and permit- dustry in the state. The this contract is the most vi- begin July 12. ting activities. Planning, engi- challenge is achieving resolu- able means of transforming The contract does not neering and permitting the tion on a contract that ulti- that dream into reality. They guarantee construction of the project will cost the mately transforms Alaska’s warn if Alaskans insist on pipeline nor does it set a companies about $1 billion. 30-year pipe dream into getting everything they de- timeline for development be- The state’s most optimistic reality. mand from the contract, the cause there are a number of timeline shows that construc- For copies of the contract state runs the risk of getting variables that can affect the tion wouldn’t start for at least and other gas pipeline related nothing at all – no pipeline project’s economics and the five years and that gas would documents, please visit: and corresponding jobs, lost starting date of construction. not reach Lower 48 markets www.gaspipeline.alaska.gov. private sector business op- For instance, once the project until midway through the (907) 276-0700 July 2006 Resource Review Page 5 BALLOT MEASURE 2 BAD FOR depress spending in local communities. Measure 2 has another alarming new TOURISM AND ECONOMY requirement that forces the disclosure of confidential business pricing informa- tion about Alaska’s local small busi- nesses. This is particularly disappointing since no other business in Alaska is required to publicly disclose pricing strategies in any setting. These disclosures could reduce the amount of tours and excursions taken by visitors, hurting Alaska-based businesses the most. The citizen suit provision in Measure 2 could pose a significant threat to Alaska-based businesses, as well. The measure creates opportunities for frivo- lous and predatory lawsuits by allowing lawyers to file suit and collect up to 50% of any fines collected. This is an open in- vitation to lawyers from across the country to file suit in Alaska. RDC’s members are all too familiar with how Alaska’s timber industry has Ripple effects of Ballot Measure 2 would be felt throughout the travel industry, which generated over $2 been decimated by frivolous, predatory, billion in spending last year. There are more than 2,000 Alaska businesses, from small eco-tourism opera- and unnecessary lawsuits, costing thou- tions to large hotels, that provide goods and services to visitors. Even a 1 percent reduction in the number sands of timber jobs. Measure 2 pro- of visitors would mean the loss of $20 million from the economy and the loss of over 250 jobs. vides the same lethal medicine to By Carol Fraser, Aspen Hotels Measure 2 will not only directly hurt tourism workers. RDC Executive Committee member tourism businesses, but it will also hurt RDC opposes Measure 2 because of Ballot Measure 2, which would levy the services and infrastructure busi- the potential harm it will do to Alaska’s additional taxes and regulations on the nesses that support the industry. With economy. Here are a few things you can tourism industry, will go before voters more than 26,000 local jobs provided by do to ensure we defeat Measure 2: in the August 22 Primary Election. tourism, contributing tens of millions of • Discuss the measure with your RDC’s leadership and members have dollars to Alaska’s economy, there is a friends, co-workers, and employees. been working with Alaskans Protecting lot at stake. Explain its negative affects on local busi- Our Economy (APOE), the coalition Measure 2 would increase costs, dis- ness and encourage people to vote organized to educate the public on the courage tourism and reduce spending at “No.” negative economic impacts of theinitiative. local businesses. It mandates four addi- • Encourage your employees who are Hundreds of individuals and busi- tional new taxes, including a statewide residents of the state to register to vote. nesses, along with industry and business head tax of $50 per person, $100 per If they are already registered and work- groups, have joined this coalition to help couple, and $200 for an average family ing away from their polling location, en- defeat Ballot Measure 2 by sending in of four. courage them to request an Absentee resolutions of opposition. Visitors have many options world- Ballot. Measure 2 has nine pages of complex wide. Many are on a budget for what • Set aside time on Election Day to and confusing provisions - new taxes, a they consider the trip of a lifetime. Since vote. Provide the opportunity for your new vessel permitting system, new state most are not wealthy, ticket prices do employees to vote. If they are interested, employees on every vessel, duplicative matter. Together with extra fuel costs, offer to provide transportation to and water and environmental sampling pro- visitors already pay millions of dollars in from their polling location. Make sure grams, citizen suit provisions, and more. taxes and fees on plane tickets, hotels, you set aside time outside of breaks and It will likely result in numerous, unin- hotel bed taxes, restaurants, tours, shop- their lunch period for them to vote. tended consequences negatively effect- ping, and sales taxes in certain commu- For more information about Measure ing local businesses. nities. Imposing more taxes and fees on 2’s impacts or to join efforts by signing a Tourism is a growing industry and is top of all the other additional travel resolution of opposition visit: Alaska’s fourth largest employer. Ballot costs will keep visitors away and further www.protectoureconomy.com.

