My turn: How do Northern Dynasty's payments affect judgment?

Posted: Friday, October 12, 2007

Rep. Jay Ramras, R-Fairbanks, was recently criticized for requesting an investigation into payments made to elected city, tribal and borough officials on behalf of Northern Dynasty, the Canadian junior mining company that hopes to develop the Pebble prospect near Lake Iliamna.

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Critics felt Ramras's allegations were unfounded. They are not.

Northern Dynasty paid for air travel, lodging and food costs for the two- to three-day informational meetings, and gave those in attendance as much as $200 per day, labeling the payment a "per diem." This was first reported in the Bristol BayTimes in October of 2005, when Northern Dynasty CEO Bruce Jenkins acknowledged the payments were made to officials from the Lake and Peninsula Borough, Bristol Bay Borough, City of Dillingham, Kenai Peninsula Borough and city of Homer, as well as tribal leaders and select village corporation shareholders and leaders. Jenkins called the cash "per diem" payments to meeting attendees "an expression of courtesy ... in recognition of their service."

While the payments may not have explicitly influenced residents of the region, we should look more broadly at the effect this behavior has in Alaska and other resource extraction industries.

The lack of maintenance and poor state oversight has manifested itself in the form of leaky pipelines in Prudhoe Bay, massive oil-rig fires, and the recent guilty verdict of at least one state lawmaker. And we shouldn't kid ourselves that this is a brand-new problem. We only have to look as far as the Alaska Permanent Fund dividend check, to see the effect free cash from resource development has on our ability (or complacency) to make sound decisions and remain vigilant in terms of oversight. The $1,000 cash payment Homer Simpson receives upon entering Alaska in the recent feature film is funny because it is true.

It is easy to tout the economic benefits that have come to the Bristol Bay region since mining exploration companies like Northern Dynasty began ramping up operations there four years ago. Lodges are full, villagers are working, and grocery stores are emptying their shelves. With fuel prices crossing the $6 per gallon threshold, you certainly can understand why a fishing boat crew member in the region might forego the fishing season and working as a drill rig operator, camp cook, bear guard or many of the other auxiliary services associated with proposed development. There are likely more jobs to come if the project develops further and the people of Bristol Bay should benefit financially from all of this activity. But it should be done in a legitimate manner.

By doling out cash payments to local leaders, Northern Dynasty, which has already invested hundreds of millions of dollars in feasibility and environmental studies, begins to tilt the tables in their favor, perhaps unfairly. To a region experiencing high rates of unemployment, a chronic lack of underdevelopment and an out migration of village populations to urban areas, small perks in the form of informational meetings and trips to Anchorage undermine the inherent value of tradeoffs that will inevitably come with development. The people of Bristol Bay have subsistence access to a vibrant and healthy fishery, and strong moose and caribou herds in the Mulchatna drainage. The cash-poor region also has some of the highest electricity rates in Alaska. Northern Dynasty has the cash the region so desperately needs in today's marketplace. This is known as an asymmetrical bargaining relationship.

The real question should not be whether there were any laws explicitly broken. Although these days one can never assume a company with so much at stake and so much invested in mineral exploration in the region would not be so stupid as to try to blatantly bribe public officials.

Instead, we should examine the impact that money has on Bristol Bay residents to autonomously make up their minds about the tradeoffs associated with a large open-pit mine located at the headwaters of the world's largest wild sockeye salmon fishery. Gains in capital are not necessarily an appropriate substitute for depleted natural resources. We walk a fine line when we accept cash from those who want to exploit Alaska's resources, and once that line is crossed, it can be difficult to see clearly what is most important and truly at stake.

• Jedediah R. Smith is the former editor of the Bristol BayTimes weekly newspaper in Dillingham and is studying environmental policy at the University of Alaska Fairbanks.



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