    [Senate Hearing 114-73]
    [From the U.S. Government Publishing Office]

                                                             S. Hrg. 114-73

    FEDERAL MITIGATION REQUIREMENTS AND INTERAGENCY COORDINATION RELATED TO
         THE ECONOMIC DEVELOPMENT ON FEDERAL, STATE, AND PRIVATE LANDS

    =======================================================================

                              JOINT FIELD HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                          ENERGY AND NATURAL RESOURCES
                              UNITED STATES SENATE

                                    AND THE

                 Subcommittee on Fisheries, Water, and Wildlife

                                     OF THE

                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
                              UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                          AUGUST 17, 2015-WASILLA, AK

                           Printed for the use of the
        Committee on Energy and Natural Resources and the Committee on
                          Environment and Public Works

             Available via the World Wide Web: http://www.fdsys.gov
                                       ______

                             U.S. GOVERNMENT PUBLISHING OFFICE

    96-272* (Star Print)          WASHINGTON : 2017
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                              Washington, DC 20402-0001

                   COMMITTEE ON ENERGY AND NATURAL RESOURCES

                        LISA MURKOWSKI, Alaska, Chairman
    JOHN BARRASSO, Wyoming               MARIA CANTWELL, Washington
    JAMES E. RISCH, Idaho                RON WYDEN, Oregon
    MIKE LEE, Utah                       BERNARD SANDERS, Vermont
    JEFF FLAKE, Arizona                  DEBBIE STABENOW, Michigan
    STEVE DAINES, Montana                AL FRANKEN, Minnesota
    BILL CASSIDY, Louisiana              JOE MANCHIN III, West Virginia
    CORY GARDNER, Colorado               MARTIN HEINRICH, New Mexico
    ROB PORTMAN, Ohio                    MAZIE K. HIRONO, Hawaii
    JOHN HOEVEN, North Dakota            ANGUS S. KING, JR., Maine
    LAMAR ALEXANDER, Tennessee           ELIZABETH WARREN, Massachusetts
    SHELLEY MOORE CAPITO, West Virginia

                        Karen K. Billups, Staff Director
                    Patrick J. McCormick III, Chief Counsel
                             Heidi Hansen, Counsel
               Angela Becker-Dippmann, Democratic Staff Director
                    Sam E. Fowler, Democratic Chief Counsel
               Spencer Gray, Democratic Professional Staff Member
                                     ------

                   COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                      JAMES M. INHOFE, Oklahoma, Chairman
    DAVID VITTER, Louisiana              BARBARA BOXER, California
    JOHN BARRASSO, Wyoming               THOMAS R. CARPER, Delaware
    SHELLEY MOORE CAPITO, West Virginia  BENJAMIN L. CARDIN, Maryland
    MIKE CRAPO, Idaho                    BERNARD SANDERS, Vermont
    JOHN BOOZMAN, Arkansas               SHELDON WHITEHOUSE, Rhode Island
    JEFF SESSIONS, Alabama               JEFF MERKLEY, Oregon
    ROGER WICKER, Mississippi            KIRSTEN GILLIBRAND, New York
    DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
    MIKE ROUNDS, South Dakota            EDWARD J. MARKEY, Massachusetts
    DAN SULLIVAN, Alaska
                     Ryan Jackson, Majority Staff Director
                   Bettina Poirier, Democratic Staff Director
                                     ------

                 Subcommittee on Fisheries, Water, and Wildlife

                         DAN SULLIVAN, Alaska, Chairman
    JOHN BARRASSO, Wyoming               SHELDON WHITEHOUSE, Rhode Island
    SHELLEY MOORE CAPITO, West Virginia  THOMAS R. CARPER, Delaware
    JOHN BOOZMAN, Arkansas               BENJAMIN L. CARDIN, Maryland
    JEFF SESSIONS, Alabama               BERNARD SANDERS, Vermont
    ROGER WICKER, Mississippi            KIRSTEN GILLIBRAND, New York
    DEB FISCHER, Nebraska                CORY A. BOOKER, New Jersey
    MIKE ROUNDS, South Dakota            EDWARD J. MARKEY, Massachusetts
    JAMES M. INHOFE, Oklahoma (ex        BARBARA BOXER, California (ex
        officio)                             officio)

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page
    Murkowski, Hon. Lisa, Chairman and a U.S. Senator from Alaska....     1
    Sullivan, Hon. Dan, Subcommittee Chairman and a U.S. Senator from
      Alaska.........................................................     3

                                   WITNESSES

    Fogels, Ed, Deputy Commissioner, Alaska Department of Natural
      Resources......................................................     7
    Brand, Randy, Vice President, Great Northwest, Inc...............    19
    Crockett, Deantha, Executive Director, Alaska Miners Association.    26
    Nukapigak, Joseph, Vice President, Kuukpik Corporation...........    31
    Clark, Theresa, Vice President of Lands and Shareholder Service,
      Olgoonik Corporation...........................................    38
    Shephard, Phil, Executive Director, Great Land Trust.............    43
    Murphy, Ted, Associate State Director, Bureau of Land Management,
      U.S. Department of the Interior................................    58
    Hobbie, David, Chief, Regulatory Division, Alaska District, U.S.
      Army Corps of Engineers........................................    65
    Thiesing, Dr. Mary Anne, Wetlands Coordinator for the Office of
      Ecosystems, Tribal and Public Affairs in Region 10, U.S.
      Environmental Protection Agency................................    70

              ALPHABETICAL LISTING AND APPENDIX MATERIAL SUBMITTED

    Arctic Slope Regional Corporation:
        Statement for the Record.....................................   112
    Brand, Randy:
        Opening Statement............................................    19
        Written Testimony............................................    21
    Clark, Theresa:
        Opening Statement............................................    38
        Written Testimony............................................    40
    Coons, Michael:
        Letter for the Record........................................   119
    Crockett, Deantha:
        Opening Statement............................................    26
        Written Testimony............................................    29
    Ecological Land Services, Inc.:
        Letter for the Record........................................   121
    Fogels, Ed:
        Opening Statement............................................     7
        Written Testimony............................................    10
        Responses to Questions for the Record........................    95
    Fortymile Mining District:
        Letter for the Record........................................   122
    Hobbie, David:
        Opening Statement............................................    65
        Written Testimony............................................    67
        Responses to Questions for the Record........................   105
    Matanuska-Susitna Borough:
        Statement for the Record.....................................    79
    Murkowski, Hon. Lisa
        Opening Statement............................................     1
    Murphy, Ted:
        Opening Statement............................................    58
        Written Testimony............................................    61
        Responses to Questions for the Record........................   100
    Nukapigak, Joseph:
        Opening Statement............................................    31
        Written Testimony............................................    34
        Responses to Questions for the Record........................    97
        Supplemental Statement for the Record........................   132
    Shephard, Phil:
        Opening Statement............................................    43
        Written Testimony............................................    45
    Sullivan, Hon. Dan:
        Opening Statement............................................     3
    Thiesing, Dr. Mary Anne:
        Opening Statement............................................    70
        Written Testimony............................................    72
        Questions for the Record.....................................   110

    FEDERAL MITIGATION REQUIREMENTS AND INTERAGENCY COORDINATION RELATED TO
           ECONOMIC DEVELOPMENT ON FEDERAL, STATE, AND PRIVATE LANDS

                                  ----------

                            Monday, August 17, 2015

             Committee on Energy and Natural Resources,
             Committee on Environment and Public Works,
                 U.S. Senate Subcommittee on Fisheries,
                                    Water and Wildlife,
                                                            Wasilla, AK
        The Committees met, pursuant to notice, at 2:30 p.m. at the
    Curtis D. Menard Memorial Sports Complex, 1001 South Mack
    Drive, Wasilla, Alaska, Hon. Lisa Murkowski, Presiding.

      OPENING STATEMENT OF HON. LISA MURKOWSKI, U.S. SENATOR FROM
                                 ALASKA

        The Chairman. I call to order the meeting of the Energy and
    Natural Resources Committee and Environment and Public Works
    Subcommittee hearing on BLM and U.S. Army Corps of Engineers
    mitigation.
        I would like to welcome everybody. I want to start off this
    afternoon by thanking Senator Sullivan for working with me to
    arrange what is probably a pretty unprecedented hearing.
        Senator Sullivan. Yes.
        The Chairman. To have a joint hearing between the Energy
    and Natural Resources Committee and the Environment and Public
    Works Committee.
        I would also like to thank Wasilla for hosting us this
    afternoon. I want to welcome and thank our witnesses for
    joining us and participating in an important dialogue for
    Alaskans.
        We have brought our committees to Alaska to examine the
    regulatory practices that impact and often delay or prevent
    development in our state. Specifically, our focus today will be
    on the Bureau of Land Management's (BLM) policies for
    mitigation and land use and the Army Corps of Engineers and
    EPA's regulation of water and wetlands and related mitigation
    issues.
        We here in Alaska are keenly aware of the challenges that
    current regulatory practices impose. We have heard the
    statistics before, and you will hear them a lot today.
    Approximately 43 percent of our state is categorized as
    wetlands. That does not include the lakes and the streams and
    the rivers and the adjacent waters to them. The BLM also
    manages 72 million acres of Alaska's land and in many ways,
    given the reach of its regulations and its ownership of lands
    in our state, the Federal Government, is sort of a gatekeeper
    and a landlord here in Alaska.
        So how the Federal Government chooses to approach those
    rules has a big impact on our daily lives and our ability to
    grow as a state. Right now there is a lot to be desired. In
    some instances we are being held back by ill-designed, ill-
    fitted or ill-applied policies.
        It is estimated that the acreage of wetlands in the lower
    48 has halved over the last 200 years while here in Alaska,
    over the same period of time, we have lost only one tenth of
    one percent of our wetland acreage. So it is really a different
    comparison set when you are talking State of Alaska verses the
    rest of the country.
        Despite this strong record, our state is still pigeonholed
    into the same regulations as the limited fill of wetlands in
    drier climates like Arizona or in more heavily populated
    regions like California or New York. The BLM employs many land
    management regulations including national and regional policies
    and those concerning mitigation. These are not well-suited for
    Alaska which has some unique history, geography, remoteness and
    work force needs. We all know our considerations should simply
    be different from those in the lower 48, yet Alaska is again
    categorically analyzed through the lens of national and
    regional portfolios.
        Like many Alaskans, my concern about Federal overreach has
    grown dramatically over the years. As I go around the state,
    and I know Senator Sullivan hears the same, if there is one
    unifying theme amongst Alaskans, whether you are down on Prince
    of Wales Island, up in the Interior of the Fortymile region or
    up on the North Slope, a concern consistently is we see
    ongoing, rapidly developing, encroachment, overreach and
    overregulation that is stifling us.
        The regulatory scheme within the Department of the Interior
    has significantly departed from the fundamental principle of
    multiple use as defined in and required by law. Instead it is
    tilted toward conservation, more conservation, and is followed
    by what appears to be mere lip service toward other uses
    protected under law.
        Though the Department of the Interior's authorities are
    rooted in very different principles from that of the EPA's
    Clean Water Act, Interior has decided to adopt its regulatory
    principles on mitigation anyway. Secretary Jewell published an
    order highlighting Interior's mitigation priorities, and it
    mirrors the language from the Section 404 sequence of
    mitigation.
        There is something fundamentally flawed about an agency
    that borrows theories and regulations which are born from
    wholly different laws and adopting them as its own when its
    authorizing language is so markedly different, and that is what
    we are seeing here.
        Then we come to the Corps of Engineers and the EPA. We have
    seen time and time again in Alaska instances where individuals
    and companies have pre-coordinated desired projects, redesigned
    those projects based on the Corps recommendations and paid
    millions and millions of dollars toward mitigation only to
    learn, at the very end, that the agency wants additional
    conditions. This moving of the regulatory goalpost has a
    serious, chilling effect on project development and it limits
    the growth of our economy. It hurts the livelihoods of the
    Alaskan people, and it cripples our ability to fulfill promises
    of our statehood.
        I think, in fairness, that the Corps really does try to get
    to yes. I wish that I could say the same for EPA, but its
    perogative often seems to be finding a way to get to, or to
    perhaps stay at, no.
        We have reached a point where Federal agencies are
    unreasonably binding the hands of well-intentioned,
    environmentally-principled, hard-working Alaskans. And whether
    it is the layering on of new regulations like the recent waters
    of the United States rule, reasonable litigation ratios or
    something else, we have reached a point where it often looks
    like the goal in Alaska is to stop new development in its
    tracks rather than helping it to reasonably and responsibly
    advance. So the question then is what do we do about it? What
    do you do about it?
        Well, it begins with oversight. I hope that the desire
    would be a constructive and an open conversation amongst us all
    here today. We will renew our demands that the agencies
    faithfully apply the law, thoughtfully analyze each and every
    permit sought in this state, and work with us, not against us,
    but with us as Alaskans. If that is not enough, we will turn to
    the legislative and appropriations process to secure the fair
    treatment that we deserve.
        Again, I want to welcome our witnesses. I am going to turn
    to Senator Sullivan for his opening comments, and then for
    those of us gathered here today, we will kind of, blow out the
    program here this afternoon in terms of what you can expect for
    the timing.
        It is a delight and a privilege to be here with my
    colleague, Senator Sullivan. I appreciate his leadership for
    Alaska on the Environment and Public Works Committee. It is key
    and it is so important to so many of the issues that we are
    working on in the Senate.
        Thank you, Senator Sullivan.