Page 6 July 2006 Resource Review www.akrdc.org THE PEBBLE PROJECT Balancing Community Values And Economic Opportunities

A consortium of large mine operators is likely to emerge later this year to permit, con- struct and operate the big Pebble copper-gold-molyb- denum project in Southwest Alaska. That’s the goal of Robert Dickinson, Chairman of the Hunter Dickinson Group, which operates Northern Robert Dickinson noted, “Discovery of Pebble East has given us the opportunity to consider different mine plans for the Dynasty Mines, the company project.” Jason Metrokin said, “It would be irresponsible of us (Bristol Bay Native Corporation) to indicate support or op- pursuing development of the position for a project that is not yet defined.” Mayor Glen Alsworth said, “When I make a decision, it will be based on fact.” Pebble deposit, the largest ac- jobs for as long as 50 years. capital for a large mine,” Photos by Judy Patrick cumulation of copper and The project would also bring Dickinson said. state’s permitting process,” gold in North America. much needed economic and After Northern Dynasty Dickinson said. “Consortiums are a typical infrastructure development started feasibility studies for Dickinson also reported structure for most large mine to rural Alaska. an open pit mine, Dickinson that a deep sea port site has developments and generally Others, however, have explained, “Late in 2005, we been selected on Cook Inlet include large mine operators voiced concerns about poten- hit the home run when our and an 88-mile road from the and smelter groups,” tial environmental impacts of exploration drilling discov- port has been surveyed. He Dickinson said. “Discussions a large mine on the region’s ered the new, higher-grade said power for the project are well underway with the commercial and sport fishing Pebble East deposit.” Pebble will be delivered via a 41-mile world’s senior mining com- industries and local subsis- West is a 4.1 billion ton open submarine cable hook up to panies and I fully expect we tence activities. pit style deposit and Pebble the Alaska electrical trans- will achieve our consortium The project is in its early East is a 1.8 billion ton un- mission grid near Homer, goal before the end of this days. Environmental, social derground style deposit followed by a standard over- year.” and geological studies are on- which is still open to expan- head transmission line to the Dickinson joined Mayor going, and the lengthy per- sion. site. Incorporated into the Glen Alsworth of the Lake mitting process of the project Dickinson said project fea- mine’s energy plans is power and Peninsula Borough and is not expected to begin until sibility studies and permit ap- distribution to local commu- Jason Metrokin, Vice 2008 at the earliest. plications for an open pit nities in the region. President of Shareholder and Pebble is located on state mine are now being deferred Dickinson said the growing Corporate Relations at land within the Lake and while the new, underground- global demand for copper Bristol Bay Native Peninsula Borough, about style, Pebble East deposit is bodes well for Pebble. Corporation, in speaking be- 230 miles southwest of fully delineated. “Analysts are currently fore more than 500 people at- Anchorage. Initially the “Discovery of Pebble East predicting that by 2016 the tending RDC’s 31st Annual Pebble West deposit was has given us the opportunity world will require 26 new Meeting in Anchorage June thought to contain about one to consider different mine Pebble deposits to fill the 13. billion tons of moderate to plans for the project,” void between copper con- Both Alsworth and low copper grades, Dickinson said. sumption and copper sup- Metrokin said it is too early Dickinson said. By the end of this year, ply,” Dickinson said. “Here to judge the controversial Following extensive Northern Dynasty will have in the U.S., production of project and they each empha- drilling programs, the first invested more than $111 mil- copper is falling due to the sized their decisions to sup- major breakthrough for lion dollars advancing exhausting of major open pit port or oppose the mine will Northern Dynasty came in Pebble. Over one third of the copper mines in Arizona, be based on fact, not rhetoric 2003 and 2004. expenditures are on extensive New Mexico and Utah. The or speculation. “Not only did the Pebble environmental and socioeco- inability by the U.S. to fully Many consider Pebble a West deposit grow fourfold, nomic baseline studies. supply internal demand has world-class opportunity for we discovered more than 500 “These studies will enable lead to a growing need to im- Alaska, representing billions millions tons of higher grade Northern Dynasty to design port substantial amounts of of dollars of investment and starter ore to enable early the very best mine project to copper.” thousands of well-paying payback of the construction eventually propose to the (Continued to page 8)

