State panel hears 'precedent-setting' water rights application on Chuitna mine project

A far-flung salmon stream west of Cook Inlet is at the center of a precedent-setting water battle that's dictating the future of a hotly debated proposed coal mine near Tyonek and Beluga.

Middle Creek, at the headwaters of the Chuitna River, is in the path of the PacRim Coal LP Chuitna Coal Project that hopes to extract 300 million tons of coal for overseas export.

PacRim, which doesn't yet have permits to proceed, plans to destroy about 13 miles of Middle Creek and then reclaim the stream to its natural condition.

A four-person state panel on Friday held a day-long hearing on an application by a grass-roots group, Chuitna Citizens Coalition, to protect salmon in Middle Creek by establishing a water reservation -- and, in so doing, block mining in the area.

The unusual application marks what the coalition calls a first-of-its-kind process involving a citizen group using state water use law to protect Alaska's salmon. PacRim has also filed applications for water rights to "dewater" 100 percent of the same stream, but those applications aren't ready for review.

Even protection backers say it's unclear just how many salmon are in Middle Creek. One estimate puts the number of coho spawning in the stream in 2010 at roughly 9,700, or 22 percent of the 44,100-fish abundance estimate for that year in the Chuitna River, according to information from Cook Inletkeeper, a nonprofit working with the coalition.

The state's decision isn't about choosing salmon or coal, said Valerie Brown, an attorney for Trustees for Alaska, the nonprofit law firm representing the Chuitna coalition. That's because the state has the authority to revise or revoke the protections down the road, she argued.


"PacRim will not suffer any harm if these reservations are granted," Brown told the panel.

PacRim and several industry groups at Friday's hearing contended the water reservation would not only block the mine's progress but create an industry-chilling precedent in which private non-governmental groups could halt development.

Eric Fjelstad, an attorney representing PacRim, told the panel that the group's application for instream flow reservations would cede regulatory control to private citizens at the expense of the Alaska Department of Natural Resources' long-established permitting process for major projects like the mine.

"We think it's a phenomenally important and huge policy issue for DNR to decide to delegate its authority to private citizens," Fjelstad told the panel. "We're not aware it's ever been done up here. We're not aware it's ever been done anywhere."

If the state approves the reservations, it's possible federal regulators who will need to sign off on a pending environmental impact statement will balk at the entire project if it doesn't include mining through Middle Creek, he said.

"There is no project without mining through this area. There will be no alternative," Fjelstad said. "We think there is a very real risk they will say, 'Why should we be spending the kind of time and effort on this if there is no economically viable alternative to move forward?'"

Part of the conflict comes because PacRim also needs a water rights permit to "dewater" Middle Creek during mining.

The Alaska Department of Natural Resources had hoped to decide the coalition's reservation request at the same time as PacRim's opposing water rights application. But an Anchorage Superior Court judge in 2013 ordered the state to move forward on the citizen group's application.

The company has a pending application before the state and argues that qualifies as a "competing use" of the water – one of several reasons the state can deny the Chuitna coalition's application. Groups pushing for the water reservation say PacRim has delayed permitting for years and the pending water rights application doesn't qualify as a competing use.

PacRim also says the company has the technology to reclaim the creek successfully.

The technology of reclamation is not advanced enough to restore a functioning fish stream at Middle Creek after PacRim excavates 300 feet deep for the mine, Brown countered.

"There's absolutely no scientific proof they can restore an anadromous fish stream where the headwaters are destroyed, that's dug out to depth, and where the water body's in a wetland," she told the panel.

Critics of the mine say crumbling coal prices throw the whole project into question even as climate change hits Alaska harder than other parts of the country.

"We know this project is not financially viable until we see a business plan that tells us otherwise," said Bob Shavelson, executive director of Cook Inletkeeper.

More than 7,000 comments supporting the water reservation in Middle Creek flooded state offices earlier this year, according to mine opponents.

Friday's hearing, however, was open only to people who objected to DNR's analysis of the application packet.

The Alaska Oil and Gas Association, Alaska Miners Association, Council of Alaska Producers and Resource Development Council spoke against the water reservation on grounds it set a negative precedent for industry.


The Alaska Mental Health Trust also weighed in against the salmon protections. The trust manages land for the 10 percent of Alaskans who are beneficiaries of its mental health programs.

Estimated revenue from the mine project "would effectively double our historical revenue," said John Morrison, acting executive director of the trust's land office, told the panel. Shavelson countered that there are no valid estimates on mine revenues at this early stage.

The trust's revenue in the last fiscal year was more than $11 million, Morrison said.

He urged the state to reject the water reservation applications to protect Middle Creek, a "commercially insignificant fishery that benefits only a few people."

The state must make a decision on the Chuitna coalition water reservation applications by Oct. 6.

Zaz Hollander

Zaz Hollander is a veteran journalist based in the Mat-Su and is currently an ADN local news editor and reporter. She covers breaking news, the Mat-Su region, aviation and general assignments. Contact her at