        STATEMENT OF HON. DAN SULLIVAN, U.S. SENATOR FROM ALASKA

        Senator Sullivan. Thank you.
        Well, thank you, Madam Chair, and I want to thank everybody
    for attending.
        You know, these issues that we are discussing today, I
    think, sometimes can be viewed as rather technical. These
    regulatory issues sometimes are viewed as only impacting large
    companies.
        Well, I thank you for the turn out here of many state
    legislators. Certainly I want to thank Representatives Gattis
    and Keller and Hughes, but there are others in the audience
    today--I really want to thank you, for everybody coming. I have
    seen so many Alaskans from so many different parts of the state
    come out today and show that you are interested in this topic
    because it is a huge topic for all of us.
        I want to thank the witnesses. I know we have an
    outstanding panel both in terms of the first panel and the
    second panel. And I do want to thank Senator Murkowski, the
    Chairman of the Energy and Natural Resources Committee in the
    U.S. Senate.
        This is, I think, a rather new approach. This is a
    combination of the Energy and Natural Resources and the
    Environment and Public Works Committees. I chair the
    Subcommittee on Fisheries Waters and Wildlife. So this is an
    official U.S. Senate hearing, and to have Senator Murkowski's
    leadership on this is critical.
        As I mentioned, I think that there's a tendency on some of
    these issues that we dismiss them or say this is kind of
    technical. It doesn't really impact us or it just impacts large
    companies which certainly impact us, but how does this affect
    the lives of our citizens throughout the state?
        Well, I think that you are going to see today in testimony
    that these kinds of regulations do hugely impact all of us. And
    whether it's small placer miners or other examples that we hear
    about constantly, this really matters to Alaska. Let me provide
    just a couple of examples.
        Recently the Alaska Association of Realtors shared with us
    a story about a land transaction that fell through because the
    Army Corps acknowledged that the land may include wetlands.
    After disclosing this information to perspective buyers and
    even after lowering the sale price by a significant amount, the
    mere suggestion that property could include wetlands in our
    state made an important real estate transaction fall through.
        A few months ago, a Fairbanks company wrote to my office
    and explained that they previously had a 404 permit to fill a
    portion of their land. A few years later, their permit expired.
    After reapplying for another permit they were told that it
    would only be issued after placing a permanent, non-development
    deed restriction on one fifth of their property. This was all
    after paying an undefined sum to a mitigation bank in-lieu of
    fee program. The power to require payment and other concessions
    on what occurs on private and state lands effectively grants
    Federal agencies the ability to zone the whole state, and that
    should concern all of us.
        Finally, at an EPW Subcommittee hearing earlier this year
    in Alaska, Mayor Charlotte Brower testified that the North
    Slope Borough paid over $1 million in mitigation fees for
    simply trying to expand their landfill on the North Slope. In
    testimony before an EPW Committee she stated, ``That's $1
    million less to pay for teachers, health aides, police officers
    and many other services we need on the North Slope.'' It is
    important to remember every dollar spent on mitigation is a
    dollar not spent building Alaska.
        I want to conclude by mentioning one other thing that I
    think is very important. In many ways, I think we're going to
    see compensatory mitigation often appears arbitrary and even
    punitive to those of us trying to navigate this complex
    process.
        One critical issue that I certainly want to discuss today
    is the legal authority, the statutory authority for Federal
    agencies to undertake these actions. All Federal agencies, all
    Federal actions, whether an action or a regulation, has to be
    based on a Federal statute or the Constitution. That is a fact.
        Unfortunately, I think many agencies forget or downright
    ignore this bedrock principle of the rule of law, that they
    have to have statutory authority to do what they do. And when
    they do this, when they ignore that, it's what we in Alaska
    refer to, and Chairman Murkowski has already mentioned this, as
    Federal overreach.
        It is not just us talking about it. It's not just us
    claiming it. In the last two terms of the U.S. Supreme Court,
    in two different cases, the U.S. Supreme Court has found that
    the EPA has violated either statutes or the Constitution of the
    United States, zero for two, on two different cases. So this is
    a concern for all of us, and it should be.
        I want to thank everybody who is here again. I want to
    thank the witnesses. I look forward to an informative hearing
    so that we can take additional action to address what is a huge
    concern for our state and, I think, a concern for most of you.
        Again, I want to thank everybody for coming out today.
        Thank you.
        The Chairman. Thank you, Senator Sullivan.
        With that we will now hear testimony from two panels.
        The first panel is the six Alaskans that you have in front
    of you today. I will introduce them in just a moment, and we
    will hear their comments.
        Let me just outline to you the process that we will use and
    follow today which is a little bit different than what you
    would see if you were attending a hearing in Juneau. In the
    Senate we have hearings set up so that the witnesses will each
    provide five minutes of oral testimony. Their full statements
    will be included as part of the record. But hopefully this will
    be an opportunity for you to basically outline the issues that
    you have been dealing with, not only to inform those who are
    here in the room, but to inform the Senate Committee records,
    the Committee records for both the Energy Committee and the EPW
    Committee. We will hear comments from each of the witnesses,
    and then Senator Sullivan and I will pose questions to each of
    them after the six have presented. When they have concluded
    that Q and A exchange we will excuse the first panel and we
    will turn to the second panel, which is comprised of three
    representatives from our agencies.
        Senator Sullivan and I agreed coming in that typically back
    in Washington we see the agency people are on the first panel.
    And no disrespect to the gentlemen and lady that make up that
    first panel, but we thought it was very important to hear the
    actual stories, the issues on the ground that these Alaskans
    have been dealing with so that it would better help form your
    comments and responses when we get to that panel. So we do
    appreciate the deference that you have shown us, no disrespect
    to the titles, but we are just making sure that you all are
    fully informed as to where they are coming from as well.
        There will not be an opportunity for you, as audience, to
    then come up and also present testimony. As much as we would
    like to be able to do that, that is not a format that we
    typically use. Perhaps at a Town Hall we might be able to look
    at that as one alternative.
        If you would like to submit written commentary for the
    public record, we are going to be holding the Committee record
    open for an additional two weeks. If you or your companies
    would like to provide a written statement, it is welcome.
        I also want to acknowledge and thank the representatives
    who are here today. Senator Sullivan has mentioned
    Representatives Gattis, Keller and Hughes. I do believe that I
    saw Senator Stoltze walk into the room a minute ago, and we
    appreciate him being here as well. And a former colleague of
    mine, former Senator Scott Ogan, is also with us. So thank you
    for not only being here today but the good work that you are
    doing working with us in Juneau.
        With that, unless, Senator Sullivan, you think we need to
    add anything more in process, I think we are ready to go to our
    first panel.
        Senator Sullivan. I think we are good to go.
        You should know though, we do read the submissions for the
    record. I think some of us will be staying around after the
    hearing so we can hear from you then. We want to hear from
    everybody.
        But if you are not able to make comments or we don't hear
    the comments today, we certainly want to encourage you,
    particularly if you have your own stories on how this has
    impacted you, we certainly want to hear that because that
    becomes part of the official record of this hearing. I think it
    can have a good impact in terms of legislative actions that we
    want to take to address some of these challenges.
        The Chairman. Good.
        We will turn to our panel to receive testimony on the
    implications of the regulatory actions that are taken by
    Federal agencies to which these witnesses will speak. We
    anticipate they will discuss the affects of regulatory actions
    on project proponents and the State of Alaska Attorney General,
    if not--on Federal, State and private lands.
        I will go ahead and introduce each of the panelists, and
    then we will begin with Mr. Fogels.
        At the end here is Mr. Ed Fogels, who is Deputy
    Commissioner of the Department of Natural Resources for the
    State of Alaska. He is here to talk about the development
    challenges he experiences in his role both as Deputy
    Commissioner of the Department of Natural Resources and as a
    conduit for project proponents who are seeking assistance from
    the State of Alaska to navigate the maze of Federal
    regulations. We are pleased that Mr. Fogels is here.
        Next to Mr. Fogels is Mr. Randy Brand. He is the Vice
    President of Great Northwest, and he will speak about his
    experiences in the construction industry in Fairbanks and the
    evolution of increasingly complex and costly mitigation and
    permitting requirements that his business has encountered. I
    think it is almost legend in Fairbanks what Great Northwest has
    had to go through, so we look forward to your testimony.
        Next to Mr. Brand is Deantha Crockett, the Executive
    Director of the Alaska Miners Association, representing miners
    both large and small across our state. She will discuss the
    challenges they face with a complex and unclear regulatory
    scheme required by the BLM and also speak to miner's
    experiences with 404 mitigation.
        We also have Mr. Joe Nukapigak, the Vice President of
    Kuukpik. He is here to highlight permitting challenges that we
    experienced on the Spur Road, what might be expected for
    proposed roads in the Colville Delta, and what the community
    would like to see on GMT1 mitigation funds.
        Next to Joe we have Theresa Clark, the Vice President of
    Lands and Shareholder Services at Olgoonik. She is here to talk
    about the challenges the villages face when they try to marry
    mitigation and regulatory requirements for growing villages.
        Rounding out the panel we have Phil Shephard of the Great
    Land Trust. We greatly appreciate you being here, Phil, to
    present the interests and the perspectives of the Great Land
    Trust.
        So thank you all for being here. We will lead off with Mr.
    Fogels.
        Again, if you can try to limit your comments to about five
    minutes, your full statements will be incorporated as part of
    the official hearing record.
        I will note that we have the hearing room until five
    o'clock, so we are going to try to keep moving on this.
        Mr. Fogels, welcome to the Committees.

    STATEMENT OF ED FOGELS, DEPUTY COMMISSIONER, ALASKA DEPARTMENT
                          OF NATURAL RESOURCES

        Mr. Fogels. Thank you, Chairwoman Murkowski, Chairman
    Sullivan.
        My name is Ed Fogels. I'm Deputy Commissioner at the Alaska
    Department of Natural Resources, and on behalf of Governor Bill
    Walker, I thank you for this opportunity to testify.
        The focus of my testimony today is to first discuss permit
    coordination process employed by the State of Alaska and second
    is to discuss some concerns we have with current mitigation
    requirements. I'll focus primarily on some BLM mitigation
    requirements that we are afraid might start duplicating and
    confusing the mitigation requirements required under the Clean
    Water Act.
        The state has established a sophisticated coordination
    office for large projects within my department. This office,
    the Office of Project Management and Permitting, coordinates
    the environmental review and permitting process for major
    development projects. The state has found this leads to real
    permitting efficiencies for several reasons.
        First, public processes are integrated across different
    agency timelines, which prevents repetitive and confusing
    public notices. It gives the public an accessible source of
    information about projects in one place.
        The state processes are synched with corresponding Federal
    processes to minimize duplication of effort, permit
    collaboration and avoid duplication. The state can speak with a
    highly coordinated and well-informed voice in the Federal and
    local permitting process and in National Environmental Policy
    Act reviews.
        Our services are unique in that they are voluntary for
    project proponents. If a project proponent wants to pursue the
    efficiency of coordination they must enter into a memorandum of
    understanding with the state which also requires reimbursement
    of state expenses. The state has long advocated that the
    Federal Government establish a similar coordination process for
    large and complex projects based on the same principles and
    structures.
        Next let me speak to our concerns about the Bureau of Land
    Management's draft regional mitigation strategy manual, which
    is a guidance document that will direct Federal staff on how to
    require mitigation for impacts to Federal lands that occurs as
    a consequence for permitted activities. The manual mentions
    different types of mitigation and how they may be applied, but
    we feel there is little to no discussion of what impacted
    resources would require mitigation or how those impacts will be
    calculated in order to determine what mitigation requirements
    would be required.
        We are also very concerned about duplication with the
    compensatory mitigation requirements for permits issued under
    Section 404 of the Clean Water Act.
        We're also concerned the manual has not been developed
    through a public process. As it has been formulated as a
    guidance document, the manual has not gone through a formal
    rulemaking process.
        Next I would like to briefly discuss one example which we
    believe illustrates where the process could be improved, the
    Greater Mooses Tooth well or GMT1 in the National Petroleum
    Reserve.
        First, let me start by emphasizing, however, how grateful
    we are to BLM and all the Federal agencies for permitting this
    project. GMT1 is anticipated to add about 30,000 barrels per
    day in the Trans-Alaska Pipeline system, making it a critical
    priority for the State of Alaska and furtherance of the
    national strategic interest; however, the state has some
    concerns about the process, and we believe they should be
    addressed for future projects.
        The EIS and BLM's record of decision layered additional
    mitigation measures on the project. These mitigation measures
    are in addition to numerous requirements already required by
    other BLM EIS' and lease stipulations.
        Cooperating agencies including the state were surprisingly
    excluded from the development of the mitigation measures. BLM
    required a number of oil spill-related measures for the project
    despite the fact that this authority falls mainly under the
    Alaska Department of Environmental Conservation. Consultation
    with the cooperating agencies would have prevented this
    duplication.
        Next let me touch briefly on an issue of these new Areas of
    Critical Environmental Concern. This is, I'm sorry, another
    concerning area on the BLM planning and regulatory activities
    have a proposal to designate multiple Areas of Critical
    Environmental Concern, or ACECs.
        BLM is increasingly proposing excessively restrictive ACECs
    across Alaska. If designated as proposed, these ACECs will
    create uncertainty for development projects of critical public
    and economic importance such as the natural gas pipeline for
    the North Slope and the Donlin Gold project's proposed natural
    gas pipeline. Specifically, two ACECs in the Eastern Interior
    RMP, Resource Management Plan, would close approximately
    713,000 acres from mineral location and leasing, providing
    blanket closures on restrictions for off-highway vehicles,
    including snow machines.
        We're also concerned that these ACECs could potentially
    hamper the state's ability to fulfill its statehood land
    entitlement as most of these ACECs are layered on top of
    existing withdrawals.
        In closing, I would like to say that regardless of these
    issues that I've brought before these Committees, we do have an
    excellent working relationship with our Federal agency
    partners, especially the Alaska staff, and we continue to work
    to make that relationship better.
        Our intent here is to highlight the areas where we must
    improve. The state needs to be viewed as an equal partner by
    the Federal Government. Additionally, the Federal Government
    should draw from the success of the state permitting
    coordination model to improve its own process.
        We at the state applaud the efforts of the oversight of
    your Committees to drive Federal improvements in these areas.
        Thank you.
        [The prepared statement of Mr. Fogels follows:]

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        The Chairman. Thank you.
        Mr. Brand, welcome.

    STATEMENT OF RANDY BRAND, VICE PRESIDENT, GREAT NORTHWEST, INC.

        Mr. Brand. Thank you.
        If you visit the EPA website, you're bombarded with why we
    need the clean water rule to protect our streams and wetlands.
    Ironically, EPA workers accidentally caused a toxic wastewater
    release in Colorado. If this had happened to any of us in the
    industry, we would soon be out of business and in handcuffs.
        For the past 22 years my firm has either had a controlling
    interest or outright ownership of 300 acres of heavy
    industrial-zoned land in Fairbanks. We have developed this
    property to serve the construction needs of the greater
    Fairbanks area. Originally all that was required for a wetland
    permit was to submit a written development plan to show the
    purpose and need. Over the years, things became gradually more
    difficult.
        The first change was the requirement that any plan for pit
    development had to include a restoration plan to include
    littoral zones. Restricting development of a 20-foot wide zone
    around an old pit may not sound like much, but it adds up
    quickly. A 20-foot strip around a five acre pond equals about
    0.85 acres. A geometric calculation of this set-aside equals a
    volume of 206,000 cubic yards with a potential value of over
    $600,000. Requirements gradually worsened to the point we are
    at today with the requirement of compensatory mitigation.
        In 2006, my firm needed to update our existing wetlands
    permit. The U.S. Army Corps of Engineers required that we
    contribute $55,000 to The Conservation Fund to provide for
    offsite mitigation of 16 acres of lost wetlands. We were also
    required to permanently set aside an additional 10.64 acres of
    our land to be protected wetlands in perpetuity.
        As we were aware of two U.S. Supreme Court rulings that
    might affect our determination, we held off executing the
    permit. After those rulings were published, we requested on
    July 12th, 2006 the Corps revisit the jurisdictional
    determination for our property. This remained unanswered until
    March 28th, 2007 when the Corps offered a proffered permit
    which included a condition that the in-lieu fee for
    compensatory mitigation would be held in escrow until a new
    jurisdictional determination was issued under the new guidance.
        On July 28th, 2008 the Corps determined that this property
    was jurisdictional wetlands. With the help of the Pacific Legal
    Foundation, we fought this determination on our property all
    the way to the 9th Circuit Court and won at a cost of $89,000.
    The new rulemaking by the EPA will reverse that determination,
    potentially forcing us to re-enter the permitting process for
    our ongoing development. To hopefully protect ourselves from
    that situation, we have cleared and disked much of this land at
    a cost of $73,000 to convert it to uplands beyond the EPA's
    reach.
        In other private cost impacts, a business associate of mine
    with a development on North Slope Borough leased land in
    Deadhorse was required to pay $90,000 in fees to develop seven
    and a half acres in 2011. Three years later he applied to
    develop an adjoining seven and a half acre parcel. The price
    doubled to $180,000 without any explanation. That's about
    $24,000 per acre.
        This impact is not limited to private landowners. Our
    ability to improve public infrastructure is also impacted by
    these rules. Mayor Brower has previously testified that the
    Barrow landfill project had to pay $1 million in compensatory
    mitigation.
        I would like to add that Northern region transportation
    projects paid $3.4 million in mitigation payments in 2014 and
    $1.3 million in mitigation payments in 2015 to date. During
    2014 the credit cost increased from $2,200 per credit to as
    much as $33,000 per credit.
        [Audio problems.]
        Mr. Brand. So last but not least is an agreement reached in
    December 2007 whereby the Juneau Airport project paid $5.3
    million to the Southeast Alaska Land Trust as compensatory
    mitigation for impacts to 73 acres of wetlands. That's about
    $73,000 per acre.
        Another interesting note is the government's failure to
    recognize court rulings. Several of us individually own
    property upstream of the Great Northwest property that was
    deemed non-jurisdictional wetlands. The government claimed
    jurisdiction over my property last week, just as they had done
    to other property owners in the same neighborhood.
        To further complicate matters, the EPA has shut down The
    Conservation Fund until they do an audit of the expenditures.
    Permits cannot now be obtained as there is no organization to
    receive the required funds. Progress for future paying projects
    is now at risk.
        These payments are impacting our ability to deliver
    worthwhile infrastructure improvements, predominately within
    long dedicated rights-of-way. Additionally, these payments are
    re-directing taxpayer dollars to NGO's with their own self-
    serving interests, salaries, and expenses. One could even argue
    these payments constitute extortion due to the fact you will
    not get a permit to fill your wetlands without making the
    appropriate payment.
        These new regulations will take large tracts of land not
    currently under the authority of the Clean Water Act and
    redefine them as waters of the U.S. This egregious Federal
    overreach has more to do with the largest land grab in history
    than with expanding protection under the Clean Water Act. The
    net result will be changing the Clean Water Act into a Wetlands
    Protection Act.
        If there is a need for a Wetlands Protection Act, Congress
    should enact one and leave public rights-of-way and privately
    held properties out of it. If the public wants to set these
    areas aside then the public should purchase the land outright
    at fair market value.
        Thank you.
        [The prepared statement of Mr. Brand follows:]

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        The Chairman. Randy, thank you, we appreciate your
    testimony. I think sometimes those costs that are associated
    are just astounding.
        Deantha Crockett, welcome.