(907) 276-0700 July 2006 Resource Review Page 7 NEW MEMBERS ELECTED TO RDC BOARD

Above, members of the RDC statewide Board of Directors gather on the jade stair- case of the Sheraton Anchorage Hotel following the 31st Annual Meeting. New mem- bers elected to the 2006-07 Board were Ella Ede, Northern Dynasty Mines, Inc.; Kip Knudson, Tesoro Alaska Petroleum Company; Karen Matthias, Canadian Consulate; Lance Miller, Juneau Economic Development Council; Judy Patrick, Judy Patrick RDC’s current slate of officers were all re-elected to an additional term. Photography and Cam Toohey, Shell Exploration and Production Company. Pictured above are Executive Director Tadd Owens, Treasurer Stephanie (Photos by Judy Patrick) Madsen, Senior Vice President Rick Rogers, Secretary Tom Maloney, President John Shively and Vice President Wendy Lindskoog. Shively was elected to his fourth consecutive term as President.

Pebble Decisions Should Be Based On Fact, Say Mayor, Native Corp

(Continued from page 7) gained skills they can use to obtain employment elsewhere,” Both Metrokin and Alsworth struck a neutral tone in their com- Metrokin said. “The skills they have learned are exportable.” ments about the project, noting that while the economy in Southwest He also pointed out that with all the attention to the region’s lands, Alaska is in need of economic diversification, historically commercial much has been learned about the area’s geology, biology, sociology fishing is the economy’s mainstay and subsistence is the heart and and geography. soul of the region. “We should all hold ourselves accountable – as Alaskans and While Pebble is not on Bristol Bay Native Corporation land, Bristol Bay residents – to become educated on this project’s potential Metrokin said it is monitoring the project while evaluating both benefits and risks, so that we can make informed decisions at the opportunities and risks. right time,” Metrokin said. “It would be irresponsible of us to indicate support or opposition Alsworth struck a similar tone, emphasizing it is premature to for a project that is not yet defined,” Metrokin said. “We will take a judge the project before it has been engineered, designed and routed position when the time is right. We will participate in the process through the state and federal environmental and permitting process. should it move ahead. We will represent our shareholders, and make “When I make a decision, it will be based on facts,” Alsworth said. our decisions from a position of sound scientific knowledge.” He said the borough would not support the mine if the facts ulti- Metrokin noted there are a number of resource development mately indicate unavoidable, significant impacts to fish, wildlife and opportunities in the region. Most of the projects are for hard rock the environment. minerals, but exploration for hydrocarbons is also being considered Dickinson expressed confidence that the rigorous permitting south of the region. He said total expenditures on these projects will process will conclude the project can be developed in an environ- approach $50 million in 2006 with much of it staying in the region. mentally-sensitive manner and he said Northern Dynasty is working “There have already been many benefits of the exploration activ- hard to be a good neighbor. ity,” Metrokin said, ranging from major donations to training and “I believe Pebble provides the opportunity to create one of scholarship programs to new business opportunities and employ- Alaska’s most important sustainable developments, potentially 50 ment of local residents. years or more, while at the same time it is of strategic importance to “Even if no mines or gas fields are developed, our people have America.” Page 8 July 2006 Resource Review www.akrdc.org (907) 276-0700 July 2006 Resource Review Page 9 A MESSAGE FROM THE PRESIDENT

