Court Allows Gold Mine to Dump Waste in Lake

Despite ruling, detractors say fight is far from over.

by Elizabeth Bluemink

The U.S. Supreme Court's Monday decision allowing a gold mine near Juneau to discharge its waste into a fish-bearing lake could be the final word in the long-running dispute.

But environmentalists hope that it is not.

Their lawsuit over the Kensington mine, 45 miles northwest of Juneau, fueled a bitter war between industry boosters and environmentalists in the state's capital.

Statewide, the suit cast a shadow over Alaska's mining industry, and in particular, the massive Pebble copper and gold prospect in Southwest Alaska.

On Monday, Kensington's supporters -- including the entire Alaska congressional delegation and Gov. Sarah Palin -- hailed the Supreme Court decision as a positive step for Juneau and the state.

Coeur Alaska Inc., operator of the Kensington mine, announced plans to begin producing gold in the last half of 2010.

But environmentalists say their fight is not over.

About 150 members of the U.S. House of Representatives are co-sponsoring legislation this year seeking to reverse the Bush administration policy that the Supreme Court relied on in its ruling Monday. Also, a coalition of environmental groups are pleading with the Obama administration to cancel the Bush policy.

"If the Obama administration does nothing, it has busted the door wide open for destructive mining practices in other places," said Tom Waldo, a Juneau environmental attorney who argued the case all the way up to the Supreme Court.

He said the ruling will allow any developer of a project -- from Pebble to a coal-fired power plant in the Midwest -- to get around federal water-quality standards by petitioning the U.S. Corps of Engineers to redefine its waste as fill material, Waldo said.

That allows for easier, cheaper disposal: when industrial waste is considered fill, it doesn't have to meet state water-quality standards at the point of discharge; however, the water downstream still must meet water-quality standards.

The environmental groups that filed the lawsuit are the Southeast Alaska Conservation Council, the Juneau Chapter of the Sierra Club and the Haines-based Lynn Canal Conservation group.

PEBBLE IMPACT?

The companies developing the Pebble mine proposal said Monday they are not sure if the ruling will affect their project. That's because they have not finalized their development plans, said Mike Heatwole, spokesman for the Pebble Partnership.

The Pebble developers might not need to put their waste into a lake, said Tom Crafford, a large mine permit coordinator for the Alaska Department of Natural Resources.

In theory, Pebble's developers could divert streams, fill in existing ponds or wetlands with clean material and store rock waste on top of the filled-in area, he said.

Other mines in Alaska have done that, including the Pogo gold mine near Delta Junction and the Fort Knox gold mine near Fairbanks, according to Crafford and mining industry officials

For that reason, Steve Borell, who runs the Alaska Miners Association, doesn't see Monday's decision as establishing a precedent.

Mines have typically built their impoundments in valleys containing wetlands, ponds or streams, he said.

Waldo, the environmental attorney, responded that there's a major difference between putting waste into a natural water body and putting it in a man-made pond, as other mines have done.

"This was a test case," he said.

The federal Environmental Protection Agency has to have veto power over the Corps' fill permits, the Supreme Court pointed out in its ruling.

The EPA chose not to exercise its veto over the Kensington project.

A WAITING PERIOD

Despite the positive ruling, the Kensington project still has up to a year to go before it can start producing gold. The Supreme Court sent the case back to the 9th Circuit Court of Appeals, which has 30 days to revise its decision against the mine so that it conforms to Monday's ruling.

State regulators said Monday they expect at least 60 days to pass before construction can begin at the mine again, perhaps longer.

Regulators need to make sure Coeur has funding set aside to dismantle the mine eventually and to review the design for the dam that will hold back Kensington's tailings, Crafford said. The dam and at least one other component of the mine project have not been built yet. Also, construction workers recently excavated acid-generating rock near the lake that must be dealt with before the project can go forward, he said.

The underground mine would employ about 300 people during construction of the dam and about 200 when it begins operating, according to Coeur Alaska.

The mine would be the capital city's second largest private employer, on a payroll basis, according to the McDowell Group, a consulting firm in Juneau. The largest is the Greens Creek silver mine on Admiralty Island.

Kensington could produce 125,000 ounces of gold annually for 10 to 15 years, according to Coeur Alaska. That production level would be worth over $110 million a year at today's prices. The Pogo and Fort Knox gold mines in the Interior are much larger.

FUZZY LAW

In a 6-3 vote Monday, the Supreme Court said the nation's laws and regulations are aren't in agreement on how waste put into a water body should be regulated.

In light of that fuzziness, the court deferred to a 2002 Bush administration memo that attempted to iron out the differences in the law. The memo was later used by the U.S. Army Corps of Engineers as the basis for redefining the tailings, or rock waste, from the Kensington mine as fill.

The Corps approved a permit allowing Coeur Alaska to put the tailings in Lower Slate Lake, even though it would kill the fish -- Dolly Varden and threespine stickleback. The permit required the company to restore the lake when the mine closes and restock it with fish. Otherwise, the company would have to forfeit its reclamation bond.

Monday's ruling clears the way for as much as 4.5 million tons of mine tailings -- a slurry of rock waste, water and trace contaminants left after gold is extracted from the ore -- to be deposited into the lake about three miles from the mine.

Obama administration officials wouldn't say Monday whether they agreed with the court's ruling.

"We are reviewing today's Supreme Court decision ... and its potential implications regarding EPA's authority to ensure effective environmental protection under the Clean Water Act," read a statement provided by the EPA, which initially opposed the mine's lake disposal plan.

Doug Garman, a Corps spokesman in Washington, D.C., said his agency had no comment on the court decision yet.