       STATEMENT OF DEANTHA CROCKETT, EXECUTIVE DIRECTOR, ALASKA
                           MINERS ASSOCIATION

        Ms. Crockett. Thank you, Senators.
        For the record my name is Deantha Crockett, and I'm the
    Executive Director of the Alaska Miners Association (AMA).
        I know that you two are quite aware of what AMA is. But for
    the record, we are the statewide membership-funded trade
    association that represents all aspects of the mining industry.
    You described the vast affect of the areas of the state that
    these polices have an effect on our membership spans. We've got
    branches in Nome and we have a branch in Ketchikan, Prince of
    Wales and six in between. Members really do operate in every
    corner of our state.
        I represent six large operating mines, but around 400
    permitted placer operations. A vast majority of my job on a
    day-to-day basis is advocating and helping placer miners to sum
    up Federal policies in five minutes. I think I heard Mr. Fogels
    use this word as well, and I'm sorry to say that the word I've
    got to use is uncertainty.
        Right now I have the large operations that I referenced
    evaluating what source of investments they'll make of those big
    projects, but I've got the vast majority of my placer miners
    evaluating whether or not they'll still have a livelihood.
        I do have one of my members, someone I've become great
    friends with, in the third row, Bronk Jorgensen. He is here
    from the Forty-mile Mining District and watches that every
    single day in terms of how Federal management policies affect
    placer mining on Federal land in Alaska.
        I will begin with the BLM. I think we're seeing multiple
    policies come from multiple field offices throughout different
    levels of management in the agency whether it's land planning,
    regulatory enforcement or how permitting is conducted. But a
    lot of times policies are introduced in draft form to which the
    industry scrambles to digest multiple volumes, I'm not
    exaggerating, about this high, of different plans and policy
    changes that come out. Sometimes the polices come to fruition,
    sometimes they don't, and sometimes in the meantime we see them
    used by the agency as legitimate land management tools.
        To be specific, BLM recently reevaluated its implementation
    of the regulations in which mineral activity is permitted and
    managed in Alaska, which is essentially new regulation that
    doesn't add any additional environmental protection. It doesn't
    fix any problems, and it burdens the miners with increasing
    costs and delays.
        For many years placer mining operations have applied for
    permits and been regulated under the Annual Placer Mining
    Application, the APMA process, which is managed by three State
    of Alaska agencies and BLM. For a long time these agencies got
    together and made sure that the APMA was a good program that
    placer miners could effectively manage permitting for but still
    establish the objectives of all the agencies involved.
        That certainly changed into a different animal, and now BLM
    has proposed seven new supplemental documents for the APMA.
    There is also a requirement to gather new data and a possible
    Reclamation cost estimate to determine the cost of reclaiming
    an operation that doesn't have any non-compliance issues in the
    first place.
        So outside of the permitting, the agency has also released
    a number of land management plans as part of an overarching
    landscape level process. The RMPs cover really large acreages
    and often contain management prescriptions that guide polices
    of the land users in the area outside of what is current land
    regulation and statute.
        Deputy Commissioner Fogels did a phenomenal job of
    explaining the ACECs, so I was able to cross out a little of my
    testimony here.
        Recently we've seen two, a newly proposed and then an
    expanded one, that was in existence in the Fortymile region,
    and it really has that district very concerned. It's hundreds
    of thousands of acres that are being proposed for closure to
    mineral entry, an area that's known to be highly mineralized.
        There is an additional component within the land managing
    process called rapid ecological assessment. And I have to be
    honest with you, I'm still not totally sure what it does or
    what it doesn't do. But these are all examples of, frankly,
    what is a puzzle and us trying to understand BLM's land
    management philosophy and how it applies to placer mining on
    Federal lands in Alaska.
        When the National Director, Neil Kornze, visited Chicken
    earlier this year, which we profusely thank you for your help
    on, I had the opportunity to talk to him. I told him that I
    think there are really good, intelligent and hard working staff
    within the BLM Alaska offices here. I firmly believe that.
    They're all sitting in this row right here. They are wonderful
    about communicating with me. They're asking for different ways
    to provide outreach to miners.
        And what I told Director Kornze is that they've got a lot
    of good ideas on how placer mining can be regulated and the
    agency's objectives can still be established. I hope that the
    communication between the Alaska staff and the national staff
    is a two way street, and they're being allowed to implement
    ideas. I think they are the best ones to understand placer
    mining in Alaska.
        So switching to wetlands mitigation, we certainly do have
    our struggles with jurisdiction over Section 404. But one thing
    I can say at this time is kudos to that agency for its recent
    internal review of how wetlands jurisdiction and regulation is
    conducted in Alaska. I know that they are evaluating the 1994
    Alaska Wetlands Initiative, and is it a tool that is there for
    the agency to manage projects specific to mining in Alaska.
        I know that the agency has committed to reviewing whether
    the entire suite of tools is being utilized to regulate
    operations and wetlands in Alaska. We saw these words put into
    action with the recently released general permit for placer
    mining that the agency went through. They extended the existing
    permit because they readily admitted we're not done. This is
    not a forum with which we're happy and ended up striking out
    the compensatory mitigation for certain small placer mining
    projects.
        So they really did put their money where their money is, so
    to speak, and ended up taking multiple stages of revisions from
    placer miners into that final product. And it's one that there
    are some things we don't like about it. There's a lot of things
    we like about it, and I think they did a great job of meeting
    us in the middle, if you will, on that one.
        So I think I've exceeded my time allotment. For that, I
    apologize. But I thank you again for the opportunity to testify
    for placer miners today.
        [The prepared statement of Ms. Crockett follows:]

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        The Chairman. Thank you, Deantha.
        Joe, welcome.

        STATEMENT OF JOSEPH NUKAPIGAK, VICE PRESIDENT, KUUKPIK
                              CORPORATION

        Mr. Nukapigak. Thank you.
        Thank you, Senator Murkowski and Senator Sullivan and the
    Committees for allowing me the opportunity to provide testimony
    on Federal mitigation requirements. I hope to add local content
    and offer some suggestions for the committees to consider.
        Kuukpik Corporation is the Alaska Native Land Settlement
    Act Village Corporation for Nuiqsut, which is an almost
    entirely Native community on the North Slope of Alaska.
    Approximately 90 percent of our residents of Nuiqsut are
    shareholders in Kuukpik Corporation or are married to Kuukpik
    Corporation shareholders or descendants of Kuukpik
    shareholders.
        Kuukpik is one of the largest private landowners in the
    National Petroleum Reserve-Alaska, having received title to
    approximately 74,000 acres of ANCSA lands surface estate. The
    balance of Kuukpik's lands, totaling about 69,000 acres, are
    just east of the NPR-A in and around the Colville River Delta.
        Nuiqsut is the community most affected by oil development
    on the North Slope to date. Alpine is only eight miles away
    from the village and can be seen from the village, day and
    night. Nuiqsut is a traditionally Inupiat community where over
    70 percent of households get more than half their food from
    subsistence hunting.
        The oil industry has been active on the eastern side of
    Nuiqsut's traditional subsistence lands at Prudhoe Bay and
    Kuparuk for over 50 years, but construction of the Alpine field
    in 1998 put the oil field and Nuiqsut in close daily contact.
    Three new satellite oil fields have been built around Nuiqsut
    since Alpine and at least two more are planned. Impacts to
    subsistence activities and resources are continuing and
    persistent issues.
        Our challenge as a community and a corporation was to
    realize the economic benefit of ANCSA land ownership through
    oil development, while protecting our Native culture. Our
    leadership has consistently worked to protect subsistence and
    our natural surroundings.
        As oil development occupied more and more subsistence lands
    to the east and north, Kuukpik decided that better access to
    subsistence land to the west was the one part of dealing with
    oil development impact, while the other part was better access
    to jobs and training at Alpine oil field.
        Our solution was to build a Spur road from the village to
    the industrial CD-5 road. The road has three purposes. One is
    to open up more area for subsistence to the west. Two is to
    allow Nuiqsut residents and shareholders to drive to training
    and employment opportunities at home. Three expanded health,
    life, and safety options.
        Projects such as the Spur Road are a key part of ANCSA's
    purpose, to protect Native land and culture while promoting
    economic development of Native land, jobs, and training for
    Alaska Natives. Yet the Federal permitting process has created
    substantial barriers to the project.
        The Permit Process. In January 2013, Kuukpik submitted an
    application to the U.S. Army Corps of Engineers. The proposed
    road was 5.8 miles long and called for placing gravel on 51
    acres of our land that we own. Over several months Kuukpik
    submitted information to improve our application. In August
    2013, the EPA commented on our application. Like many 404
    applicants, they sent Kuukpik a letter stating that they
    reserved the right to elevate our ANCSA project if their
    concerns are not addressed, or could not be addressed.
        Specifically, the EPA argued that mitigation for Kuukpik's
    51-acre road required that we set aside an additional 294.2
    acres in permanent conservation status. Under the EPA
    calculation, the 51-acre footprint of our community road would
    actually impact a minimum of 343.2 acres of Kuukpik-owned
    property. The proposed mitigation acreage would be almost six
    times the actual footprint.
        Kuukpik continued to meet with the Corps of Engineers and
    the EPA throughout the fall of 2013. We repeatedly argued that
    the size of parcel needed as an offset for the project was
    smaller than required by the EPA and that the purpose of the
    road is an extension of our right as a landowner under ANCSA
    and served to mitigate oil development impacts.
        Our negotiations lead Kuukpik to the conclusion that
    despite the inherent conflict between ANCSA and the Clean Water
    Act, we needed the 404 permit. We eventually agreed to set
    aside a 127-acre parcel in the area known as Fish Creek, so
    that the Spur Road's 51-acre footprint impacts 178 acres of
    Kuukpik land. The mitigation acreage is more than twice as much
    as the actual footprint even though the mitigation acreage is
    made up of higher value wetland than those occupied by the
    project footprint.
        Kuukpik is still in the process of finalizing the easement.
    One of the many byzantine requirements of the Clean Water Act
    is that a qualified third-party entity hold the easement, and
    that an entitlement be set up to fund future costs of managing
    that easement.
        We are in the process of identifying a qualified and
    willing third-party that can harmonize our need to continue our
    lifestyle with the demands of the Clean Water Act.
        Kuukpik supports continuing to use all the mitigation-
    related tools available under the existing rule, including
    wetland mitigation banks, in-lieu fee programs and permittee
    responsible mitigation; however, Kuukpik also supports
    expansion of the options available to Alaska Native
    Corporations including recent legislation introduced by our
    Congressman calling for preservation leasing for tribal
    organizations, including Alaska Native Corporations. That
    legislation could more closely tie mitigation acreage to the
    actual life of project-related impacts.
        Finally, we think that Alaska Native Corporations should be
    exempt from Clean Water Act requirements where the applicant is
    an Alaska Native Corporation and the project is on Alaska
    Native land.
        BLM Region Mitigation Strategy. The Department of the
    Interior has now stepped into the compensatory mitigation
    equation. BLM negotiated an $8 million mitigation payment to
    offset impacts created by GMT1. Decisions regarding the
    disposition of the funds should be made by the NPR-A Working
    Group.
        The NPR-A Working Group was created as part of the
    Integrated Activity Plan for the NPR-A. The purpose of the
    Working Group is to guide the Federal Government's decision
    making process within the NPR-A. The group has broad
    representation including tribal, local government, and
    corporate groups. It makes perfect sense to allow that group to
    determine the use of the funds.
        Second, we recommend that funding community mitigation be
    the highest priority for the funds.
        We will continue to work with our families and our
    neighbors including the City of Nuiqsut, Native Village of
    Nuiqsut, and the BLM on plans for utilizing the funds.
        Thank you for your time.
        [The prepared statement of Mr. Nukapigak follows:]

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        The Chairman. Thank you, and thank you for representing
    Kuukpik.
        Ms. Clark, welcome.

        STATEMENT OF THERESA CLARK, VICE PRESIDENT OF LANDS AND
               SHAREHOLDER SERVICE, OLGOONIK CORPORATION

        Ms. Clark. Good afternoon. My name is Theresa Clark. I am
    the Vice President of Lands and Shareholder Services for
    Olgoonik Corporation.
        Thank you, Senator Murkowski and Senator Sullivan and
    members of the Committees for providing Olgoonik the
    opportunity to testify today. I thank you for conducting this
    public hearing here in Alaska on this very important issue of
    Federal wetlands, Federal mitigation requirements, and the
    proposed legislation to address wetlands mitigation.
        Olgoonik Corporation is the ANCSA village corporation for
    Wainwright. Olgoonik privately owns 175,000 acres of surface
    estate, all of which are within the NPRA, so we are one of the
    closest communities to offshore development in the Chukchi Sea.
    Offshore exploration, development, and production will require
    onshore-based support services which we are planning to
    deliver.
        We received our full entitlement to our ANCSA lands. It
    took BLM over 20 years to patent our lands to us. The Clean
    Water Act was amended to address wetlands mitigation just as we
    were receiving the balance of our full entitlement, which
    subjected our lands to new and additional Federal requirements.
        Wainwright residents and Olgoonik Corporation will be
    highly impacted by oil exploration and industry development in
    both a positive and negative manner. We are trying to minimize
    the adverse impacts that development brings to our community,
    especially those affecting our subsistence way of life. The
    positive impacts will be business and job opportunities, and a
    financial future for generations.
        To minimize impacts and to capture benefits we are planning
    and developing Olgoonik lands on the outskirts of Wainwright.
    This will make development of Olgoonik lands subject to
    wetlands mitigation rules.
        We have our own land management plan to develop lands and
    protect certain sensitive areas. Our strategy is to keep
    development of our lands to a minimum by compacting the
    development into a reasonably small footprint.
        We are currently in the process of purchasing lands
    formally utilized by the Air Force as the Early Defense Warning
    System, DEW lines. With your introduction of an amendment to
    the 2015 NDAA and its passage, Senator Murkowski, thank you, we
    are now in the process of purchasing those lands. This property
    is within our ANCSA lands. Our plans for this property is to
    build infrastructure upon the plans already existing to provide
    essential support to oil and gas industries. This will further
    minimize development on wetlands within our ANCSA lands.
        Full mitigation to protect wetlands is good and needed. We
    recognize that fact. We are also mindful that this impacts our
    ANCSA lands or purchased lands, the DEW line.
        For example, there is a social deed in our community to
    build new homes. We are subdividing lands for that purpose.
    Roads will be needed for access. To build roads, we'll have to
    comply with the Federal regulations. This will drive up the
    price of development as the current method we are leaning
    toward is paying an in-lieu fee.
        The current wetlands inventory data for Alaska's North
    Slope is limited and out-of-date. The Arctic Coastal Plain is
    comprised of approximately 80 percent wetlands. This was
    determined by the State of Alaska in 1994. This places the
    burden of more detailed delineation of our lands on us as a
    developer. Currently the average cost per acre to develop is
    approximately $12,000 per acre.
        Using this data, a majority, if not all, of our land is
    considered wetlands. The in-lieu fee program is not available
    or able to pre-sell additional credits at this time. Permittee
    responsibility is challenging in that we are required to triple
    the size of the impacted area when one adds together the
    project with a conservation easement.
        We are certainly watching for and hoping that the Arctic
    Slope Regional Corporation's bank will be certified. In short,
    we feel that having multiple mitigation options is important
    from a permitting standpoint but also a financial standpoint.
        Finally, we do not desire to lock up any of our lands in
    perpetuity to mitigate as we cannot predict the future.
    Decisions made today in regards to our lands may not be
    applicable 20 years down the road. As time passes, corporate
    leaders change, additional development will be needed to take
    place, and we need to keep the options open for our future
    generations to determine.
        Therefore, with these purposes in mind, we support the
    proposed legislation to one, provide ANCs exemption from the
    Clean Water Act requirements where an applicant in an ANC and
    the proposed projects are on ANC lands. And two, to have the
    ability to enter into a preservation easement as a mitigation
    option.
        I thank you for the opportunity to be heard, Senator
    Murkowski and Senator Sullivan and members of the Committees. I
    request your support on this proposed legislation.
        [The prepared statement of Ms. Clark follows:]

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        The Chairman. Thank you, Theresa.
        And finally we will wrap up with Mr. Phil Shephard, welcome
    to the Committees.