JOHN SHIVELY

CRUISE INDUSTRY FEEDS ALASKA ECONOMY

On page six of this month’s Resource Review there is a Let’s take a look at taxes. In Anchorage alone, cruise ship piece by Carol Fraser of Aspen Hotels that discusses in some passengers provide over 70,000 bed nights a year to the hotels detail the reasons for voting against Ballot Measure 2, which in the city. The bed taxes paid on these bed nights will make is a nine-page voter initiative designed to punish the cruise a substantial contribution toward the building of Anchorage’s industry in Alaska. new convention center. I am not going to repeat the arguments that Carol makes so The Denali Borough was formed around the property tax well as to why the ballot measure is a particularly onerous base from the hotels and other tourist facilities that serve vis- piece of work. What I do want to address is why this initia- itors to Denali National Park. In communities such as Juneau tive has caused concern throughout the tourism sector and and Ketchikan businesses are growing and constructing new may well have implications for other industries trying to buildings, further adding to the local tax base so that these build Alaska’s economy. communities can fund education, police protection and other In many ways the cruise industry is the feedstock for much services for their citizens. In addition, our visitors leave be- of what goes on in tourism in Alaska. Cruise ships bring hind millions of dollars in sales tax to help support those about half of the visitors to Alaska each year. In doing so, the communities that have such a tax. industry helps feed hundreds of Alaska businesses, large and Another way the cruise industry helps feed the Alaska small. On the large side of things, the industry provides tens economy is through our aggressive marketing programs. As of thousands of passengers for the airlines. In the summer, it an industry, it spends about $70 million a year to encourage helps fill the hotel rooms in Anchorage, Denali, and people to visit Alaska. Fairbanks. This effort is considerably more However, the industry also feeds than the state puts into its tourism the smaller operators. The list of “It should be no surprise to marketing arm, the Alaska Travel Alaska businesses that have grown anyone that Alaska businesses, Industry Association (ATIA). up to serve cruise ship passengers is However, as part of our partner- practically endless. River boat large and small, have lined up ship with Alaska’s tourism busi- rides, river rafting, kayaking, nesses, we contribute about $2 guided hikes, canopy walks in our to oppose Ballot Measure 2, as million a year to ATIA’s program, forests, sport fishing, flight seeing have organizations such as a significant boost to its budget. in fixed-wing aircraft and helicop- Another example of how the ters, salmon bakes, whale watch- RDC.” cruise industry acts as the feed- ing, sport fishing, a tramway, stock for tourism in Alaska is by horseback rides, and a narrow gage giving thousands of people their railway, are just some of the Alaskan businesses that have first taste of Alaska. Obviously there are many spectacular sprung up to serve the people cruise ships bring here. places in Alaska that can not be visited by a cruise ship. Then there are the numerous restaurants, bars, coffee shops However, the cruise passenger can get a good idea of what we and souvenir emporiums that benefit from the cruise ship have to offer for future visits. A survey conducted by ATIA traffic. Chris Anderson, the owner of Orso and the Glacier a few years ago found that 27% of return visitors first came to Brewhouse in Anchorage, has stated on numerous occasions Alaska on a cruise. that, if it were not for the summer visitor business, his restau- It should be no surprise to anyone that Alaska businesses, rants would not be here in the winter. large and small, have lined up to oppose Ballot Measure 2, as Our visitors help support institutions such as the Seward have organizations such as RDC. They recognize the symbi- Sea Life center, the Anchorage Museum of History and Art, otic relationship between the cruise industry and Alaska’s Sitka’s Raptor Recovery Center, and the Alaska Native economic well being. They know that the punishment in- Heritage Center, places residents can visit year round. The tended for the cruise industry by those who promoted Ballot cruise industry brings tens of thousands of visitors to Alaska’s Measure 2 will be felt by hundreds of Alaska businesses. national parks each year and helps pay for the costs of oper- So take Carol Fraser’s advice. Vote “no” on Ballot measure ating some of those parks. It has worked with the National 2 and help educate your friends, neighbors and co-workers as Park Service to develop new interpretive programs for our to why they should do likewise. visitors. It is also a major source of revenue for the state’s Editor’s Note: John Shively is Vice President, Government and Community Totem Bite Park. Affairs, Holland America Line. Page 10 July 2006 Resource Review www.akrdc.org RDC NEWS DIGEST In one of the most important property rights cases before the court this year, PLF represented John Rapanos, who has stood up to federal regulators in an 18-year battle after he attempted to move sand on his property without a federal permit. The property is 20 SCOPING PROCESS BEGINS ON CHUITNA COAL miles from any waterway