Representatives from Red Dog Mine and the Northwest Arctic Borough have agreed to meet for talks following a bridge payment earlier this summer.
After months of litigation, both parties say they are encouraged by the recent development.
"We see this as an opportunity to begin a dialogue based on shared interests and priorities for the region and hopefully we can have a discussion around what those priorities are and look for ways that we might be able to come up with an agreement that accomplishes that," said Wayne Hall, the manager of community and public relations for Red Dog.
The bridge funding came in the form of a single payment of $11.2 million from Teck, which operates the mine, to the borough, with $2.4 million set aside specifically for the school district.
"It is directly being pre-paid for this year, so you could think of it almost as a credit. We're paying it early because the payment isn't due until January 2017 under the way the borough has structured their severance tax," Hall explained. "So, it would apply to either their severance tax payment or, if we came up with a new Payment in Lieu of Taxes (PILT) agreement, it would apply to that as well."
Every five years, the borough and Teck have renegotiated the PILT agreement, which averaged an $11.5 million payment each year from the company to the borough.
The most recent agreement expired in December, at which point the borough moved toward a severance tax, which may have tripled the company's annual payments.
Teck countered by filing a legal complaint in January, saying the tax increase could potentially compromise its ability to operate the mine.
This spring, the borough filed to have the lawsuit dismissed.
"Right off the bat, we initiated this legal complaint very reluctantly. It wasn't something we wanted to do. Really, the goal of that action was to see if we could get the borough to come to the table and work with us to negotiate a new and reasonable agreement," said Hall. "We are excited the borough has decided to have some discussions and hopefully the entities can come to an agreement and we won't need the legal complaint to continue."
Under the severance tax, Teck would not have been required to make a payment to the borough until early 2017, leaving a year gap between payments, which in the past had been more regular.
The bridge funding, therefore, is providing a mid-year buffer, though it is a credit toward future payments, not an additional one.
The amount was loosely based on past PILT payments, though Hall said he couldn't speculate on how the actual amount was decided upon.
As part of the bridge funding deal, both parties agreed to sit down for talks outside the litigation process. They held their first meeting in Seattle last week, borough representatives said.
According to Borough Mayor Clement Richards, the first round of talks was a good step toward getting to know each other better.
"Everything seemed to have gone well," a borough spokesperson said. "We're going to continue working together to come up with a direction to move forward on."
Both parties expect to hear a decision on whether or not the lawsuit may be dismissed in early August, so these talks are happening outside formal litigation.
"Really, we're hoping that this dialogue will result in a new agreement which has a reasonable payment for Red Dog but also provides benefits to the region and specifically the villages with education as a priority," said Hall. "We're hopeful that we can come to an agreement that will work for everyone in the long term."
NANA Regional Corp., the landowner at Red Dog Mine, has been an ancillary stakeholder since the lawsuit was filed earlier this year, though it is not directly involved.
As the Arctic Sounder previously reported, the corporation has stated it hoped the two parties would be able to negotiate one-on-one.
"The corporation is hopeful the payment recently made by Teck to the Northwest Arctic Borough opens an avenue for the parties to come together for a broader discussion to resolve the issue surrounding the PILT," wrote Liz Cravalho, the senior director of community and government relations at NANA in an email. "We hope to see a cooperative resolution to this matter because revenue resources from responsible development at Red Dog Mine are very important to the region and NANA shareholders."
According to the borough, representatives from both it and Teck plan to sit down once again in mid-September for the next series of discussions.
This story first appeared in The Arctic Sounder and is republished here with permission.