Kensington decision to be early test of Obama on mining issues

The public comment period closes Aug. 3 on minor revisions to the U.S. Army Corps of Engineers' Section 404 fill permit for the Kensington Mine near Juneau.
However, the big uncertainty hanging over the project is whether the Corps will accede to the U.S. Environmental Protection Agency's July 14 request for an extended delay in the permit.
If the Corps doesn't go along with the EPA, the environmental has authority to veto the Section 404 permit, according to the Corps of Engineers' Alaska spokeswoman, Pat Richardson.
Kensington is a medium-sized underground gold mine near Berners Bay, about 40 miles north of Juneau.
The controversy is shaping up to be an early test of policies of President Barack Obama's administration on mining and environmental issues because it will ultimately be resolved in Washington, D.C.
There are no deadlines for decisions by the Corps or the EPA, so the issue could drag unresolved into the fall, jeopardizing hopes by Kensington developer Coeur d'Alene Mines to get the mine finished and into production this year.
EPA's Region 10 wrote the Corps July 14 asking for the delay, citing new information that was not available when the Corps approved a permit allowing mine developer Coeur Alaska Inc. to dispose of Kensington mine tailings in a small lake. That permit was hotly contested, and the case wound its way up to the U.S. Supreme Court.
In June, the high court ruled 6-3 that mine tailings could be disposed of in Lower Slate Lake near the mine.
The court issue revolved around whether the tailings are viewed as fill material like gravel or whether tailings are a form of waste that cannot be placed in a water body, as conservation groups and the EPA argue.
Despite the legal win for the company, the battle flared anew when the EPA sent its letter. If the Corps judges the new information cited by EPA as important enough, it may have to agree to the agency's request. Or, if the Corps doesn't agree, EPA may use its veto authority over the federal permit. Section 404c of the Clean Water Act gives the EPA that authority.
Alaska's congressional delegation is wading into the fight. The state's two senators, Lisa Murkowski and Mark Begich, criticized the EPA's action and met with EPA Administrator Lisa Jackson July 24. Then-Gov. Sarah Palin and current Gov. Sean Parnell also expressed concern about potential further delays.
"In June, the U.S. Supreme Court ruled that the U.S. Army Corps of Engineers has the authority to permit Kensington mine to deposit rock waste into Lower Slate Lake in the Tongass National Forest. EPA's letter appears to do an end run around the Supreme Court," Murkowski said in a statement.
Parnell said, "This is frustrating. Once the Supreme Court speaks it's supposed to be 'game over.' We thought we were in the end zone, but the Seattle EPA office is trying to move the goalposts."
Ironically, Coeur may have helped create the problem the project now faces. The most substantial new information is a proposal that Coeur developed for an alternative dry-land tailing disposal method, which environmental groups supported, and which the company put forth when it looked as if the lake disposal plan would founder in the courts.
Coeur backed away from the dry-land disposal after it had applied for permits, and took a gamble that the Supreme Court would approve its earlier plan to use the lake, which it did.
The company feels it has now a valid federal permit for the lake disposal and that it should be allowed to finish the mine and get it into production.
"The company has a valid and legal 404 permit (Army Corps of Engineers Section 404 permit) as ruled by the U.S. Supreme Court in a 6-3 decision, and as supported by the EPA and the corps in nine years of permitting and nearly three years of litigation," Coeur spokesman Tony Ebersole said in a statement.
In its July 14 letter, EPA Region 10 Deputy Regional Administrator Michael Gearheard said that Coeur's alternative on-land disposal plan, a paste tailings facility, which was put forth by the company in 2008, was well along in the process of being approved by federal agencies, including the EPA, when the company withdrew its application.
"The Corps did not evaluate the paste tailings facility in its analysis of alternatives at the time it issued the current Kensington 404 permit in 2005," Gearheard wrote.
The alternative plan had not yet been proposed by Coeur at the time.
"EPA believes that the paste tailings facility could have less environmental impact than the Lower Slate Lake disposal site that was permitted, and therefore the permit should be reevaluated in view of the new information concerning this alternative," Gearheard said in the July 14 letter.
Gearheard cited two other new factors, one that the mining rate now proposed - 1,250 tons per day - is less than the rate studied in the project's environmental impact statement - 2,000 tons per day - which translates into a change in the amount of tailings produced and the environmental effects.
A second new factor is the recent excavation of sulfide-bearing rock near Lower Slate Lake that resulted in acid rock drainage into a settling pond near the outlet from Lower Slate Lake and East Fork Slate Creek. The presence of this potential environmental harm needs to be assessed, Gearheard said.
Both of those will be weighed by the Corps in its decision on the 404 permit but Southeast community officials say they believe it is the existence of the paste and fill proposal made by Coeur, and which was not evaluated by the Corps, that may loom larger in the final outcome.
Murkowski said she believes the EPA's objection is legally and factually flawed, and that the EPA is now trying an end run around the courts.
"The Slate Lake disposal option was first developed in cooperation with the EPA. The Corps issued a Clean Water Act Section 404 permit to the project in 2002. Environmental groups sued Coeur in 2006, claiming the mine's owners should have applied for a permit from the EPA," Murkowski said in her statement.
"EPA was part of the federal government's defense of the validity of the Corps' Section 404 permit. At no time in the development of the proposal during the Clinton administration, during the Bush administration when the suit was filed, or during the Obama administration while the high court's decision was pending, did the EPA object to the Slate Lake disposal plan," Murkowski said.
The mine is basically finished but completion and production are being held up over the controversy of the mine tailings.
Coeur has about 40 workers on staff now doing maintenance-related work and has told Juneau city officials it would put about 100 to work right away to complete the project if it gets the go-ahead. In production, the mine would add more than 200 new jobs in Southeast communities.

By:  Originally published in the Alaska Journal of Commerce on July 31, 2009