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ESA Strategy/Resource Development Speech

RDC Luncheon, 10/15/2010, Captain Cook Hotel

By The Honorable Sean Parnell
Governor of Alaska


Thank you, Jason, and thanks to the RDC membership for this opportunity to speak on priority issue in Alaska and the nation: growing jobs and our economy.

While Alaska has largely avoided the crush of the recession, we cannot relax. We must create a climate for investment that sparks job growth./ And, we must clear away regulatory barriers to those jobs.

Alaska can lead the nation out from the sea of red ink ($1.3 trillion dollars in federal fiscal year 2010).

Think about it: ANWR, OCS, NPR-A, the gas pipeline, Pt. Thomson and the Foothills gas and Umiat’s oil, heavy oil at Prudhoe Bay, mining, timber, renewable energy, tourism, fishing. Alaska has immense potential for jobs and economic growth. But in Alaska, roughly two-thirds of Alaska’s lands are under federal control. And, today, Alaska’s economy remains bound to the political whims of a Washington administration.

I have been asked by a few: Why are you so aggressive in pushing back against the federal government? We have to be.

Which federal agency received about a $3 billion dollar increase in its budget?

Which federal agency produced forty-two “significant” regulations packages in the first 18 months of the current federal administration each with a negative annual impact on our nation’s economy of $100 million or more?

Which federal agency immediately set about trying to “reform” gold mining in Alaska by working on a new rule on “fill” after the 2008 elections? A rule that if enacted before a U.S. Supreme Court decision on the subject would have prevented hundreds of Alaskans from working and feeding their families today?

The answer is the Environmental Protection Agency. The mine: Kensington.

Washington-based, one-size-fits-all decision-making by federal agencies seriously impacts Alaska. Especially when sweeping national rules get applied here without the benefit of Alaska-specific science.

For example, the EPA designated an Emissions Control Zone in waters off the North American Coasts, including Alaska, requiring ships to purchase more costly fuels and equipment. The EPA did this without conducting any actual air quality testing in Alaska they had no Alaska evidence tying vessel traffic out to 200 miles to air quality problems here, and did so without analysis of true costs to Alaskans.

We’ve requested the EPA reconsider, we’ve reached out to another affected state, and we’ll continue pursuing Congressional relief. We cannot afford to lose more ground when it comes to development of Alaska’s resources and jobs. I want to be very clear on this issue: Our very future as a state is at stake. If we give up our right to responsibly develop our resources without a fight, we surrender state sovereignty and economic potential. We must develop our resources... And we will.

To get there something even more fundamental is at stake: who controls our resources? Simply stated… in order to develop them, we first need to control them – to direct their responsible use for the maximum benefit of Alaskans.

We are under an unprecedented assault by federal agencies and environmental groups to lock up Alaska’s resources. The examples are almost too numerous to list: NPR-A stoppage, OCS moratorium, ANWR wilderness designation, slowdown of EIS permitting at Pt. Thomson, constant ESA listings and thousands of square miles dedicated to ESA critical habitat, and ocean zoning. Every day, some federal agency seeks to shut us up and lock us down in Alaska.

John Katz, Director of the Alaska Governor’s Washington D.C. office, and Drue Pearce, former Senate President and Federal Pipeline Coordinator, said it loud and clear in this month’s Petroleum News, “Alaska is under an assault in a manner never before experienced in our history… Many of the federal agencies are doing everything in their power, hand-in-hand with the environmental industry, to shut us down.”

This is OUR immediate reality – yours and mine, and every Alaskans’. But it won’t be our future. We’re fighting back aggressively – and our strategy is gaining ground. Yes, we have filed a lot of lawsuits. And I don’t apologize for any of them.

Let’s turn now to our Endangered Species Act Strategy. First, vigilance. It’s easier to prevent a problem than to correct it. To this end we’re manning the watchtower and looking for risks of unwarranted attempts to bring a species under the ESA regulatory umbrella.

Before the federal government declares a species threatened or endangered, we work with federal officials to develop “pre-listing agreements” for species that are candidates for listing. If we adopt our own appropriate protective measures, we are less likely to see ESA-based mandates. So we incorporate protections of species and habitats into our state permits and licenses, notably in oil and gas exploration and development activities.

Secondly, we communicate. My administration constantly works to ensure ongoing information exchanges with federal agencies. We make sure that federal regulators have access to our comprehensive data on wildlife as well as our expertise when they conduct status reviews, designate critical habitat, or conduct consultations.

We always work to down-list or even de-list species when the data shows that they’re recovering. Recently, we petitioned to remove a specific population of Steller sea lions from the threatened species list, because the recovery plan elements have been met. Delisting these animals protects our fishing families and other businesses from needless regulation and frivolous litigation.

And through it all, we’re taking Alaska’s case to the court of public opinion. We’re going out and recruiting allies.