      STATEMENT OF PHIL SHEPHARD, EXECUTIVE DIRECTOR, GREAT LAND
                                 TRUST

        Mr. Shephard. Thank you.
        Thank you, Senator Murkowski and Senator Sullivan.
        My name is Phil Shephard. I'm the Executive Director of
    Great Land Trust. We're a private, non-profit land trust that
    operates here in Alaska. We're based in Alaska. We have an all-
    Alaskan board.
        We were founded in 1995, so 20 years ago. We work with
    willing landowners, agencies, communities, local governments
    and other partners to conserve south central Alaska's special
    lands and waterways. We have our service area, the area that we
    work is in south central, so from Denali, down to Kodiak,
    Prince William Sound. Primarily we've worked in Anchorage and
    Mat-Su, and we were asked in 1998 by the municipality of
    Anchorage, the State of Alaska, and various regulatory agencies
    to consider starting an in-lieu fee program in Anchorage.
        So there's been discussion today about different mitigation
    options. We happen to operate one that's called an in-lieu fee
    program. There are other options.
        But so what I'm going to talk about today is this public/
    private partnership that we happen to run as a land trust to do
    some of the mitigation. I'm not going to weigh in on why
    mitigation happens because that's not our purview. We don't do
    advocacy work. What we do is the mitigation after the fact.
        So when the Army Corps has made the decision that okay,
    here's a permit, you can't fill this wetland, then that
    permittee, whether it's a private developer or an agency, it's
    DOT or some agency that's filling a wetland, they decide that
    the mitigation is formed and the mitigation options and the
    fee. Then that payment is made to us, and we aggregate those
    funds and then we turn around and we purchase those purchase
    properties to permanently protect those wetlands.
        What we have to do in order to do that, in order to operate
    this is in the fee program, is we spend a great deal of time
    using the current data on wetlands in Anchorage and the Mat-Su
    to know, okay, well where are the best wetlands to mitigate?
    And so what we've done to date is partner with dozens of
    private landowners and agencies. We've created seven new parks,
    we've built a number of trails, we've conserved about 45 miles
    of salmon habitat here in Upper Kuukpik arm, we've provided six
    access points to public lands, and we've worked in eight
    different estuaries.
        One of the things that we've focused on is if there's a
    wetland and it's privately owned and if we only work with
    willing landowners and the landowners that have these wetlands,
    and for whatever reason they decided they, you know, they don't
    want them anymore, we purchase those and then oftentimes they
    are adjacent to say, a state game refuge or a state park, and
    then we add those to the park. And then that way that property
    provides access to these public lands.
        So we are blessed with a lot of public lands in Alaska. In
    some cases, especially around Anchorage, access is very
    limited. Actually right near here we just purchased property
    near Machetanz Elementary School and added it to Palmer
    Hayflats State Game Refuge and are building a boardwalk for the
    kids at Machetanz who are helping us. That's an example of a
    project, a type of project, that we do.
        When we try to figure out where to do the mitigation we
    spend, I already said, a great deal of time with maps and GIS
    to figure out the best possible mitigation to do. We work
    closely with the boroughs, the municipal governments, state
    agencies, to find the best property. When we get frequent
    feedback from these agencies and resident experts that choose
    these properties we're really proud of all of the projects
    we've done.
        One of our--several of our main partners have been Native
    Corporations. We've got--we've conserved almost 7,000 acres of
    Native Corporation lands in Upper Turnagain Arm that were
    mitigation from various projects around Anchorage.
        Obviously there's way more impacts to wetlands around
    Anchorage and the Mat-Su just because there's more people here.
    And so I can't speak to the North Slope and these areas in the
    interior. We only operate or are in the fee program in Mat-Su
    and Anchorage.
        In closing, I'd like to thank the Senators, both Senators
    Murkowski and Sullivan, for coming here and having this
    hearing. I'm sure everyone appreciates the ability to
    understand this issue more fully. I would just like to close
    with we're a, you know, small, private nonprofit in a
    partnership between a private nonprofit and these Federal
    agencies and the public I think has resulted in some really
    sound, high quality mitigation that has been for the good
    citizens of this area.
        [The prepared statement of Mr. Shephard follows:]
        [