that could trigger federal oversight. The law limits federal jurisdiction to “navigable waterways” used for The Environmental Protection Agency has opened the scoping shipping and commerce and adjacent wetlands; inland wetlands are process for the proposed Chuitna Coal Project 45 miles west of protected by state and local rules. Anchorage. The public comment period closes July 24. The scoping phase is part of the EPA’s process in preparing a Supplemental Environmental Impact Statement (SEIS) to evaluate MAGNUSON-STEVENS ACT PASSES SENATE, RDC the potential impacts of the proposed project, a surface coal mine RAISES CONCERN OVER POTENTIAL AMENDMENTS and export development in the Beluga coal fields. The project is based on the development of a one billion ton, ultra low sulfur, sub- In a victory for Senator Ted Stevens, legislation reauthorizing the bituminous coal resource, the center of which is 12 miles from the Magnuson-Stevens Act, which manages and regulates fisheries in the coast of Cook Inlet. The project area is largely undeveloped, except U.S. Economic Exclusion Zone, unanimously passed the Senate last for a system of primitive roadways that remain from oil and gas ex- month. ploration and production, and logging activities. “The Senate has now acted and I will work closely with the House The proposed project includes a surface coal mine and support fa- to get our bills resolved in conference and get this important legisla- cilities, an access road, a coal transport conveyor, personnel housing, tion to the President for his signature,” Stevens said. Stevens has an air strip facility, a lo- worked hard for the passage of the progressive bill updating the na- gistic center and coal tion’s fisheries laws. export terminal. The ex- RDC is concerned over potential amendments to the bill which port terminal would in- would place limitations or restrictions on the ability of American clude a 10,000-foot corporations having foreign ownership to participate in future fish- trestle built into Cook ery management programs. The amendments could emerge during Inlet for the purpose of conference committee deliberations. loading ocean-going RDC said such an action would ignore the benefits foreign capi- coal transport ships. tal in the fisheries has generated to Alaska and its fishing-dependent PacRim Coal, the proj- communities. Without foreign investments, the onshore processing ect developer, predicts a industry would not have been developed. Instead, the industry has minimum 25-year mine life based on proven reserves in one of three become a pillar of the state’s economy, providing thousands of jobs mining areas within the 20,571 acre lease area. and paying millions of dollars in taxes and fees to the state and local A previous project design was evaluated in an Environmental governments. Impact Statement (EIS) and permitted by most state and federal reg- RDC also noted such limitations would create a tier of second- ulatory programs in the early 1990s, but the mine did not proceed to class companies by government fiat and put them at a competitive development. There have been substantive changes in the project de- disadvantage. Amending federal law to discriminate against foreign- sign and in the regulatory requirements since the project went owned firms is the wrong message to send to Alaska’s trading part- through the first permitting and EIS process, requiring a new stand- ners and investors, RDC argued. alone SEIS. RDC noted restrictions on foreign investment in the fishing in- The scoping document and the previous EIS is available on EPA’s dustry would set a dangerous precedent for other capital-intensive, website at: www.epa.gov/r10earth/water/htm. Comments should be resource development activities, especially in Alaska. No other state sent to Hanh Shaw, Chuitna Project Manager, EPA, 1200 Sixth relies on foreign investment more for economic development or is Avenue, OWW-130, Seattle, WA 98101. Email: [email protected]. better positioned to attract and benefit from foreign investment in the future. In every major Alaska industry sector there is substantial SUPREME COURT HANDS PLF ANOTHER VICTORY foreign investment.

The U.S. Supreme Court handed the Pacific Legal Foundation AMEREF COAL CLASSIC RAISES NEARLY (PLF) and its supporters its fifth win out of six cases in which the law firm has appeared before the court as Counsel of Record. $20,000 FOR RESOURCE EDUCATION In the latest case, the court ruled the U.S. Army Corps of Engineers does not have jurisdiction over every puddle or “dry ar- The 14th Annual Coal Classic Golf Tournament in support of royos in the middle of the desert.” Before it can claim jurisdiction, AMEREF was held on June 7 at the Anchorage Golf Course. The the court said the Corps has the burden of showing that the prop- sold out event raised nearly $20,000 for objective resource education erty activity it seeks to regulate will have a significant effect, not an in Alaska. insubstantial effect, on the nation’s waters. The ruling is a significant A list of the many generous sponsors and pictures from the event blow to the agency which has taken a position in its own rules that may be found online at: www.ameref.org/coalclassic/ if private fill activities “could” possibly have some effect on the na- tion’s waters, it has permitting jurisdiction.

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