A few examples… Attorney General Dan Sullivan co-chairs an ESA working group through the National Association of Attorneys General. Our Fish and Game deputy commissioner is on a State-Federal Task Force examining the ESA. Our Legislature and congressional delegation have supported us on ESA matters. And, I proposed and the Legislature increased the Department of Law’s budget for ESA matters by $1 million, buying us more firepower on these critical issues.

Where vigilance and communication fail, we challenge unwarranted federal action with litigation.

We must remain vigilant, not just because of the threats already posed, but because of threats to come. What species is next? Walruses? South East Alaska herring? Federal agencies are currently reviewing both for listing under the ESA. And the list keeps growing. Alaska can count on my administration to continue fighting for Alaska’s jobs.

And, we take positive steps to grow our economy. Let’s look at tourism. The travel industry provides the template for other industry sectors. Alaska is truly a unique destination in the world and there are plenty of reasons for visitors to spend their dollars to see our state.

We’re turning discouraging visitor numbers by listening to Alaska small business owners, industry experts, and stakeholders and partnering with them. This last session we cut taxes, got more sensible environmental regulation, and increased Alaska tourism marketing. As a result, we now have positive momentum in the travel industry.

I want to say thank you to the RDC for your leadership role in this positive change. RDC made the issue a centerpiece of last year’s conference. You helped create Alaska ACT; went to Miami for SeaTrade and also helped in the legislative session. Our work together is paying off.

Princess Cruises announced yesterday that it’s sending another ship to Alaska for the 2012 season, bringing a potential increase of 45,000 passengers to enjoy our state and bolster our economy. That could mean $40 million MORE in direct and indirect spending.

I thank Princess Cruises for their confidence in Alaska’s business environment, and I fully expect more companies will move in the same direction.

This travel industry template for success can be used to bring more oil and gas exploration and development jobs to Alaska.

Oil remains the backbone of our economy.

And, my commitment is to put more oil into that pipeline—and create the climate and jobs that go with it.

To do that, we need a more competitive tax regime,/ a permitting system that works,/ land availability and road access to resources. Taking each of those in turn…

I’ll start with the ACES tax regime…

I have personally communicated with the companies my willingness to move forward with positive changes to ACES.

And, I have a two part plan to make Alaska’s oil tax regime more competitive.

First, I propose eliminating – effectively capping progressivity – at higher oil prices.

Second, I will propose tax credits for technically challenged fields—such as heavy oil fields.

If Alaska business owners and employees join with other tax payers – much like the Alaska travel industry did – we can create more jobs for Alaskans in the oil patch. The only thing I require is that the industry, in the public forum of the legislature, make the compelling case for competitiveness and jobs for Alaskans.

These resources, such as heavy oil, can serve as the primary new production source to stem the decline in North Slope production, and potentially increase production above today’s level.

More oil means more jobs for Alaskans, more long-term revenue to the State, and lower TAPS tariffs per barrel.

Next, we will get a gas pipeline.

For the first time in Alaska’s history, the bids are in on two projects to supply gas for a gas pipeline. A project that could include both a large pipeline and a line to Valdez for LNG export.

The companies’ role now is to negotiate precedent agreements with the pipeline sponsors. We expect those in First Quarter 2011.

The state’s immediate role now is to work to resolve Pt. Thomson litigation, and we’ve made good progress. I have been personally engaged in discussions to resolve that litigation, and can say I am cautiously optimistic we can get there soon. We all understand the importance of Pt. Thomson gas to any gasline project.

With Pt. Thomson resolved and companies under precedent agreements, we can meaningfully turn to state fiscal issues with a gasline.

Besides being in a historic place with two projects having bids in hand, we have the support of the President and his administration for an Alaska gasline project.

Liberty, Nakiatchuk, and Point Thomson are all moving forward. And if the EPA finally agrees with the villages, tribes, ANCSA corporations, Conoco, and the State, on a single permitting issue, Conoco’s CD-5 project can finally receive its Army Corps of Engineers permit and get moving.

On OCS development, we need swift action by Secretary Salazar to approve drilling permits and the Environmental Appeals Board to approve air permits. Even with acknowledgement that Shell has gone above and beyond in planning, spending, and preparation, drilling rigs and workers are idle and Alaskans are missing out on much-needed, well-paying jobs. We WILL keep the pressure on.

Access to lands is critical as well, on State lands, we funded several seasons of work on a road to Umiat, we’ve funded road work to the Ambler mining district. And, we’re extending the road from Juneau to Cascade Point. These efforts ultimately lower exploration and development costs. They are roads to jobs and we will continue pursuing those roads to resources.

Tax changes, permitting, access – ALL are needed to fill our oil pipeline and develop our rich resource base to create jobs. And, we’re leading to make it happen.

Alaska can take charge of its destiny to fill the pipeline and bring gas to market. But it’s going to take all of us getting all-in.

As a state we are vigilant, and proactive. We join with you in a common purpose—to grow our economy.

Thank you.

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