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you.
        Thank you, Mr. Shephard, and thank you to each of you for
    not only your testimony here this afternoon but the work that
    you do within your respective communities, your region, and the
    state.
        I think if I have heard a common theme here it is the
    uncertainty that comes about with any level of requested
    development whether it is housing, as you were talking about in
    Wainwright, Ms. Clark, or whether it is mining activities out
    in the Fortymile region. When you do not have clear and
    consistent policies, it is difficult to make that business
    judgment decision as to how to move forward.
        I have to say to friends here at home I feel like I have to
    apologize sometimes for the alphabet soup. I was listening to
    Mr. Fogels and Ms. Crockett. We have APMAs, we have ACECs, we
    have RMPs, we have REAs, and that's just in the little BLM
    area. It kind of boggles your mind. Unfortunately it just seems
    like that this is the acronym of the day, what is coming next?
    I don't know and I am not sure that our regulators know, and it
    adds to the confusion and complexity of what we are dealing
    with.
        I am concerned as we look at the impact to our
    opportunities to develop. Mr. Fogels, you mentioned some of the
    big ticket items that we think about whether it is the ability
    for Donlin Gold to bring affordable energy to a project out
    there being limited by an ACEC; whether it is our Trans-Alaska
    Pipeline; whether it is further build out and repair of our
    Dalton Highway after the washout; whether it is what we are
    trying to accomplish in GMT1 and recognizing that we are still
    trying to get things moving within the NPRA. It really causes
    you to wonder how we have had the level of progress that we
    have had to date.
        Let me ask, specifically, about these areas of critical
    environmental concern, these ACECs. In 1986, my understanding
    is we had 16 across the state and it encompassed about 2.7
    million acres. Now, well in 2014, we had 52 ACECs overlaid
    across the state accounting for approximately 8.7 million acres
    of additional management. I do not go anywhere without my map
    of things that rile me up. Where is my rile me up map?
    [Laughter.]
        I got so riled up that I put it in another file. Where is
    my colored maps? Those, you have them.
        For those who do not have the areas of withdrawals of
    Alaskan lands, it is not just things like ACECs and the
    withdrawals within each of our public lands. It is what we also
    see withdrawn off of our coastline, with critical habitat
    designations. At the end of the day, Senator Sullivan has seen
    this chart through videos, but it is a colored patchwork that
    just, kind of, reinforces the situation that we are in and
    trying to access what we are dealing with here in this state.
    We are seeing this growth in ACECs. We are seeing this growth,
    this expansion, if you will.
        I am going to ask you, Mr. Fogels. You have been with the
    Department of Natural Resources for some time. Are these
    regulatory measures increasing the health and the welfare to
    Alaskans? Is it helping us in terms of management? Are we
    gaining any benefit by these additional designations?
        Mr. Fogels. Senator Murkowski, I think, in my professional
    opinion, these most recent proposals that we have seen do not
    add to the health and welfare of the Alaskan people.
        We, I should say that these are all, the ones out in the
    Eastern Interior Management Plan that totals up about 713,000
    acres. And then there's another large one that we're watching.
    We're very concerned about the Donnelly project with many
    hundreds of thousands of acres. Those are all still in draft. I
    know those have been finalized. All of those plans are still in
    their planning process. So we're strongly commenting on these,
    on all of these ACECs, and we do not believe they're warranted.
    They're way too big. They don't have the justification.
        In addition, we believe that the BLM already has the
    ability to manage those resources properly with their existing
    tools. They don't need to create these Areas of Critical
    Environmental Concern. I think it's----
        The Chairman. Let me interrupt and ask you, though, even if
    it has not been finalized, what is the impact of this proposed
    designation? What does that do to any potential development?
        Mr. Fogels. Well, Senator, that's a good question. That's
    one that we see in a number of different venues in Alaska when
    an agency typically is studying something, let's say, for
    wilderness, then they're apt to treat it and manage it like a
    wilderness while they're studying it. So, while we do not have
    direct experience with that in these instances, I would imagine
    that's a significant concern on these Areas of Critical
    Environmental Concern.
        The BLM is doing a good job with their planning process.
    I've got high hopes that reason will prevail and the public
    will comment on these things. Until that happens, I don't know.
        The Chairman. But until such time as there is a final
    designation, it is managed as de facto withdrawal effectively?
        Mr. Fogels. Well, Senator, I think you might, I think in
    your next panel you might have BLM folks. You might ask them
    about that.
        It's important to note that wherever these ACECs are
    proposed now, as we understand it, there are already
    withdrawals under those ACECs. And that's one of the things
    that concerns us is that those existing withdrawals, many of
    those, were put in place for a purpose that is no longer valid.
    And so with the layering of the ACEC on top of that, we argue
    that that's essentially repurposing that original withdrawal
    that underlies it.
        That would be contrary to provisions in ANILCA which
    prohibits the designation, the withdrawal of more than 5,000
    acres without Congressional approval.
        The Chairman. Let me ask you, Ms. Crockett. Representing
    the miners in the Fortymile area and Mosquito Flats, Fortymile
    is the area where over 700, what did you say? Seven hundred and
    ?
        Ms. Crockett. Eighteen.
        The Chairman. Eighteen thousand acres will be put under
    this designation. Even though it has not been finalized, what
    impact is that having on a small placer miner out there?
        When was the last time we saw a new mine permitted out
    there in the Fortymile region or really anywhere in the state?
        Ms. Crockett. Senator Murkowski, that's an interesting
    question. I actually don't know the answer to when the last
    time a placer mine was permitted in the Fortymile Mining
    District.
        The Chairman. But it has been long enough that you cannot
    remember. [Laughter.]
        Ms. Crockett. I should be a little fair admitting I've only
    been there for three years. So I will research that and get
    back to you.
        The Chairman. Okay.
        Ms. Crockett. Maybe the BLM folks have an answer to that; I
    have not had one brought to my attention in the last three
    years. So I will find that out.
        Ms. Crockett. You also asked me about the impact, and I
    think it has made a lot of them very scared.
        And looking in terms of how did we get here? If you talked
    about the number of ACECs that are in place or proposed now,
    how many more there are. The number is certainly alarming, but
    I think what's more alarming for me is learning about the ACEC
    nomination process and how exactly it works.
        So the two that are within the Fortymile region in one
    meeting with BLM, it was explained there were individuals that
    nominated these, that proposed these ACECs. So any member of
    the public can nominate for an ACEC. And when they were put
    into the Eastern Interior Resource Management Plan there was an
    ACEC nomination process so that individuals could then forward
    that generally had hunting and fishing interests, and foreclose
    that as needed caribou habitat or moose having habitat,
    etcetera.
        When the proposal came out with public comment there was no
    information whatsoever about the mineral potential of the area.
    It was a lot of information about ecological aspects and
    wildlife aspects. We brought that to their attention and they
    said, bring it to us. So we did. We said, okay, we'd like to
    provide you with some information. Here is a known, very large
    deposit here in a number of areas where placer mining activity
    could really increase and diversify and strengthen. And that
    was generally not available to the general public that may have
    been interested in commenting on this.
        So I think that process of how they're brought to the
    public, those of us that are trying to just understand this
    better, and information they don't include, is more alarming to
    me than anything. And I hope that kind of answers your
    question.
        The Chairman. Well, it does.
        I know that Senator Sullivan will go to the issue of
    specific authorization under the law, and I think what we would
    question is whether or not much of this can move forward
    without congressional authority under the parameters of ANILCA.
        Ms. Crockett. Yes, absolutely.
        And the proposals, as they stand now, do designate closure
    to mineral entries. So no mining activity would occur if these
    become effective.
        The Chairman. Again, contrary to ANILCA.
        Ms. Crockett. Yes.
        The Chairman. Senator Sullivan?
        Senator Sullivan. Thank you, Madam Chair.
        Mr. Fogels, I wanted to follow-up on a couple questions.
        You talk about OPMP. I agree with you, the state has done a
    good job of coordinating on large projects. There was an
    Executive Order by the Obama Administration a few years ago
    that tried to replicate that, but from my perspective, it did
    not seem to go anywhere.
        How is the coordination at the federal level and is there a
    need, do you think, from the Federal legislative standpoint to
    mandate that kind of coordination?
        Because right now whether it is the Shell project, whether
    it is a different Alaska natural gas AK LNG project, it seems
    like Federal agencies come in with all kinds of different
    requirements, completely uncoordinated. What do you think needs
    to happen there and is that Executive Order doing enough?
        Mr. Fogels. Senator Sullivan, I would have to say that, in
    my opinion, I see where the coordination can, on the Federal
    level, have flashes of where it actually starts working. But
    it's pretty inconsistent. We've seen places where we tried, at
    a local level, to improve that coordination. We have excellent
    regular meetings with EPA and the Army Corps to discuss large
    projects around the state, trying to avoid blow outs like we
    have with CD5 to head those off at the pass. So that's working.
        I think on a broader scale with President Obama's
    interagency working group, our frustration there was that, as
    you know, we were never invited to sit at that table.
        Senator Sullivan. Yes.
        Mr. Fogels. That was purely a Federal table.
        Much to our pleasant surprise, the local Federal leaders
    decided to build their own mirror group of that and they
    invited us to sit at the table here in Alaska.
        Senator Sullivan. Let me ask you, let me follow-up on that
    in terms of those invited to the table.
        In the Clean Water Act, you agree the Clean Water Act, we
    are supposed to be a co-regulator, on an equal basis with the
    Federal Government. That is the way the Clean Water Act was set
    up.
        Yet on compensatory mitigation are we at all involved in
    the process in terms of laying out these random and, I think,
    arbitrary numbers and amounts and the dollar figures? Are we at
    all a part of that process even though that is under the Clean
    Water Act?
        Mr. Fogels. Senator, in my experience we are really not
    involved in that process at all.
        Senator Sullivan. So you think that clearly goes against
    the spirit if not the actual rule of the law of the Clean Water
    Act?
        Mr. Fogels. Well certainly the spirit, Senator.
        I think in years past we've also tried to evaluate whether
    the state should seek primacy for the 404 process. And almost
    every state in the Nation has primacy over the 404-2 discharge
    program. But only two have primacy over the 404 program. And
    when you read the Clean Water Act and even early EPA guidance
    documents, it clearly says the states should be ultimately
    getting primacy and they should take the lead. And that has not
    happened.
        Senator Sullivan. Let me ask another, kind of, related
    question with regard to mitigation.
        I actually spent a lot of the day yesterday at the Chena
    Hot Springs Alternative Energy Fair, which was a great event. I
    had a lot of time to talk to Governor Walker about a number of
    these issues, and told him we had this hearing coming up.
        We were discussing, both of us were wondering to what
    degree the Federal Government can require mitigation with
    regard to the state. So coequal sovereign under our
    Constitution, and I did not think the Federal Government could
    require if the State of Alaska is building the road, do we have
    to mitigate that under the Federal rules?
        So I took a look at this. I think the answer is not only
    yes, but heck, yes. Almost $3.4 million in 2014 we had to pay
    to the Federal Government for mitigation to build roads in
    Alaska. I think that violates the tenth amendment or any other
    aspect of the Clean Water Act. It certainly seems to me kind of
    an outrageous example of the Federal Government claiming way
    too much authority.
        What is your thought on that?
        Mr. Fogels. My thought?
        Well, I would think a former Attorney General would kind of
    know more about that than I probably do. [Laughter.]
        Senator Sullivan. So Madam Chair, I have a number of more
    questions.
        The Chairman. We will go back and forth.
        Because the question, I think most Alaskans would be
    stunned----
        Senator Sullivan. Stunned.
        The Chairman. To know that, for instance, on the rebuild of
    the Dalton Highway after the substantial flooding, what we need
    to do is we need to elevate that road. We are going to have to
    do something a little bit different than what we had before or
    we will have a repeat. In order for us to move forward with
    that, a level of mitigation is required. I am not sure what the
    dollar amount is, but we do know that the state is basically
    going to be paying the Federal Government for those mitigation
    costs.
        Then it speaks also to the issues that Mr. Nukapigak and
    Ms. Clark have spoken to whether it is coming from Wainwright
    or Nuiqsut. The fact that these are your ANCSA lands that were
    conveyed to you as part of a settlement, and for you to access
    these lands whether it is a road that will allow for additional
    subsistence opportunities for you or whether it is for the
    folk, the people, in Wainwright to be able to access additional
    area for housing that is necessary. That they also will be
    paying the Federal Government, and whether it is six times the
    amount or whether it is negotiated down to just twice the
    amount of the footprint, I think most would be very shocked to
    find that from your native lands that were conveyed upon
    settlement that you, as tribal entities, have a requirement now
    to pay the Federal Government.
        I was in Craig on Prince of Wales last week, and they too
    are looking to build additional housing. The compensation that
    they have to then pay, again, to access their lands and what I
    was told was that the issue of where these mitigation dollars
    go to is of great concern.
        Mr. Fogels, you mentioned that there is an issue right now
    with the availability of mitigation banks that can accept these
    dollars to move forward. I understand that up north there was
    an effort to expand, or build out, a hangar in the area. They
    are all ready to move on the project, and there is nobody that
    can take the mitigation dollars because of this audit that you
    acknowledged.
        What do you do then? You need to build the hangar. You need
    to repair the road. You need to build housing or a connector
    road.
        Mr. Shephard has mentioned the in-lieu system, but he also
    mentioned that is just down here.
        Are we to believe that we are not able to move on anything
    up in the North Slope because we do not have a place to even
    bank it if we can agree that a two-to-one mitigation ratio is
    reasonable and not extortion?
        Mr. Fogels. Well, Senator Murkowski, yes, as we understand
    it, there's a situation that's developed that one of the main
    mitigation banks in the in-lieu fee programs is no longer
    accepting money to further the program. I think it's a fairly
    recent development. I think, I know, that is a huge concern to
    us.
        What we're doing right now is, even with the tight budget
    situation the state has right now, we received a small
    legislative appropriation this year to start investigating
    forming a state in-lieu fee program or possibly even a
    mitigation bank.
        So that's something that, I think, the state can have a
    bigger role in this whole process. That's one place we're
    really looking at trying to put some energy and hopefully help.
        The issue is if for every acre we develop now we have to go
    and protect ten or five or whatever it is. That is just an
    untenable situation. It's just, I mean anyone can see that's
    just not workable.
        So we'd like to use that money as much as possible to do
    environmentally good things, right? I mean, it's kind of ironic
    when Point Thompson thought it was being permitted. Exxon wrote
    some huge multimillion dollar check that's probably going to go
    and protect a block of land somewhere.
        At that same time, when we're talking about how do we
    cleanup these legacy wells, you know, which all have wetlands
    in house. Wouldn't it be nice if we could have just used that
    money to clean up a legacy well? I know that's kind of a reach
    for the Clean Water Act, but I mean, that's what we need to do.
    We need to reach, we need to think outside of the box and
    figure out how to use these dollars to fix real environmental
    problems.
        The Chairman. Mr. Fogels, can you explain what happens
    there then if, for instance, in Wainwright the mitigation
    dollars, the concerns you are under, which are the organization
    is that it is not able to accept funds now? Is there any
    requirement that these mitigation dollars be used to help
    either in the regions of the North Slope Borough or even within
    the State of Alaska?
        The mitigation dollars the Great Northwest paid, are they
    required to be directed somewhere in the region that is
    impacted or even the state that is impacted?
        Mr. Fogels. Well, Senator, you know, our understanding is
    that those dollars should be used to be as close as possible in
    areas related as possible to the area of the impact.
        I think you might have some folks coming in the next panel
    that you may actually get a more clear answer of what the
    latitude is to move those dollars around to other parts of the
    state. I'm not sure I would have been the best person to answer
    that with very much precision.
        The Chairman. Well, know that for the next panel that is
    something that I would like to drill down on because it is my
    understanding that while it is recommended that that happen,
    there is no certainty to that. In fact, these dollars go places
    that you and I may have never heard of.
        I think what Great Land Trust has done to make it be very
    localized is the model that we would like to pursue and
    recognize. You can see that benefit going there. But I am
    afraid that the system that we currently have does not allow
    for an assurance that we are seeking.
        Senator Sullivan?
        Senator Sullivan. Mr. Nukapigak, I thought your testimony
    was very powerful in a couple of ways. You talked about some
    broader themes, kind of the clash of ANCSA and the Clean Water
    Act, which I think is a really important issue.
        But could you unpack that a little bit more? Essentially
    what you are saying is under the Alaska Native Claims
    Settlement Act, regional and village corporations receive the
    allotments of land they own in fee simple, to develop with
    their shareholders. Yet when you are trying to develop these
    for your shareholders, you have to actually give up more land.
    You literally have to give land back, and it is not one for
    one.
        What I am interested in is when you talked about the EPA
    and you said it wanted a 300-acre easement to make it 50 acres.
    Then they came back and said, ah, maybe we'll do a little bit
    less here, a little bit more. Were they giving you any kind of
    sense of where they were coming up with these numbers? You
    mentioned six to one initially then it came down to two to one.
    What was the basis of these negotiations?
        That is one question. But the broader question is do you
    think that what is going on here undermines the spirit and
    again, the letter of the law, what the Federal Government is
    trying to do in regard to ANCSA? The more you develop your
    land, the more you are going to lose your land. I do not think
    that was part of the deal.
        Mr. Nukapigak. Well, Senator Sullivan, there are times that
    my corporation had to contend with some of those issues. You
    see the Tenement Act allowed us to select land to then
    determine what then the population of the village. And so when
    we finally, when Alpine was finally discovered some years ago,
    there was two ways that we had to set aside or come up with
    $1.4 million, which is hard earned money.
        Senator Sullivan. One million four hundred thousand
    dollars?
        Mr. Nukapigak. One million four hundred thousand dollars of
    our hard earned money or set aside a certain piece of land that
    the EPA wanted us to. You know, that's kind of contradictive of
    what the purpose of ANSCA was for.
        And you know, what can we do? I don't know, here we're
    trying to make a pact for the betterment for our people to make
    our life easier by having access to the Alpine for jobs. And
    so, it's only eight miles away and some of our locals and
    without that, we've got no roads.
        I don't think the men of our villages would be willing to
    spend three weeks at a time at eight miles away unless they'd
    be able to come home every night and spend the night with the
    family.
        You know, these are the environments that we strive to make
    better.
        Senator Sullivan. When they came to you initially with this
    six to one proposal, did they give you a sense of why they
    chose six to one?
        Mr. Nukapigak. Well, they, I don't know how that number
    came up but they gave to us some sort of a calculation that, I
    don't like, maybe, of course, somebody might be able to answer
    that----
        But how they calculated that is something that I don't
    know, probably I think it would be, might be easier, might even
    be able to answer that might be a person in this room.
        Senator Sullivan. Okay, well we can, I mean, maybe we can
    take that for the record and if you guys could get back to us
    on it on answering that question, that would be very helpful.
        Ms. Clark, I was going to ask you, you kind of watched that
    whole episode. I would imagine that that also sends a bit of a
    concern. It is kind of random, right, six-to-one and then down
    to two-to-one and then all over the map?
        You guys, as you mentioned, are looking at a whole number
    of important issues with regard to the potential developments
    in your community. I wanted to ask you a question. The
    mitigation rule that we are talking about here encourages
    permittees to first avoid and then minimize impacts on wetlands
    but when that cannot be done you have to mitigate. Is it
    geographically possible to avoid wetlands in your region?
        Ms. Clark. No, no. What we're doing right now because the
    1994 delineation, you know, if you go to the outlet you go to
    probably the Corps of Engineers website. You'll see that the
    wetlands are delineated there in our area. They're not
    delineated. And so we're having to have a consultant come in
    and delineate what is wetlands and what isn't wetlands because
    if we don't do that, then they'll all have to be considered
    wetlands, which would either cost us more dollar wise or more
    land wise. So we're trying to save some money and some land by
    getting our land delineated and determining what is wetlands
    and what isn't wetlands near our community.
        Senator Sullivan. But right now it is looking like pretty
    much?
        Ms. Clark. Wetlands.
        Senator Sullivan. Everything.
        Ms. Clark. Right.
        Senator Sullivan. So you are, again, stuck with a conundrum
    that as you want to develop, you lose land.
        Ms. Clark. Yes, that's correct.
        Senator Sullivan. Again, I am not sure of the Federal law,
    whether it is the Clean Water Act or the ANCSA, that should
    create such a black and white choice. It seems to me that that
    is completely at odds with both the goals of both of those
    statutes.
        So I made a reference to Mayor Brower's comments about
    essentially the tradeoffs. They expanded their land bill, had
    to pay over $1 million. Are your communities struggling with
    similar payoffs? You are having to contemplate right now
    whether it's payment of $1.4 million or the loss of lands that,
    in essence, is making you make a very difficult decision how
    you are going to do this because you really have no choice
    whether it is the wetlands or whether it is payment that could
    cost millions that takes away from all your potential effective
    use of that kind of money.
        Ms. Clark. We're struggling with that right now.
        Senator Sullivan. What do you think would be an answer to
    address that?
        Mr. Nukapigak. What was the question again, sir?
        Senator Sullivan. With regard to the tradeoff, not only in
    terms of money for the ability to develop but also lands like
    we were talking about, that if you are developing your land,
    you are losing your land because all your land is wetlands. The
    exemption you talked about in terms of your testimony.
        Mr. Nukapigak. Well, um, I don't know what the purpose of
    this ANCSA was supposed to be was to keep land for the ancient
    land that we have taken from the path.
        But mitigation may not mean mitigation. Things like that
    is, here, you wanted to hold up one. Your own land but, you
    know, when your hands are tied by EPA or somebody, what can you
    do it to come up with money more or lose that land that is
    highly valued such as ancient land? But how you value, in terms
    of money, monetarily or how you compensate for it is another
    manner.
        Senator Sullivan. Yes.
        Mr. Brand, I wanted to ask you a question. First, I commend
    you for your company's willingness to actually challenge this
    because that takes a lot of guts, a lot of money, a lot of
    time, and a lot of uncertainty. You won in the 9th Circuit, of
    all places, which is kind of a miracle. [Laughter.]
        Well done, from my perspective.
        You are an example of a small business, not one of the
    large companies that has had to not only litigate but seen the
    different increases in these regulatory and permitting
    requirements. Can you give us a sense of how that has grown?
    Your testimony touched on it. You said several years ago, hey,
    you only had to do one thing. Now it looks like it is layer
    upon layer upon layer. Can you give us a little bit of sense of
    that in addition to the kind of litigation that you undertook?
        Mr. Brand. I'll try.
        As I mentioned in my testimony, it used to be 25 years ago
    or so all you had to do was submit a written plan along with
    purpose and need, and you were granted the permit. And then the
    littoral zone came in. Anybody that doesn't know what littoral
    zone is, it's a shallow area if you're digging relative to the
    water. They instituted a plan where we needed to create a
    littoral zone for fish and bird habitat, I believe, that for
    the first 20 feet from the shoreline you couldn't get much more
    than like three feet deep.
        So that created a bit of a restriction where we were only
    able to mine a portion of our property rather than the entire
    property because we had to set aside a littoral zone. And if
    you take it, at best, at a full 150 feet, it's $700,000 worth
    of gravel that you have to leave in the ground to comply with
    this new restriction.
        Then, we've all been talking about the compensatory
    mitigation as well as the time factor. It's a huge amount of
    time to submit and go through the process to get your wetlands
    permit, if you can. And right now in Fairbanks because of The
    Conservation Fund debacle, we couldn't even do that.
        Senator Sullivan. And you mentioned in your testimony that
    you just found out that other land that you own, private land,
    was recently found to be Clean Water jurisdictional by the
    Corps of Engineers. How did that happen and then what are the
    implications for any plans you had for that private land that
    you own?
        Mr. Brand. That's a very good question. I don't know how
    that happened.
        But a little bit of history on our situation. The Great
    Northwest property was deemed to be the closest water was the
    Tanana River. And we were successful on our argument because
    they cannot claim wetlands that are adjacent to adjacent
    wetlands, and in our situation that's I think from the--
    decision that you can't, you know, keep on going forever out
    through the water calm. You have to stop at wherever there's a
    barrier.
        And our property was separated by two barriers from the
    Tanana River. The first was the flood control dike built by the
    Corps of Engineers many, many years ago. And then the second
    barrier was the railroad embankment, for the railroad spur that
    runs out to the Fairbanks International Airport. So those two
    embankments separated our property from the Tanana River, and
    that was the whole argument in court. Therefore our wetlands
    were adjacent, and they couldn't be considered jurisdictional
    wetlands. They are or were wetlands, but they're no longer
    jurisdictional wetlands until this new rulemaking becomes
    effective.
        And the properties that I and others own personally are
    further removed from the Tanana River upstream, if you will,
    from The Great Northwest project. So with The Great Northwest
    property non-jurisdictional wetlands because of these barriers,
    anything further removed from it should also be non-
    jurisdictional wetlands. But the Government has ignored that
    and continues to assert jurisdiction over the wetlands.
        The Chairman. Why don't you go ahead?
        Senator Sullivan. So, Ms. Crockett, I had a question and I
    know that you are very familiar with the state of the amount of
    wetlands in Alaska which is about 40 percent of the state that
    I think comes to about 60 percent or over 60 percent of all the
    wetlands in the United States. These statistics are why this is
    such an important issue for us.
        But if you add state lands, you remove Alaska Native lands,
    and we are only left with, 60 percent of Alaska, Federal land.
    If you look at that whole menu of lands, we are only left with
    about one percent of Alaska's land base that is in private
    hands. So when we look at mitigation requirements, where is
    industry supposed to find private land mitigation?
        Isn't that part of the huge conundrum that a one-size-does-
    not-fit-all for Alaska when it comes to the Clean Water Act as
    we are literally so different from every other state and
    country?
        Ms. Crockett. Senator Sullivan, yes.
        I'd answer that question I have no idea. It's just
    something that we're grappling with every single day. And I
    think Deputy Commissioner Fogels touched on this a bit earlier,
    but we even struggle with that purpose whatsoever.
        And it's not as though the people I represent and companies
    I represent are being forced to just write a check to be able
    to do something. We are being forced to write a check to go
    close up land that could, I mean, we are literally denying our
    future generations or maybe not that far away, the potential to
    develop something in the future. We could, hypothetically, be
    blocking up the next Red Dog or access to the next Red Dog for
    no significant purpose.
        And, you know, I don't know how we got that way, down that
    road, instead of doing things that are actually good for the
    environment, that are actually, you know, why isn't like you
    said with the Exxon example, why isn't the company, if you do
    want to talk about the disturbance that's going into wetlands
    and access a dollar amount then do something good with it.
    Don't just lock up land. Do something good, you know,
    enhancement is something that we talk about all the time and
    really do think outside the box. And I don't think this is a
    naive statement.
        I know there are liability issues and there are things that
    agencies disagree with, but we should find a way to get around
    that. And we should find a way to say, okay, company x, you'd
    like to develop this project. We would like to figure out a
    fair reasonable amount to assess you. We want you to bring a
    project to us, propose to us something good you can do to
    enhance the environment or enhance someplace that's in the
    State of Alaska and do something for the greater good verses
    denying us future opportunities.
        Senator Sullivan. Right.
        Thank you, Madam Chair. I think we have gotten a lot of
    good ideas from this panel.
        The Chairman. There really are, and we could stick to this
    panel all afternoon. Believe me, I have got a lot more
    questions, but I do think in the interest of getting to the
    next panel we will wrap up.
        I want to ask, though, Mr. Fogels, has the state taken a
    position on the proposal that has been introduced, at least in
    the House by Congressman Young, for the preservation easements
    for tribes and Native Corporations?
        Mr. Fogels. Senator Murkowski, I do not know. I'm not
    familiar enough with that legislation. I haven't been involved
    in it, so I don't think I can answer that question right now at
    this time. I can look into it to see if I can get you a
    response.
        The Chairman. I would appreciate it because it is something
    that as we listen to some of the on-the-ground examples of what
    we are dealing with, whether it is Wainwright or Nuiqsut or out
    in Craig. These are very real, very immediate issues. It is
    something that I would like to look at, perhaps dealing with
    legislation in the Senate following Congressman Young on this.
    I would appreciate knowing where the state is on it as well.
        The exemption allowing our even exemption for Clean Water
    Act on ANC lands is perhaps another matter to, again, consider.
    But I think that these are very direct and immediate issues
    that we can look to as we are trying to figure out a path
    forward here.
        The Chairman. So again, I thank you all for what you have
    provided to us today by way of not only your input here but
    that there is follow-up to your comments that you have made
    today that you would like to have presented as part of the
    record.
        Again, we will keep this record open for another couple
    weeks and would welcome them. So thank you. Thank you for being
    here and thank you for making the trip to be here. We
    appreciate it.
        Next we will go to the second panel. We have a diverse
    group of Administration panelists before us this afternoon. We
    appreciate them being here and providing their comments and
    their input to us.
        The panel will be led off by Mr. Ted Murphy. Mr. Murphy is
    the Alaska Associate State Director of BLM. He is here to give
    us a perspective on BLM's regulatory process, internal
    practices such as how it is determined whether guidance and
    policy should receive public comment, and then talk a little
    bit about the evolution of the regulatory framework. Mr.
    Murphy, we welcome you.
        Next to Mr. Murphy is David Hobbie, the Chief of Alaska's
    District Regulatory Division of the Army Corps of Engineers. He
    is here to inform us about what tools are available to the
    Corps, and how he intends to employ those tools going forward
    in his new role as the Chief here.
        We also have Dr. Mary Anne Thiesing, the Regional Wetland
    Ecologist and Wetlands Coordinator in the Office of Ecosystems,
    Tribal and Public Affairs for EPA. She is here to speak to the
    inter-agency cooperation and coordination of EPA and the Corps
    as well as engagement of EPA with individual project
    stakeholders.
        Again, thank you for being here, and thank you for the
    courtesy that you have given in allowing the first panel to
    proceed and offer specific cases of the concerns. My hope is
    that that will better frame your opening comments or certainly
    your responses to questions that Senator Sullivan and I will
    have.
        So we thank you for being here.
        Mr. Murphy, if you would like to lead off with about five
    minutes or so? Again, your full statements will be included as
    part of the official hearing record.
        Thank you.

