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Vol. 14, No. 26 Week of June 28, 2009
Providing coverage of Alaska and Northwest Canada's mineral industry

Mining News: Supreme Court upholds Kensington permits

High court rejects challenge to Coeur tailings disposal plan; Southeast Alaska gold mine expected to start production in late 2010

Shane Lasley

Mining News

The U.S. Supreme Court has ruled in a 6-3 vote to uphold Coeur d’Alene Mines Corp.’s tailings disposal permits at the Kensington gold mine located about 45 miles northwest of Juneau.

The June 22 decision came in response to a challenge to a permit issued by the U.S. Army Corps of Engineers that allows the proposed mine to dispose in a nearby lake waste rock created during mining.

The Southeast Alaska Conservation Council and other environmental groups fought the miner’s plan for wet disposal of the tailings and sued the Corps, arguing that the permits were illegal.

The State of Alaska, Coeur Alaska and federal regulators countered that the tailings, properly classified as fill, met requirements of the 404 permit issued by the Corps.

Hailed as a landmark ruling, the High Court decision ends four years of litigation and paves the way for the Idaho-based miner to complete tailings facilities at Kensington and begin producing gold.

“We are also very grateful for the support during this process from the State of Alaska, the Alaska Congressional delegation, Southeast Alaska Native groups, the Army Corps of Engineers, U.S. Forest Service and the Environmental Protection Agency who all supported the permits in the Court, and the U.S. Solicitor General, who argued the case before the Supreme Court,” Coeur President and CEO Dennis Wheeler said in reaction to the ruling.

Two questions

After more than five months of deliberating the tenets of the Clean Water Act, and the jurisdictions of the two agencies charged with enforcing it, the High Court boiled the Kensington case down to two basic questions.

“The first is whether the Act gives authority to the United States Army Corps of Engineers, or instead to the Environmental Protection Agency, to issue a permit for the discharge of mining waste, called slurry. The Corps of Engineers has issued a permit to petitioner Coeur Alaska, Inc. for a discharge of slurry into a lake in Southeast Alaska. The second question is whether, when the Corps issued that permit, the agency acted in accordance with law. We conclude that the Corps was the appropriate agency to issue the permit and that the permit is lawful,” Justice Anthony M. Kennedy said, writing for the majority.

The Court concluded a discharger of mine waste must ask the question: “Is the substance discharged fill material or not?” to determine whether to seek a 404 permit from the Corps or a 402 permit from the EPA.

The Court found that Coeur Alaska’s plan to raise the bottom of Lower Slate Lake by 50 feet – transforming the 23-acre alpine lake into around a 60-acre lake – clearly meets the simple criteria for fill, and the Corps is the proper authority for issuing the permits.

In a dissenting opinion, Justice Ruth Bader Ginsberg expressed concern that the simple criteria would give potential polluters a loophole in meeting the standards of the Clean Water Act by adding a sufficient amount of solid matter to classify the pollutant as fill.

Concurring with the majority, Justice Stephen G. Breyer said, among other safeguards, EPA has the right to veto any 404 permit that it finds has an “unacceptable adverse effect on municipal water supplies, shellfish beds and fishery areas . . . , wildlife, or recreational areas.”

“By declining to exercise its veto, the EPA in effect deferred to the judgment of the Corps’ on this point,” Kennedy wrote.

Court defers to agencies

The Supreme Court also found that the Corps acted under the guidelines of the CWA when it issued the permits, and deferred to the Corps expert analysis that Lower Slate Lake was the “least environmentally damaging practicable” way to dispose of tailings from the Kensington Gold Mine.

“The Corps determined that placing slurry in the lake will improve that body of water making it wider shallower, and so more capable of sustaining aquatic life. The Corps determined furthermore, that the alternative – a heap of tailings larger than the Pentagon placed upon wetlands – would cause more harm to the environment,” Kennedy wrote.

While the Corps is in charge of the permits for the material being dumped into Lower Slate Lake, EPA requires Coeur Alaska to comply with the strict standards of a 402 permit for the water being discharged from the lake.

The Court determined this compromise is reasonable and fits within regulatory framework.

“We accord deference to the agencies’ reasonable decision to continue their prior practice,” Kennedy concluded.

“I cannot say whether the EPA’s compromise represents the best overall environmental result; but I do believe it amounts to the kind of detailed decision that the statutes delegate authority to the EPA, not the courts, to make (subject to the bounds of reasonableness),” Breyer concurred.

Wheeler said his company now looks forward to bringing Kensington into production, “which we are now targeting for the second half of 2010.”

Once in production, the Kensington Mine is expected to create about 370 jobs, and produce about 125,000 ounces of gold per year.



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