Bering River Coal Fields

The Bering River region is one of the most unique and productive ecological areas along the Gulf of Alaska coastline. Essentially an island between ice, river, rainforest and sea, this region constitutes critical habitat for millions of birds, terrestrial and marine mammals, and wild salmon. It is one of the last remaining pristine such ecosystems to be found anywhere.

To preserve these lands, Eyak Preservation Council and the Native Conservancy (tNC) are working together to purchase coal patent and development rights; our intent is to retire the Bering River coalfield into the Native Conservancy land trust.

This purchase will stop the environmentally devastating development projects proposed for this land, including:

• Port of extraction and 4.5 mile road at Shepard Point
• 8,000 acre clearcut of old growth hemlock
• Mountaintop removal mine on 12,000 acres
• A 55-mile road across the Copper River Delta
• Katalla oil and gas drilling and 25 mile road
• Trillions of pounds of carbon emissions that will result from coal use

Originally owned by Chugach Alaska Corporation (CAC), the Coalfield patents and development rights became Korean Alaska Development Corporation (KADCO) holdings in 1991 when CAC filed for bankruptcy. Dr. Hyun Joo Shin is the majority shareholder of KADCO, and he has expressed a desire to sell his interest for conservation – against the wishes of other shareholders. We have been working with Dr. Shin and various conservation funders to transfer his ownership for ten years.

The current status of negotiations remains complex. The most current $7.9 million price agreement has expired, due to the length of time the due diligence took, the lack of firm funding “on the table,” and division within KADCO’s board. At this time, most of the pieces are in place to transfer ownership of the Coalfields:

1. Great Land Trust of Anchorage has agreed to stand as “reverter clause” partner for the Native Conservancy land trust after the title transfer is complete.
2. Sales and Purchase Agreement. The preliminary agreement between KADCO and the Native Conservancy has been drafted.
3. Title Search – Perfecting Bering Coal Patents. EPC has determined that the coal development rights are in KADCO’s possession and transferable. This due diligence ensures that all funding and donations are protected and that the Native Conservancy will be able to permanently protect the development rights once they are purchased.

EPC plans to bring interested parties in the conservation world to the table to establish a cohesive game plan for renewed negotiations.

The preservation of the Bering River coalfields would provide substantial benefits in the nation's effort to curb emissions of carbon dioxide (CO2), the primary greenhouse gas implicated in global warming. Coal combustion for electricity is the world's largest source of CO2. Without preservation of the coalfields, over 35 million tons of coal could be mined, resulting in an estimated 64 million tons of CO2 pumped into the air.

Background to Bering River Coalfield

A bioregion is a living planetary cell and its ecosystems are integral to its life. They are not replaceable and are disappearing at an accelerating rate through the linked processes of development and climate change. The human population and its culture is as much a part of a bioregion as the land and its biology. The Copper River delta watershed and associated pristine salmon spawning grounds and undisturbed forest is part of one such cell, home to the Eyak whose traditional culture has evolved from this abundance. Once this bioregion stretched undisturbed to Santa Cruz in California, with primeval forests, fisheries and Native cultures.

Against this backdrop, is the mountainous region that is the subject of this issue– The Bering River Coalfields.

Coal, is still an important fossil fuel, particularly in the economy of S.E. Asia, where its use has led to widespread environmental degradation for short-term economic gain. It may still be a reasonable commodity until renewable energy sources are brought online, if the coalfield is in already developed terrain. But the Bering River Coalfield is not one of these. It is, by contrast, in undisturbed terrain, emblematic of the health, hope and future of an Earth renewed. It is unconscionable that it should not be preserved from development, being one of the few pristine bioregional ecosystems left to preserve.

History of Coalfield Development Efforts. The coalfield plays an integral role in the history of the US conservation movement. The value of the coal was first recognized in the early 1900s, when it became the subject of a famous struggle between Teddy Roosevelt and his ally, Gifford Pinchot, who favored strong action to protect the area from development, and the “Alaska Syndicate” who sought to develop it.