     STATEMENT OF TED MURPHY, ASSOCIATE STATE DIRECTOR, BUREAU OF
            LAND MANAGEMENT, U.S. DEPARTMENT OF THE INTERIOR

        Mr. Murphy. Thank you.
        Chairman Murkowski and Chairman Sullivan, thank you for the
    opportunity to discuss the Bureau of Land Management's efforts
    to facilitate responsible economic development of public lands
    while protecting the natural and cultural resources that
    Americans cherish. I'm Ted Murphy, the BLM Associate State
    Director for Alaska, and I look forward to discussing these
    issues with--from the BLM experience here in Alaska.
        Mitigation is central to the BLM's successfully carrying
    out our multiple use and sustained yield mission. It is
    something we have done for decades and its legal basis comes
    straight from our governmental authorities under FLPMA.
        When you think about mitigation at the BLM you think about
    what is a three step process: avoidance, minimization and
    compensation. Through this process accounts are first divided
    through careful siting that will minimize by using innovative
    design features and best management practices. And then
    sometimes they are compensated for their corresponding offsets
    elsewhere.
        Mitigation programs have been used to solve some of our
    most significant resource challenges and partnerships with
    states, tribes and other Federal entities have been central to
    their success.
        For example, in the early 2000's the BLM faced a major
    challenge with permitting large scale oil and gas projects in
    Wyoming. In response to concerns about impacts to state managed
    game species, the BLM, the State of Wyoming and the oil and gas
    companies came together to develop innovative solutions that
    worked for the companies and helped mitigate impacts to those
    state managed species. This approach was championed by the
    previous Administration as a breakthrough for balancing the
    development and conservation and it has served as a model for
    our agency.
        While recently in Nevada BLM issued mitigation to speed the
    approval of a solar project through Western Solar Plan. The
    plan avoided sensitive areas by establishing focused areas for
    development. They identified key design features and called for
    regional mitigation strategies to direct compensatory
    investments. By identifying mitigation responsibilities up
    front BLM was able to provide certainty to private developers
    and increase the efficiency of its environmental review.
    Innovative mitigation approaches are helping the BLM conserve
    greater safeguards to habitat and support system while economic
    development on portions of public land in ten states across the
    West.
        A recent landmark agreement among the U.S. Fish and
    Wildlife Service, the BLM and Barrick Gold of North America
    established a conservation bank that gives fair certainty for
    the company's planned future mine expansion on public lands.
    Other states are leading efforts to develop similar systems and
    the BLM is working hard to support these efforts.
        Chairman Murkowski and Chairman Sullivan, I know you both
    are familiar with the Greater Mooses Tooth Project in Alaska.
    As you know this project is the first oil and gas development
    project on Federal lands in the National Petroleum Reserve in
    Alaska. As part of our public review of the project the BLM
    identified significant impact to the subsistence resource
    provided by--of ANCSA. In the final project approval the BLM
    included a suite of best management practices approved by the
    company to avoid or minimize project impacts as well as an $8
    million fund to directly address the subsistence impacts. As
    part of the planning for that project BLM is also moving
    forward with regional mitigation strategies for Mooses Tooth
    with--development units that will provide certainty to
    developers coming into these areas in the future. We believe
    this sort of up-front planning is good for subsistence
    resources and good for developers.
        With all of these promising efforts underway on public
    lands, the BLM is recognizing the need to set common standards
    and consistent expectations for mitigation across our lands and
    program areas. Since 2005 BLM has developed a series of
    increasingly detailed policies to assist BLM staff in their
    mitigation work. The latest of these was released in 2013. We
    released this policy on an interim basis which has allowed us
    to gather important lessons as we continue to execute these
    programs on the ground with states and companies. We anticipate
    issuing a final policy in the coming months.
        Chairman Murkowski and Chairman Sullivan, thank you again
    for the opportunity to present this testimony, and I would be
    glad to answer questions you may have.
        [The prepared statement of Mr. Murphy follows:]

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        The Chairman. Thank you, Mr. Murphy.
        Mr. Hobbie, welcome to the Committees.

     STATEMENT OF DAVID HOBBIE, CHIEF, REGULATORY DIVISION, ALASKA
                 DISTRICT, U.S. ARMY CORPS OF ENGINEERS

        Mr. Hobbie. Thank you. Thank you.
        Good afternoon, Chairman Murkowski, Chairman Sullivan.
    Thank you for the opportunity to testify today. My name is
    David Hobbie. I am the Chief of the Regulatory Division of
    Alaska's District U.S. Army Corps of Engineers.
        I've served at the Corps for approximately 25 years, have
    worked around the globe, predominantly in the Regulatory
    Program, and I am very happy to be back in Alaska. In my career
    with the Corps and its Regulatory Program, I have witnessed
    many changes over the past quarter century, while gaining an
    understanding and appreciation for the complexity of this
    mission.
        There are some special challenges that come with applying
    the Regulatory Program in a state as varied and as unique as
    Alaska, including identifying and implementing compensatory
    mitigation requirements. Natural resources in Alaska are
    abundant and include a huge percentage of wetlands. Alaska is
    also an extremely large landmass with a low population base and
    a large percentage of the land are publicly held.
        I have been back in Alaska for approximately seven months
    as the Chief of the Regulatory Division. One of the first
    issues I was asked about following my arrival was compensatory
    mitigation. Compensatory mitigation is a key component of the
    Regulatory Program, and reviewing these practices in the state
    has been one of my top priorities.
        The fundamental objective of compensatory mitigation is to
    offset environmental losses resulting from unavoidable impacts
    to waters of the United States caused by activities authorized
    by Clean Water Act permits. Compensatory mitigation enters the
    analysis only after the proposed project has incorporated all
    appropriate and in implementing compensatory mitigation
    requirements. The Alaska Regulatory Program has sought
    opportunities to be more flexible when possible while at the
    same time protecting aquatic resources to the maximum extent
    practicable. One example involves the Alaska Department of
    Transportation replacing culverts fully to increase fish
    passage and assist with fish resources.
        Additionally, we are looking at ways to improve
    communication and collaboration, not only with agency partners
    at the state and Federal level, but also with the public in
    order to better understand their issues. These efforts have
    involved meetings with leadership from the Department of
    Natural Resources, the U.S. Environmental Protection Agency,
    Bureau of Land Management, National Marine Fisheries, Alaska
    Oil and Gas, and CIRI which is an Alaskan Native Corporation,
    just to mention a few. During these meetings we discuss
    mitigation and the opportunities that exist for the Federal
    family and our non-Federal loan partners to work more closely
    together.
        Compensatory mitigation is a complex issue. Our goal, which
    is a national goal within Corps, is to ensure no net loss of
    wetlands functions and values while remaining as flexible as
    possible to allow reasonable and sustainable development. It is
    also our goal to be transparent, as transparent as possible, in
    our decisionmaking process.
        Every project is unique. No two projects are exactly
    identical. Although the structures may look the same, the areas
    and types of impacts associated with individual projects are
    nearly always different. Therefore, the quantity and type of
    compensatory mitigation required will vary depending on the
    site specific nature of each project.
        Before I close, I would like to offer a little general
    information about the Regulatory Program in Alaska. So far in
    Fiscal Year 2015, which starts on October 1st of 2014, the
    Alaska District has authorized 431 projects under the
    Nationwide/Regional General Permit Program. General permits
    streamline the process of meeting the requirements of the Clean
    Water Act for projects with no more than minimal environmental
    impacts.
        Of the 431 projects authorized, 17 required compensatory
    mitigation, approximately four percent. We have completed 75
    Standard Permits/Letters of Permission for larger, more complex
    projects where the impacts were determined to be more than
    minimal, of which 12 required compensatory mitigation,
    approximately 16 percent. I believe the number reflects the
    Corps' ability to work closely with the applicant and partner
    agencies to avoid and minimize impacts so that compensatory
    mitigation is not always a requirement for the authorization of
    a project. At the same time, the Corps remains flexible, so
    that when compensatory mitigation is required, we are able to
    work with the applicant and other agencies to achieve a
    successful outcome.
        Thank you again for the opportunity to speak here today. I
    look forward to questions.
        [The prepared statement of Mr. Hobbie follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Mr. Hobbie. Welcome to Alaska, or
    welcome back.
        Mr. Hobbie. Thank you.
        The Chairman. Dr. Thiesing.

     STATEMENT OF DR. MARY ANNE THIESING, WETLANDS COORDINATOR FOR
     THE OFFICE OF ECOSYSTEMS, TRIBAL AND PUBLIC AFFAIRS IN REGION
                10, U.S. ENVIRONMENTAL PROTECTION AGENCY

        Dr. Thiesing. Good afternoon, Chairman Murkowski and
    Chairman Sullivan. I'm Mary Anne Thiesing, Wetland Coordinator
    for the Office of Ecosystems, Tribal and Public Affairs in
    Region Ten, EPA. I'm pleased to be here to discuss the Clean
    Water Act, Section 404 Mitigation program, compensatory
    mitigation banking and EPA's coordination with the Corps.
        As you know the Clean Water Act was promulgated in 1972 to
    restore and maintain the physical, chemical and biological
    integrity of the waters of the U.S. The Act established the
    Section 404 permit program which authorizes the discharges of
    dredged and fill material to waters in the U.S. discharge that
    can degrade or even destroy those waters.
        The Corps is given responsibility under the Act to issue
    the Section 404 permits. In Alaska permits often are associated
    with activities such as road construction or energy
    development.
        To offset the impacts from permitted activities, the 404
    program is built on the concept that when impacts to waters,
    including their loss, are unavoidable, they shall be
    compensated by establishing, restoring or preserving waters at
    the impact site or at another location, generally within the
    same watershed as the impacts. Consideration of mitigation
    occurs throughout the permit application process and includes
    avoidance and minimization. However, there may still be
    unavoidable impacts to waters. Those require compensatory
    mitigation but it is only considered after a proposed project
    has first looked to trying to avoid and minimize adverse
    impacts.
        Individual permits that are associated with activities with
    more than minimal adverse effects to the aquatic environment
    may include special conditions that require compensatory
    mitigation. And that's to offset degradation or loss of waters
    of the U.S. when avoidance or minimization is not practicable.
        There are basically three mechanisms that will allow
    permittees to offset the aquatic impacts resulting from their
    projects. They can purchase credits from a mitigation bank,
    they can purchase credits from an in-lieu fee program, or they
    can conduct a compensatory mitigation project on their own.
        A mitigation bank is a site that has restored, established,
    enhanced and/or preserved aquatic resources and the Corps, in
    consultation with an Interagency Review Team, approves for the
    use of compensating the losses from future permitted
    activities. The bank approval process establishes the number of
    credits and the bank sponsor is responsible for the success.
        With in-lieu fee mitigation, a permittee provides funds to
    an in-lieu fee program. Those are sponsored by either a
    government or a nonprofit entity or a tribe that conducts
    compensatory mitigation projects consistent, again with an
    agreement, with the Corps in consultation with an interagency
    review team. Typically the in-lieu fee mitigation projects are
    started only after they pool the funds from multiple
    permittees. And the in-lieu fee program sponsor is the one who
    is responsible for the success of the sites.
        The third option, permittee responsible, is basically the
    responsibility of the permittee to conduct and ensure the
    success of mitigation. It's usually, it can occur either at the
    project site or in a different one, preferable within the same
    watershed.
        EPA works closely with the Corps and the Interagency Review
    Team that oversees the review, approval and management of
    mitigation banks and in-lieu fee programs. For proposed
    permittee responsible mitigation, the EPA provides comments to
    the Corps in the review process.
        Congress directed in 2004 that the Corps and EPA publish
    regulations, and they did so in 2008 to revise and clarify
    compensatory mitigation requirements. It ensures a level
    playing field among providers of compensation because it holds
    all the providers to the same standard regardless of whether
    it's a bank, an in-lieu fee program or by the permit applicant.
    It also increased consistency and predictability in
    compensatory mitigation requirements through a number of timing
    of the contents of mitigation plans and also the timelines for
    review. It did not change when compensation is required but
    rather focuses on how and where mitigation is planned,
    implemented and managed to improve its ecological success and
    sustainability.
        Although careful attention is given to compensatory
    mitigation requirements when they are necessary, most of the
    404 authorizations don't require mitigation. Permitting data
    from 2010 through 2014 shows the Corps nationally issued
    approximately 56,400 written authorizations per year under its
    permit authorities, about ten percent required compensatory
    mitigation. This reflects a number of factors, the Corps'
    ability to successfully work with the applicants and also with
    the agencies to try and avoid or minimize any impacts. Most of
    those authorizations occurred under the general permit process
    and they have no more than the minimal adverse impacts.
        Compensatory mitigation is a basic component of the Section
    404 permit program. It is consistent with the act's goals of
    trying to restore and maintain the chemical, physical and
    biological integrity of the nation's waters. We work together
    to ensure that this provision is applied consistently,
    predictably and effectively so that the applicants can proceed
    with projects to achieve their needs while at the same time
    protecting public health and water quality.
        Thank you very much for the opportunity to be here. I will
    be happy to answer any questions you may have.
        [The prepared statement of Dr. Thiesing follows:]

