Minions of Midas

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Why spend money on lobbyists when Alaska is already on your side? Many of the state’s Department of Natural Resources (DNR) top-level employees work in the industries they regulate before and after their stints with the state. And Governor Frank Murkowski is so pro-development that even industry insiders populating his agencies have cried foul. Last October, for example, DNR head Tom Irwin—a former mining executive handpicked by Murkowski—privately questioned the legality of the extreme tax and royalty breaks Murkowski planned to give developers of a pipeline that could transport natural gas from Prudhoe Bay to Chicago. Murkowski leaked Irwin’s memo and then fired him for not being a “team player.” Six senior DNR officials tendered their resignations in protest.

If anything, Alaska is even laxer with mining companies. While oil companies hand over up to a quarter of their revenues to the state in the form of royalties, mining companies pay Alaska less than 3 percent. Thanks to exploration incentives and generous royalty deductions, the state can get nothing from a mine—except maybe an environmental mitigation bill.

“If you mine gold in Alaska, you can get it for free,” says David Chambers, head of the Center for Science in Public Participation. Over the past 10 years, almost all of the 3,500 permit applications submitted by miners to the state have eventually been approved—indicative of a uniquely hand-in-glove regulatory approach. Rather than raise royalties, for example, the DNR, along with Alaska’s other cash-strapped regulatory departments—Fish and Game, Environmental Conservation, and Law—let the mining companies pay for the officials who oversee the permit process. For example, Northern Dynasty signed a legal memorandum promising to contribute to the salaries of 13 state employees for their work facilitating Pebble Mine permits. And once EPA representatives come around to ensure the project conforms to federal laws, these same state officials will offer their “objective” advice.

“It’s an enormous conflict of interest,” says Scott Brennan of Alaskans for Responsible Mining. Alaska’s royalty laws “were written to support the prospectors of 100 years ago,” Brennan says. “If the mining industry was paying its own way in the form of royalties, then the state would have more money to appropriate to agencies to ensure independent, objective review of applications.” So far, Northern Dynasty has paid Alaska about $150,000 for permit expediting. By the time the process concludes, it will have spent at least $700,000 toward regulators’ wages.

With the state in the bag, Northern Dynasty is free to concentrate its lobbying efforts elsewhere. It’s given $25,000 to the Nature Conservancy’s state office and provided 40 local leaders with an all-expense-paid “community meeting” in Anchorage—complete with $200 per diems.

For Pebble opponents to be victorious, they’ll “have to convince the public that the mine is a bad deal,” and force “the company to throw in the towel,” says Chambers. “Because I don’t see regulators turning this mine down.”