S. 181 — The Niblack and Bokan Mountain Mining Area Roads Authorization Act

July 17, 2013

Dear Senators Lisa Murkowski and Mark Begich,

The Greater Ketchikan Chamber of Commerce emphatically supports S. 181: Niblack and Bokan Mountain Mining Area Roads Authorization Act, which would establish a road corridor connecting both the Niblack Mine and the Bokan Mountain rare earth mine to the existing road system on Prince of Wales Island in southern Southeast Alaska.

We also ask that you do everything within your power as legislators to ensure that S. 181 – and any other legislation providing for road access on Prince of Wales Island – include provisions which also guarantee right-of-way for transmission lines and fiber optic cable. Provisions of this type will allow mining businesses to procure locally available hydropower and renewable energy, which is more affordable, and can help extend the economic life of mines. This infrastructure will also provide Alaskans with new and diversified economic opportunities during the lifetime of mining operations, and beyond.

The development of these two mines would represent a convergence of local economic and national strategic interests. Rare Earths, with their highly magnetic properties, are essential to the production of advanced, military, digital, and renewable energy technologies. The majority of rare earth elements used by the US are sourced from China, and subject to substantially volatile pricing, availability and political risks. Bokan Mountain is the largest heavy rare earth deposit in the United States, with an anticipated three year development timeline, and a globally anomalous skew toward three critically strategic, high-demand elements in the deposit’s profile: Dysprosium, Terbium and Yttrium.

The Tongass National Forest comprises over 90% of southeast Alaska. Southeast Alaska’s ability to reverse the severe unemployment and economic disparity impacting our rural communities, and achieve a quality of life equal to that of other American citizens is almost entirely dependent upon federal management practices in the Tongass. In the 1990s, new federal policy and management practices within the Tongass devastated southeast Alaska’s timber and forest products industries, resulting in a loss of family wage jobs; workforce out-migration; and levels of unemployment and underemployment from which we are yet to recover. The low-impact Niblack and Bokan Mountain mines proposed for Prince of Wales bring the promise of hundreds of new family-wage jobs, new infrastructure, and millions
of dollars in annual direct, indirect, and induced payroll which can help offset the economic damage caused by the collapse of Southeast Alaska’s timber and forest products industries.

As of July, 2013, US Forest Service officials providing public testimony to federal lawmakers in hearings related to HB 587 were representing that waterborne access to the Niblack and Bokan Mountain sites is preferable, claiming that this alternative is more economical than roaded access. While the extent of the cost-benefit analysis and economic assumptions which support the USFS’s assertions are unclear to the Ketchikan Chamber of Commerce, we believe that it is vital that federal agencies and decision-makers ensure that the following significant benefits associated with road and transmission corridor access are included:

  • Road access to the Bokan and Niblack mine sites will allow increased site access by local suppliers, technical specialists, vendors, caterers, and other ancillary businesses, resulting in a higher level of local economic participation and indirect / induced economic benefits associated with the mines.
  • The benefits of procuring locally available renewable hydropower through combined road and transmission corridors, rather than relying upon diesel or other thermal fuel sources, are economically significant for the following reasons:
    • Renewable hydroelectric energy can be purchased locally from sources on Prince of Wales Island, allowing the community to realize greater levels of expenditures and benefit. The alternative – relying upon fossil fuel sources – will result in outflow of US dollars overseas.
    • On a leveled cost-basis, hydroelectricity is significantly less expensive than thermal fuel sources – currently as low as 25% of the cost of diesel on Prince of Wales.
    • Thermal fuel sources such as diesel are commodities, and subject to market forces, overseas political/security risks, and pricing volatility. By contrast, renewable hydroelectric found locally on Prince of Wales offers stable pricing for decades, making it easier to plan and sustain new, viable business ventures.
    • If renewable hydroelectric projects and associated infrastructure are developed to serve mining loads associated with the Bokan and/or Niblack projects, these resources will remain available to serve the communities of Prince of Wales with affordable renewable energy and supported diversified economic opportunities for decades following the decommissioning of the mines.
  • Application of the US Interagency Working Group’s system of Social Cost of Carbon econometrics, developed and required for use in benefit-cost analysis under US Executive Order 12866, which is required in association with federal decision-making, will demonstrate enormous monetized “carbon avoidance benefit” associated with use of hydropower as an alternative to thermal fuel sources. This “carbon avoidance” benefit can only be realized if the USFS provides for transmission corridors connecting mine sites to renewable hydropower sources. We believe this benefit will more than offset the capital cost of road construction.

We believe that it is the Forest Service’s responsibility to actively ensure that new mines on Prince of Wales can be powered by cleaner and more affordable renewable energy sources, in accordance with the following US Executive Orders, laws, and Presidential policies:

  • Executive Order 13423, which was signed on January 24, 2007, and requires Federal agencies to reduce energy intensity by 3% each year leading to 30% by the end of FY 2015 compared to a FY 2003 baseline.
  • Executive Order 13514, which expanded on the energy reduction and environmental performance requirements of Executive Order 13423.
  • The Energy Independence and Security Act of 2007 (42 U.S.C.A, 17001 et seq.), which specifies under force of law that Federal agencies must ensure that at least half of all renewable energy required under EPA Act 2005 comes from new renewable sources developed after January 1, 1999.
  • Executive Order 12866, which requires federal agencies “to assess both the costs and the benefits of the intended regulation and, recognizing that some costs and benefits are difficult to quantify, propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs.” In OMB Circular A-4, the Office of Management and Budget (OMB) provides methodical guidance to Federal agencies for development of regulatory analysis, in order to comply with Section 6(a)(3)(c) of EO 12866, “Regulatory Planning and Review,” the Regulatory Right-to-Know Act, as well as numerous related authorities. It is absolutely imperative that the USFS comply with these mandates, and utilize the US Government’s Interagency Working Group on Social Cost of Carbon Technical Support Document entitled: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 in order to comply with EO 12866, and all associated authorities.
  • President Obama’s Full Climate Action Plan, released June 25th, 2013, which emphasizes the need to develop clean alternatives to thermal fuels.

In closing, we hope that you will actively challenge the USFS’s assertions to date, and support S. 181, and the development of new road, utility, and broadband corridors in southeast Alaska, so that our rural communities will have a chance to leverage new low-impact mining projects to achieve the same quality of life and infrastructure that other Americans have realized years ago.

Sincerely,
Keith Smith, Executive Director

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