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. Thank you, Doctor, and I apologize that I
    mispronounced your last name.
        You wrapped up your statement by saying that the goal here
    is a level of consistency, predictability and effectiveness. I
    think what you heard with the panel just before you is that
    this process, when it comes to compensatory mitigation, is
    anything but consistent, predictable and in many cases,
    effective.
        I want to ask you a question. You mentioned that nationally
    that with the 404C permits issued, only about ten percent are
    required to be mitigated. Is that correct?
        Dr. Thiesing. Yes, about ten percent of them are, correct.
        The Chairman. How does that compare then, here in Alaska?
    Those are national figures. We recognize that things are just
    entirely different down there. When you are up in the North
    Slope and 90 percent of the area around you is determined to be
    wetlands, what percentage here in Alaska of those 404Cs require
    a compensatory mitigation?
        Dr. Thiesing. Not 404Cs, 404 permits, Ma'am? I believe Mr.
    Hobbie actually answered that in his testimony.
        Mr. Hobbie. Yes, Ma'am.
        If you look at our numbers as a total I wrote my pertinent
    individual permit information and information GPs because the
    small ones would be less. If you combined our new totals we
    issued 431 nationwide GPs and 71 IPs. If you combine those two
    totals about six percent of the time we require mitigation in
    the State of Alaska.
        The Chairman. Does that hold true then for the North Slope?
        Mr. Hobbie. I do not break the numbers down that way and
    I'd have to get back to you. I can't tell you things I don't
    know about the North Slope.
        The Chairman. Well it is something that, I think, would be
    interesting to drill down on because when you have an area that
    is effectively almost all wetlands and the extent of the
    wetlands I would be curious to know exactly what we are talking
    about here.
        Mr. Hobbie. What I would say is most likely the percentage
    is almost always going to be greater. The reason is, percentage
    wise, because of course we, the North Slope is not the area of
    our most predominate permitting. It's typically the Anchorage
    Borough area and Juneau, Wasilla so many of the permits also
    the impacts in the North Slope tend to be much greater.
        A lot of oil and gas, it probably has too many, hundreds of
    acres in size where a lot of the projects within the
    municipality of Anchorage, Wasilla, Juneau are sometimes tens
    of acres, half acres or an acre. So the impacts are much larger
    on the North Slope, typically speaking, therefore, it would
    drive more compensatory mitigation while other areas may not.
        The Chairman. I look forward to that break down.
        Mr. Hobbie. Will do.
        The Chairman. I want to bring up with you an issue that was
    just presented to me this morning. I had an opportunity to meet
    with the Mayor of the Mat-Su Borough, the Palmer Mayor and the
    Mayor here in Wasilla. They alerted me to what they are
    entitling here the ``Wetland Mitigation Bank Concern.''
        They apparently received some information that was
    disclosed just as a result of a FOIA request regarding some
    changes in policies that relate to compensatory mitigation. The
    fact that the guidance letter was developed and implemented
    without public input which is something that I think we are
    going to have a little bit longer conversation about here and
    the concern that we have that so much of what we're seeing
    coming out is not with full public comment.
        The concern they have raised, and I will read from their
    document here they provided, ``The Corps new policy requires
    ownership of wetland banks, requires ownership of the surface,
    subsurface rights or an agreement with subsurface right owners
    to not impact the surface even in those cases where the
    possibility of mineral exploration or extraction is remote.
    Municipal entitlements for boroughs and municipalities from the
    state only convey the surface estate to municipalities.''
        This is an issue here in the Mat-Su. It is also an issue
    out in the Ketchikan Gateway Borough. I was asked to bring this
    to your attention.
        I am going to not only provide this to you, Mr. Hobbie, but
    it will become part of the record.
        [The information referred to follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The Chairman. The Borough is essentially laying out that
    they could potentially lose millions of dollars in wetland
    mitigation credit. This is something that was new to me this
    morning, and I am still learning more about it. But I would
    like you to be able to respond to not only the people here in
    the Mat-Su Borough but Ketchikan Borough because I understand
    that they have a similar concern, an issue, as it relates to
    the mitigation bank.
        Mr. Hobbie. Okay, Senator.
        I'm not familiar with that particular letter; however, we
    are struggling right now. And when I say we, Alaska District,
    and it's nationwide typically when a mitigation bank is
    established the land is reserved into perpetuity or any other
    sort of mitigation. Typically that requires some surface
    rights.
        The rationale behind that is locking up the surface may be
    fine, but that doesn't exclude people coming in individually
    and mining the area because in most states, the subsurface
    rights are not bound by any restrictions. So therefore the
    easement really doesn't mean much.
        The Chairman. Understood, but if you do not have the
    subsurface rights?
        Mr. Hobbie. Totally understand.
        The Chairman. Yes.
        Mr. Hobbie. What we're trying to do is make sure the policy
    has some kind of consistency across the nation. Alaska is sure
    where it's not the only state that has some sort of issues, so
    we want to make sure we're trying to be as consistent as
    possible across the nation.
        I'm not saying that that means that will never happen;
    however, it's something we're investigating to try to ensure
    that we are applying the rules as fairly as we can.
        The Chairman. I am going to turn to Senator Sullivan, but
    one thing that I think is important to keep in mind here in
    this state is we are unique. We have some laws here, Federal
    laws, that apply to our lands that do not apply in other
    states. ANILCA is applicable only in Alaska, and I want to talk
    about ANILCA when we do our next round.
        Senator Sullivan?
        Senator Sullivan. Thank you, Madam Chair.
        I want to thank the witnesses here. I really appreciate
    some of you flying in from out of town.
        But also what Ms. Crockett mentioned in her earlier
    testimony is it has been my experience, as Attorney General in
    Alaska, and as the DNR Commissioner, is closer to the Federal
    officials are to Alaska, when they live here, when they work
    here, they see our issues. I think the working relationship is
    oftentimes a lot stronger because you get it.
        The problem is when Washington, DC dictates certain
    policies with, kind of, a one-size-fits-all mentality, and then
    they try to apply it here. So I just appreciate you being here.
    I know that you guys are working hard on these issues.
        But as you did see and as Senator Murkowski mentioned, we
    also appreciate you letting the Alaskan panel go first, because
    I think it was good for all of us to see what the issues are.
    Clearly there is a lot of frustration. That is a sampling of
    what is going on in the state, but that was not some kind of
    handpicked group. That is very representative of the sense in
    Alaska whether you are a small, private landowner or a big
    company in terms of what is going on with mitigation.
        A lot of it is the sense of, you talked about transparency
    and predictability, it almost seems like it is the opposite
    where it is random. So I want to get into some of those kind of
    questions.
        I also, if you can and if you cannot do it here, one of the
    things I mentioned in my opening statement, authority,
    authority, authority, authority. If you are a Federal agency
    and you are taking action or issuing a regulation, do you agree
    that you have to have a basis either in Federal statute or the
    U.S. Constitution? Do you agree with that? Do you?
        The answer is yes, if you are wondering. [Laughter.]
        It is not even a close question.
        Just for the record, it should be yes. If you take an
    action as a Federal agency, your action or your reg has to be
    based in statute or the U.S. Constitution. Just for the record,
    do you agree with that?
        Mr. Hobbie. Yes, sir.
        Senator Sullivan. Okay.
        Mr. Murphy. Yes.
        Dr. Thiesing. Of course, of course it does.
        Senator Sullivan. Okay.
        Dr. Thiesing. We take the same oath that you do, sir.
        Senator Sullivan. Oh, I know. I am just checking because,
    as I mentioned, now this is a really important issue because
    there are a lot of things where, on the actions you are taking,
    I know you have some discretion and the Corps allow some
    discretion.
        But as I mentioned in my opening statement, in the last two
    terms of the U.S. Supreme Court, they have found that the EPA
    has not done that. And one of those cases actually started
    here, the Utility Air Regulator Case verses EPA. It wound its
    way to the U.S. Supreme Court. Two years in a row the U.S.
    Supreme Court has stated that you have not abided by the
    statute or the Constitution. So your record on this is not
    terribly good. I think it is an area that, in terms of
    Congressional oversight, that is important.
        The Deputy Commissioner, Mr. Fogels, raised a really good
    issue. As you guys know, when you look at the structure of the
    Clean Water Act, just like the Clean Air Act, it is supposed to
    be a co-regulator relationship between the states and the feds.
    It is in the, actually, preamble of the law.
        So why is it that in terms of mitigation which has such a
    big impact here which we have so many concerns about, that you
    guys do not invite the State of Alaska in with regard to your
    mitigation decisions? We asked Commissioner Fogels whether you
    do that. His answer was no. So why don't you do that?
        Mr. Hobbie. Well, sir, I would say two things.
        One, through our permitting process, you know, we do invite
    responses, information, from all agencies, State and Federal,
    you know. The state does have an opportunity. When it comes to
    the Interagency Review Team for mitigation, the Department of
    the Environmental Conservation which is a state agency, does
    sit on that Interagency Review Team with regards to mitigation
    banks and such.
        Senator Sullivan. So you think that Deputy Commissioner
    Fogels' response was incorrect that the state does actually
    have a co-regulator role with regard to the mitigation
    decisions?
        Mr. Hobbie. Senator, what I'm stating is the DEC does sit
    on the Interagency Review Team, and I'm stating that it's a
    practice they do come into our projects, a good majority of
    them with regards to mitigation.
        Senator Sullivan. Okay.
        Dr. Thiesing. Senator, if I might add to that?
        I believe that the commissioners of all the state agencies
    were signators to the State Interagency Review Team document.
    They're not?
        Senator Sullivan. Okay. But I think, for example, I was
    very involved with regard to the Corps and the permitting on
    Point Thompson, right? At the end of that permitting process,
    wham, there was a huge dollar figure that you put with regard
    to the permittees in terms of compensation that we had no idea,
    right?
        So I know from personal experience that we are not that
    involved because we were the lead agency doing that project but
    we did not have a clue.
        I think if you say you are doing it, you need to do a much,
    much better job of doing it because you have a Deputy
    Commissioner who just talked about it and also my experience.
    We are getting blindsided by this. I think it is important to
    go back and look at the statute. We are the co-regulator. We
    are the co-sovereign here. I think that is a really important
    issue, and it is a part of the frustration.
        Let me ask another question that came up. Do you see this
    tension that became very apparent in the previous panel between
    ANCSA and what is required in terms of the Clean Water Act
    mitigation? And if so, how do you address it? Again, I will
    just summarize it.
        If our Alaska Native Corporations, regional corporations,
    village corporations want to develop the land that they were
    given by the Federal Government and the State to develop to
    take care of their shareholders, their people they are
    responsible for, to do that they have to give up land. They
    actually have to give up land in a way that is more than one
    for one. The EPA wanted six for one which I have a question for
    on that too. But do you see the tension there? How do we solve
    that? What is your recommendation to solve that? To develop
    land you have got to lose land.
        Mr. Hobbie. Senator, there are a couple ways to respond to
    that.
        First of all with regards to compensatory mitigation,
    again, I do believe there's a low percentage of times where we
    do require it. When we do though----
        Senator Sullivan. Not on the North Slope, though. We will
    be very curious about your numbers on the North Slope. I think
    we see it on almost everything, roads, developments and that is
    a lot, in many ways the heart and soul of our economy. So I
    would like to see those numbers.
        Mr. Hobbie. We'll provide those, sir, to the Committees.
        [The information referred to was not provided as of the
    date of printing.]