President Roosevelt, at the beginning of the 20th century, created and then extended the boundaries of the Chugach National Forest to include the east Copper River Delta to protect the public coalfields from exploitation by the J.P. Morgan and Guggenheim Syndicate. This “Alaska Syndicate” sought to gain access to the coalfield not only for its supposed intrinsic value, but to assist in opening the interior of Alaska to development. Subsequently, Gifford Pinchot, first Chief of the Forest Service, was fired by Roosevelt's successor, President William Howard Taft, after Pinchot challenged the Administration’s attempts to give the coalfields back to the Syndicate. The scandal played on the national stage for months, and Roosevelt – in defense of Pinchot, the Delta, and the primary conservation ethic that public resources should not be given away for private exploitation – came out of retirement, created the Bull Moose Party, to run against Taft in the next Presidential election, and eventually succeeded in protecting the coal fields from the development. That the defense of the ecosystem where the Bering River Coalfield is located was a main cause of Roosevelt’s second term as president should not be forgotten.
While Roosevelt and Pinchot successfully defended the Bering River region from immediate development, the long-term threat remained. Under the Alaska Native Claims Settlement Act of 1971, the Chugach Alaska Corporation (CAC), one of 13 regional Native corporations formed under the law, selected 73,000 acres in the Bering River region, including the coalfield. CAC entered into a joint venture with KADCO in an effort to exploit the mineral wealth of the selected lands. Shortly after the Exxon Valdez oil spill in 1989, CAC filed for bankruptcy in 1991 and transferred rights to mine the coal to KADCO in exchange for the expenses incurred to that date. Unknown to KADCO at the time of the transfer, CAC was in possession of an appraisal that stated that the value of the transferred coal rights was valued at $100+ million. Because of the existing Tax Reform Act, net operating losses (NOL’s) were a legal accounting tax loophole available at that time, so CAC was able to declare a $99 million loss on the coal rights transfer, and sell their NOL’s for 50 cents on the dollar. CAC received approximately $45 million from the “paper loss” that later helped pay off their bankruptcy creditors. When KADCO principal Dr. Joo Shin learned of this, he was incensed. An important point is that the 2,000 CAC shareholders had no knowledge of the sale of the coal rights, to KADCO. The threat of development has increased significantly under KADCO's ownership, but so have the opportunities for a comprehensive conservation solution.

The threat of development is not limited to the coalfield. To develop the coalfield, it would be necessary to build a road from Cordova to Carbon Mountain (55-miles), and then from Carbon Mountain to Katalla (a 25-mile road connecting the coalfield to the coast). There are other resources that would be subject to exploitation in the Bering River region if the road is developed. These other resources would almost certainly be subject to development if the coalfields are opened for extraction. Other development activity likely to occur as part of the “domino effect” of coalfield development are:

• Old-growth timber harvest – 8000 acres of merchantable old growth hemlock and spruce would be clearcut by CAC in the event of road access across the Delta. This clearcutting operation would also open potential development of adjacent lands (73,000 acres) owned by CAC.
• Carbon Mountain mineral extraction – Millions of tones of gravel would be displaced at a ratio of about 20/1. The method of removal would be mountaintop removal mining.
• Katalla oilfield development – Although the Eyak Preservation Council was successful in helping block CAC’s oil drilling rights on 65,000 acres that possess oil and gas reserves in the Katalla region in 2004, several private entities still hope to develop these oil and gas fields and want to provide road access across the Delta to the region.

Finally, the door for development opened much wider in the fall of 2007 with the prospect for a major port development in Prince William Sound. The Department of Interior has granted a Record of Decision (ROD) to allow a deep-water oil spill response port to be built at Shepard Point in Cordova. A 4.5-mile road is planned to be built along the coast from Cordova to Shepard Point. This proposed oil spill response port will open up Cordova as an “extraction port” for exporting coal, timber, oil, gas, and other non-renewable resources. This development will be followed by industrial tourism (cruise ships) plans for the region. If built, this port would make the coal extraction for shipment to Korea much more feasible.

Taken together, these factors pose a significant new threat to the development of the Bering coalfield and the other resources that would become subject to exploitation. The linchpin to ensuring the conservation of this entire region is the Bering coalfield. If the Coalfield rights are taken off of the market, multiple threats will be eliminated

Preserving this thriving Copper River Delta ecosystem will help maintain and enhance an ancient form of stewardship, while providing locals and Alaskans with a viable and sustainable opportunity to continue living a rugged way of life and build a conservation-based economy. Conservation of this endangered rare wild habitat will also provide a “world class” baseline model for the rest of the world to see what types of restoration is really necessary in order to restore other already lost ecosystems.

Alaska is the last place where we still have a chance to get something right.