        Mr. Hobbie. The other thing is the mitigation banks or in-
    lieu fee programs have become a way to allow applicants an
    easier access to mitigation. There's nothing that precludes
    them from not tying up land.
        Mr. Fogels talked about legacy wells and stuff. When I met
    with the different agencies those were some of the things we
    were trying to do, trying to be flexible.
        Are there other areas in the state that can actually be
    cleaned up or rehabbed versus just setting aside land?
        Senator Sullivan. What if you are a corporation like
    Kuukpik that said they do not have $1.4 million for just an
    eight mile road? One million four hundred thousand dollars.
    They did not have that money. You heard it, their only option
    was to give up their land. You heard the testimony. They are in
    a conundrum. Develop the land. Give up the land. It seems to me
    it is squarely undermining the intent of ANCSA. How do you
    respond to that?
        Mr. Hobbie. Again, sir, they may have chosen that route,
    but again, I'm not for sure----
        Senator Sullivan. But I do not think they are choosing.
        Mr. Hobbie. Um, well----
        Senator Sullivan. If you do not have the money, what is the
    opposite?
        Mr. Hobbie. If the determination was the impacts were more
    than minimal, mitigation is required by statute. That's a
    requirement. You know, I can't change that.
        The cost of that, the Corps of Engineers nor EPA, that I'm
    aware of, apologize if I speak for you, regulates the amount of
    fees that the in-lieu banks with mitigation banks charge and
    in-lieu programs charge.
        Senator Sullivan. Let me ask a question where you have more
    flexibility than you think you might have.
        On May 13th, 1994, the Army Corps and the EPA jointly
    issued a memorandum entitled, ``Statements on the Mitigation
    Sequence and No Net Loss of Wetlands in Alaska.'' What this
    states, and it is still a memo that is good to go according to
    your guy's website, it states there are areas of the State of
    Alaska because of a high proportion of wetlands in a watershed
    or region opportunities for compensatory action may not be
    available. I think they are clearly referring to places like
    the North Slope.
        In addition, there are situations in this state where the
    technology for restoration enhancement or creation of wetlands
    is not available or are otherwise impracticable where
    compensatory mitigation is not practicable it is not required
    of Section 404 permit applicants.
        So isn't the North Slope a perfect example of what this
    memorandum is talking about? Have there been situations where
    the Corps and the EPA under this authority that you guys have,
    that you stated, have said, look, it's not going to work. You
    pick, we get it. You don't have $1.4 million and you should not
    be required to give up land to develop lands so we are not
    going to require anything. Have you ever used the authority
    given to you by this memorandum between the EPA and the Corps?
        Ms. Thiesing. Sir, the memorandum was dated 1994. We have
    since come out with a rulemaking which applies something over
    or a different set of standards which are clearer intended to
    try and make, put everything on an even playing field.
        Kuukpik was the one that offered an area of preservation as
    compensation for the impacts that they had. And when a
    conservation easement was written or identified in the Corps'
    permit and the permit that was ultimately granted to Kuukpik
    there are a number of uses of that land that remain theirs.
        They are, they can use it for subsistence purposes. There
    are a whole bunch of other things that are listed as part of
    the conservation easement which is not ordinarily something
    that is done. But----
        Senator Sullivan. Alright Ms. Thiesing, for the record, in
    the preamble to your 2008 compensatory mitigation rule it
    references the 1994 memorandum. And it says, therefore it does
    not, the new rule, change the May 13th, 1994 statements on
    mitigation sequencing no net loss of wetlands in Alaska. So to
    say that the 2008 rule overrode the 1994 memo, giving you way
    more flexibility than you are utilizing is not correct.
        Ms. Thiesing. But I believe what the preamble is addressing
    itself to is the no net loss. We understand that there will be
    loss of wetlands in Alaska.
        Senator Sullivan. Again, to say Kuukpik had an option. I
    think that is stretching the situation that you just heard from
    them. They didn't really have an option to build a road because
    they did not have the $1.4 million. You see, I think that what
    you need to do is look at a lot more flexibility for the state,
    and I think you have that. You are just not using it.
        Madam Chair, I am sorry I kind of went a lot over.
        The Chairman. No, this is the line of inquiry that I think
    most of us here in Alaska are interested in, because I do not
    think that we have received satisfactory responses from the
    agencies.
        Pretty tough words are used when we hear whether it is from
    Wainwright or Nuiqsut or Craig or the folks at Great Northwest.
    But the word is extortion. Now that is pretty tough.
        I think we can understand why it is important to allow for
    mitigation, why those regulations are in place, but I think
    there also is an expectation, and this goes back to your words,
    that there be a level of predictability, that it be fair and
    reliable. This is where the concern is because it is almost as
    if there is a bargaining that goes on and we will figure out
    what it is that we can settle on. Instead of a six-to-one ratio
    you settle on a two-to-one because that was what people finally
    agreed to.
        It is not really an option when you have no other
    alternative, and yet you want to be able to provide for the
    health and safety of the people in your village. You want to be
    able to get to work which is effectively what they are looking
    for there at Kuukpik and you want a road open for subsistence.
        So I do not mean to be not asking a question, but I think
    you need to put yourself into the shoes of those that are
    working really very, very hard to try to provide for a level of
    access, a limited level of development and a willingness to do
    so and work within the laws. But we want to know that you are
    working within the laws and not sometimes making it up as you
    go, and sometimes that's how it feels. Again, these are pretty
    harsh words for you, but that's how it feels.
        Mr. Murphy, I don't want you to get off the hook.
    [Laughter.]
        The Chairman. The compensatory mitigation is certainly one
    thing within our Corps, but we do have other issues within our
    BLM lands. The Federal Land Policy Management Act, FLPMA as it
    is lovingly called. Throughout FLPMA we have the principles of
    multiple use defined, pretty consistently, pretty clearly. I
    think you, in your comments, referred to the fundamental
    authorities that come from FLPMA to BLM.
        Secretary Jewell in her Secretarial Order stated that,
    ``Through the development of comprehensive mitigation strategy
    we can ensure that our national wildlife refuges, national
    parks, other Federal lands and waters are managed for
    conservation purposes with sound stewardship and a commitment
    to conserve habitat and fish in wildlife mitigation
    corridors.''
        She goes on to lay out the following mitigation priorities,
    and this is what she says in her Secretarial Order. She says,
    ``To avoid potential environmental impacts where impacts cannot
    be avoided require projects to minimize impacts to the extent
    practicable and where impacts cannot be avoided, DOI should
    seek offset or compensation.'' She is effectively taking this
    language, borrowing this language, if you will, from the Clean
    Water Act. And regarding the avoiding, the minimizing and the
    compensating, do we really have authority within FLPMA that
    gives to BLM the authority to borrow this language, if you will
    or these priorities, that the Secretary has included within
    this order? How do we get to this level of authority? It goes
    to Senator Sullivan's earlier question. Do we have that
    authority within FLPMA because that is your fundamental
    authority? It seems to me that what you are doing is you are
    taking language from another authority and utilizing it to
    expand yours. That is my question.
        Mr. Murphy. Well, as I pointed out in my comments looking
    through our handbook and manual--it's, well mitigation in
    general. And we do have a long history of arguing with
    proponents at development all over the United States and that's
    built upon the challenges and we realized in the lower 48 over
    time development that have impacts we couldn't sustain there.
    And as we moved into Alaska and we started to see opportunities
    for development, particularly in the National Petroleum
    Reserve, we didn't want to think of going down that same road,
    fragmenting habitat and precluding multiple use--resource
    economically and sustaining the resources, the natural
    resources that are on land.
        So, yes, we feel that our authority emanates from FLPMA.
    But within the National Petroleum Reserve we also have the
    National Petroleum Reserve Protection Act which also reinforces
    that level of mitigation necessary to sustain ourselves and the
    public land.
        The Chairman. So let me ask you about this draft guidance,
    this manual. It is my understanding that it was Secretary Hayes
    that began the process for this draft Regional Mitigation
    Manual, and that was when Secretary Salazar was in office so it
    was about five years ago, and that draft manual has not even
    been something issued. It has not been rescinded. So we are
    sitting here with a situation where BLM is effectively drafting
    guidance and then before it has been finally issued, before it
    has been vetted, you are implementing it. It goes to the
    comment that I made earlier about the lack of public comment
    afforded through BLM.
        You heard the concerns. We have had conversations about it
    in the past, and yet it still seems to me we are in the same
    situation where you are moving forward with draft provisions
    that have not been vetted, have not received the public
    comment, and yet you're moving forward to implement them.
        Even though they are not yet fully in place, you heard Ms.
    Crockett's comments about the impact that this proposed
    guidance and these designations have on the ability to invest,
    the ability to permit, the ability to really do anything in any
    area. So at the end of the day, you may get your desired effect
    if the desired effect is to limit further development in the
    area because everybody is put on hold. How are we at that place
    where we are allowing these draft, unvetted guidance documents
    to be controlling without public comment?
        Mr. Murphy. The--of that draft, I believe is 2013, and that
    draft mitigation policy was vetted with the public. And yes, we
    are implementing portions of that as we move forward.
        The Chairman. Even though it is still in draft?
        Mr. Murphy. Even though it's still in draft, in close
    coordination, we're developing with FOIA, with the states and
    to be sure that we're not overlapping each other, if you will,
    as well as making sure that we're on program as we move
    forward.
        And again, it all emanates from, you've heard it time and
    time again, the transparency aspect that we're trying to
    achieve that we can provide some assurances to those developers
    as we move forward and as they move forward to develop other
    lands in Alaska.
        The Chairman. One of the things that we did hear from Mr.
    Fogels though is a concern that you have overlapping,
    duplicative mitigation requirements. So if, in fact, you are
    working with the state to ensure that that is not the case, it
    seems to me we need to be doing a little bit better
    coordination.
        Let me go to Senator Sullivan.
        Senator Sullivan. Madam Chair, I am going to spend my
    comments or a couple more questions on authority because I
    think it goes to the fact, again, to this critical question so
    many of us are concerned about. It is clearly an oversight role
    of the Energy and Natural Resource Committee and the EPW
    Committee on pinning down where you have authority to take the
    actions that you do.
        Mr. Murphy, I know you are not driving this policy and this
    is actually driven by Secretary Jewell, but I still think your
    answers to this with regard to mitigation are not sufficient. I
    would request that, for the record, you get the Department of
    the Interior General Counsel's Office to give detailed answers,
    citing specific statutes on where you get the authority to
    require $8 million in mitigation on GMT1. It is not sufficient
    to say the Secretary has a draft letter that provides us that
    authority. That is worthless. The authority has to derive from
    the Congress. You have to be able to point to a statute.
        We have heard rumors that there was at one point officials
    from DOI saying hey, they can afford it, so we are going to
    require mitigation.
        Last time I checked that was not a proper authority to
    require that kind of level of mitigation. We heard, once again,
    it started at a real high number, again, not sure why, and then
    started to come down throughout this negotiation, and then what
    are you are actually going to do with the funds? Who made that
    decision? What are you going to do with those funds? You are
    just randomly coming up with the idea that now we have $8
    million and we are going to use it for whatever purpose we want
    without any direction from the Congress of the United States?
        I don't think you are answering these questions. I would
    respectfully request that the headquarters back at the
    Department of the Interior come back with detailed, detailed,
    legal authority on what gives you the authority for the GMT1
    mitigation and the spending of that money on whatever you feel
    like? I don't think that is a proper answer.

        [The information referred to was not provided as of the
    date of printing.]

        Senator Sullivan. I would like to ask a question that came
    up, and this could be for all three of you. In terms of
    mitigation required by the state, so the State of Alaska wants
    to build a road. We were required, I guess, last year to pay
    almost $3.5 million in mitigation. Do you have a statutory
    provision that you can provide us that allows Federal agencies
    to require compensatory mitigation of a co-equal sovereign to
    pay mitigation? I was very surprised by that. I actually did
    not know the answer until this morning.
        Mr. Hobbie. I'll take the first stab at it, Senator.
        As far, I mean, under the Clean Water Act of course,
    there's regulations that have been promulgated. Part of that
    is, of course, the 2002 rule.
        Senator Sullivan. But remember, we are a co-equal regulator
    under the Clean Water Act, so you are charging us compensatory
    mitigation.
        Mr. Hobbie. We didn't charge the state a dime. The state
    chose to pay that in a third party, in-lieu fee holder. Again,
    like replacing the fish culvert.
        Senator Sullivan. So we could have just not done anything?
        Mr. Hobbie. You would not have got a permit, sir.
    [Laughter.]
        Sir, if the state was exempt----
        Senator Sullivan. Come on there, Mr. Hobbie.
        Mr. Hobbie. If the state was exempt----
        Senator Sullivan. You are playing with the words. So we had
    to do it. No equal regulator under the Clean Water Act became
    the subservient sovereign.
        Mr. Hobbie. Yes, sir, just like the Federal agencies have
    to mitigate also.
        Senator Sullivan. Okay, can you do the same thing? Provide
    the statutory authority detail on where that authority rests?
        Mr. Hobbie. Yes, sir.

        [The information referred to was not provided as of the
    date of printing.]

        Senator Sullivan. Okay, thank you.
        Ms. Thiesing, I wanted to ask you a question. This is a
    little more detailed, but again it goes to authority issues. It
    is my understanding that the lands that are set aside in
    compensatory mitigation are supposed to be under an imminent
    threat of development.
        Dr. Thiesing. That's correct.
        Senator Sullivan. Why is this a requirement? Where do you
    derive your authority for that? For example, the EPA initially
    dismissed, when Kuukpik was working with you, the location of
    their initial easement that they wanted to provide as
    inadequate because that land was not under the imminent threat
    of development. I just do not even understand that. That is not
    just taking acreage, the six-to-one or two-to-one or whatever,
    but you are actually making sure it is acreage that is really,
    really valuable for them. Again, where do you get the authority
    in the statute to say that the acreage that you want has to be
    extra valuable to them? Do you see how it is extra valuable?
        Dr. Thiesing. Senator, I think you're not correctly
    characterizing what the rule says. The authority for requiring
    measures to evaluate a permit comes from Section 404B of the
    statute, the 1972 Federal Water Pollution Control Act also
    known as the Clean Water Act. Section 404B, Section 404A
    authorizes the Corps to, the Secretary of the Army acting
    through the Chief of Engineers or his designee, to authorize
    discharges to fill, dredged of full material to waters of the
    West. Section 404B authorizes the Administrator to develop
    guidelines, the substantive criteria, by which the Corps will
    evaluate its authorizations for against the criteria that the
    Administrator develops. Okay? So, in other words, EPA has
    responsibility to develop the guidelines while the Corps
    evaluates all of its permits applications because----
        Senator Sullivan. You are not really answering my question.
        Dr. Thiesing. No, sir.
        Senator Sullivan. Why is this a requirement? Why is the
    compensatory land that you are seeking----
        Dr. Thiesing. I'm getting to that.
        Senator Sullivan. Have to be under the imminent threat of
    development?
        Dr. Thiesing. Okay, that's where the authority comes from.
        Now the rule which is part, the 2008 final mitigation rule,
    is part of the, has become part of the 404B guidelines, and in
    laying out criteria for using preservation as a means of
    offsetting unavoidable losses, okay?
        If you preserve an area you're still incurring a loss of
    function and services that that area provides to the
    environment and to the human population. However, if an area is
    particularly valuable ecologically or provides important
    services and it is under threat of destruction or degradation
    then preserving that area provides an important--it provides,
    it preserves those important functions and services to the
    environment and to the human population using it.
        Senator Sullivan. Actually I think you can make the
    opposite argument. If you talked to the Kuukpik members who
    were here earlier that is very important to that population
    because of the fact that you are putting up, you are focusing
    on it in a way that actually is going after even more high
    value land for them. Again, I just do not understand why this
    is a requirement and where you have the authority to make it a
    requirement.
        Dr. Thiesing. It is a criteria by which, it's a criteria
    laid out in a rule by which the Corps can consider a net loss
    of wetlands if an important area, an area that's ecologically
    important and performs important functions, is preserved.
        Senator Sullivan. Okay, if you can, again if you can take
    the opportunity to provide more detailed comments with the
    general counsel from the EPA on the statutory basis for this
    requirement, if there is any. I'm doubtful there is. It would
    be very useful, I think, to be respectful here, as a follow-up
    to this hearing.
        Dr. Thiesing. I can, sir.

        [The information referred to was not provided as of the
    date of printing.]

        Dr. Thiesing. But the important thing is that valuable is,
    you know, in terms of when we look at preservation, our
    analysis of its value is how important is this to the area in
    terms of providing ecologically important services.
        Senator Sullivan. How about how important it is to the
    people of the area?
        Dr. Thiesing. Well, but that's the thing. One of the
    reasons the Kuukpik proposed this area for preservation was
    that it was very important to them for subsistence and for
    other uses for hunting, for fishing----
        Senator Sullivan. But you initially dismissed Kuukpik's----
        Dr. Thiesing. No, what we said in our comment letter was
    that we did not see the basis for them preserving. There was no
    information provided in the public notice that identified what
    the values of this parcel were. I mean, it did not have
    information available either from the public notice or from our
    discussions with the Corps as to what the basis for this
    parcel's ecological value was.
        Senator Sullivan. Okay.
        Well Madam Chair, I am sorry, but just to wrap up. I do
    think, again, even on that it would be very useful. This is
    something I have asked the Administrator a number of times in
    hearings, in Washington, about getting back to the Committees
    of oversight with detailed statutory reasoning on how you have
    the ability to take these kind of actions. If you don't you can
    admit that as well, but she has not been very good about
    getting back to us. I think it is something that we need to
    start instilling as part of the agency oversight.
        Where are you getting your authority? And you need to show
    us, you need to show the American people, the people of Alaska
    and the Congress. I think that if you can do that, provide that
    for additional follow-up to some of these questions, I think it
    would be very useful and we would really appreciate that.
        Thank you, Madam Chair.
        The Chairman. Thank you, Senator Sullivan.
        I think the whole discussion about where the authority
    stems from and some of the comments that have been made by this
    panel are important, again, in the context of where we are
    because we are not in Iowa. We are in Alaska.
        We have some provisions, some Federal laws, ANILCA most
    specifically, ANCSA certainly, but certainly ANILCA that
    recognizes that our Federal land managers who work all over the
    country and manage all kinds of Federal land all over the
    country that we all have existing Federal statutes but within
    Alaska ANILCA provides that there is a difference that in order
    to accommodate a viable social and economic future that
    respects Alaskan needs, Alaskan traditions, participation
    within the state. This is laid out in Federal statute that is
    unique to Alaska.
        Yet it seems that that is just yet one more Federal law
    that we can overlook in an effort to say, well where we are
    working on all of these other land management policies for BLM
    across the country, and so we will just lump Alaska in but for
    ANILCA.
        I have questioned you, Mr. Murphy, on where the authority
    rests to allow for an ACEC in the Fortymile area that would
    encompass over 700,000 acres when within ANILCA it specifically
    limits, specifically limits, to 5,000 acres any withdrawal or
    deferral without Congressional authority. We can talk about
    whether it is EPA compensatory mitigation or BLM, the issues
    that you are dealing with in terms of some of these proposals
    and land designations and within the Corps, but I think it is
    imperative to understand where you are operating.
        I would assume that Mr. Murphy and Mr. Hobbie, you have had
    ANILCA training and that you require ANILCA training of all of
    your staffs here in Alaska. I would hope that that is the case.
    If it is not, we need to make sure that that is the case.
        Mr. Murphy. It's the case.
        The Chairman. But further to that that anybody who is
    sitting back in Washington, DC working out these regulations
    and reading through the records and the comments, that they too
    have an understanding and an appreciation of ANILCA because
    there is something that is clearly missing. I think part of it
    is bypassing some of the fundamental Federal statutes that
    relate specifically to the State of Alaska.
        We are well over our time, and I apologize to those of you
    that have been very patient with us as we have tried to gain
    more information. I appreciate not only the testimony provided
    today, but what you will be able to provide us with follow-up.
        As we have additional comments that may be presented by the
    public for the record, know that we will keep this Committee
    hearing record open for an additional two weeks.
        I think this has been very important for Alaskans to be
    able to understand some of what we are dealing with and perhaps
    some of the more constructive paths forward.
        It is probably the bigger part of our jobs representing
    Alaska back in Washington, DC to try to lend some air of
    predictability or certainty within the Federal regulations.
    This is one area where, I think, you can see we are not able to
    give that certainty because we do not have that at this point
    in time. So the request for greater cooperation, greater
    collaboration is an imperative and hopefully we will be making
    some progress moving forward.
        Senator Sullivan, thank you for----
        Senator Sullivan. Thank you, Madam Chair.
        The Chairman. Your leadership on these issues within EPW.
    It is really important that we are working together as a team.
        For those of you who gathered here today, thank you for
    your interest and your concerns as well.
        With that, the Committees stand adjourned.
        [Whereupon, at 5:30 p.m. the hearing was adjourned.]

                          APPENDIX MATERIAL SUBMITTED

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