Today we read that “A perceived end run by Coeur d’AleneMines and the U.S. Army Corps of Engineers against a federal court injunction may have cost Coeur Alaska the ability to dispose of the Kensington gold into a nearby freshwater lake.” This statement is a follow up to the US Ninth Circuit Court of Appeals ruling in the Kensington gold mine (Coeur d’AleneMines) permit challenge. The court reversed a lower federal court decision and vacated the permits associated with a tailings facility at the Kensington gold mine in Alaska. Coeur Alaska had obtained its Section 404 Army Corps of Engineers permit in 2005 for the placement of fill material at the mine, which is currently under construction.
Kensington gold project, consisting of the Kensington and adjacent Jualin properties, is located on the east side of the Lynn Canal about 72 km north-northwest of Juneau, Alaska. The Kensington property, which contains the project’s reserves, consists of over 2,470 ha of patented and unpatented federal mining claims and state claims. The adjacent Jualin property to the south consists of 3,740 ha of patented and unpatented federal mining claims and state claims.
There is a school-of-thought that judges decide cases on the basis of their personal prejudices. This idea underlies the news report’s statement: “While the San Francisco-based 9th Circuit is notorious for being a liberal appeals court, Senior Judge Proctor Hug, Jr., who participated in the ruling against Coeur, was formerly a partner in a law firm Woodburn, Wedge, Blakey, Folsom & Hug, which has represented a number of major North American mining clients.” Does this mean we may conclude that the court found on the basis of facts rather than prejudice? Maybe judges no more like being thwarted than anybody else. My reading of the court’s decision leaves me in no doubt that the person who wrote the judgement was cross with the miners and intended to remind them who is boss. We snub out noses at the court at our own peril.
You can read the entire judgment at this link. You can also get a feel for the facts by examining earlier reports. Here is an extract from one.
In a move to prevent a multinational mining corporation from using the federal Clean Water Act to kill an Alaskan lake, Earthjustice attorneys argued in federal court today that the Act is obviously aimed at protecting, not polluting, waterways. Earthjustice is challenging a permit that lets Coeur d’Alene Mines Corporation dump toxic waste into a lake, killing all fish for at least the 10-year life of the permit. The U.S. Army Corps of Engineers issued the permit after redefining language in the law so that toxic wastewater could be considered legally permitted fill. If allowed to go forward, the Kensington gold mine would be the first mine to kill a U.S. lake using the new, weakened dumping standard. The Army Corps’ new interpretation contradicts what the law actually says, argued Earthjustice attorney Tom Waldo, assisted by Eric Jorgensen, managing attorney in Juneaufor Earthjustice. “The plain language of the Clean Water Act simply prohibits the discharge authorized by the Corps of Engineers,” Waldo told the three-judge Ninth Circuit Court of Appeals panel. The argument revolves around a gold extraction process that creates 210,000 gallons per day of toxic waste slurry. Kensington chose lake dumping despite the availability of disposal methods less damaging to the environment. Attorneys representing mine developers and the federal government said the slurry is legal fill in their view of the law, but one of the three Circuit Court judges challenged their interpretation. Judge Procter Hug, Jr. noted that the fill was actually 70 percent water and questioned how water could be considered fill material. He wondered if the Clean Water Act could allow a discharge that would kill an entire lake’s fish population.
This ruling is by no means the end of the litigation or issue. Coeur D’Alene has threatened to appeal all the way to the Supreme Court. The real question that intrigues me is this: do they have a viable alternative to lake disposal of tailings? According to the EIS, they could dispose of the tailings dry as is done at Greens Creek. And they could use some of the tailings as mine backfill. Both, no doubt, are more costly than lake disposal of tailings. Clearly this is a story to watch both because of its investment and environmental implications. I wonder how it might affect deliberations about the Kemess Mine in British Columbia.
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March 21, 2007 at 1:28 am
gadfly
Here is my take on the Kensington situation. What Kensington proposed was not an end run around environmental laws, it was an innovative piece of engineering that allowed tailings to be disposed of in a fashion that was almost invisible and had little environmental impact. The idea was that the tails would be placed in the bottom of a lake and a dam would raise the lake level. Someone flying over would see a lake instead of a tailings pile. (About 25% of the tails were to go back underground.) The fish population was minimal and may or may not have been killed in any event. There are thousands of these small lakes here in Southeast Alaska, so this was hardly a unique resource. I expect it was seldom if ever visited.
The essence of what Coeur was trying to do was make the lake into a treatment facility for the life of the mine. At the end of its use, it was to be capped and reclaimed as a lake.
Now as to the legality, the Corps of Engineers had recently promulgated regulations that clarified that mine tailings could be used as fill in a Section 404 permit—the kind of permit required to do Coeur’s project. All good and well—so far. (I will add a disclaimer here that I have not read all the court papers, but I think I read enough.)
It turned out that there was a chink in this armor. Other earlier regulations said that a mine could not put process water from a froth flotation mill into waters of the United States. But Coeur’s plan was to place the tails as a slurry with process water, so it appeared that there was a conflict. It was on this conflict that the environmental groups sued.
Here is where we start the part about Coeur’s mistakes. Other mines had been allowed to use slurry placement in tailings ponds located in “waters of the United States” and other industrial facilities have segregated waters and wetlands for industrial facilities. For some reason—and there may be a good reason, I’m not sure—Coeur’s and the government’s lawyers let the plaintiffs portray the case as one where process water was being dumped into a pristine lake rather than tailings into a tailings pond. That distinction was critical to winning the case and they gave it to the other side. It wasn’t argued at all so far as I could tell.
Other than this major mistake, there were a series of small and large abominations committed by Coeur’s lawyers. They missed an appeal deadline on the injunction. They tried to hide the facts of the situation from the appellate panel. They turned down more experienced help from a legal foundation. They kept the local newspaper’s reporters off the property. They seemed unprepared in court—certainly less knowledgeable than the plaintiffs’ lawyers. One reason lawyers get paid a lot is because the work they do is important. When they don’t do a good job, the price can be very high indeed.
When one understands the circumstances of the current decision, it is becomes easy to understand the harsh tone of the court’s opinion. The three-judge panel decided against Coeur on the injunction in December after hearing a disastrous (for Coeur) argument on the merits. Any experienced appellate lawyer would tell his client that, in this circumstance, a negative decision is virtually inevitable. But Coeur didn’t get this message. Instead, they proceeded as if they were going to win in the end. The ditch modification the court was ruling on reflected this and it raised the court’s ire.
So what of Coeur’s plan to appeal to the Supreme Court? That’s a non-starter. The high Court only deals with extremely important cases or cases that define or resolve important conflicts in the law—especially Constitutional law. A bungled regulation is fixed by administrative action, not the Supreme Court. This case will go the way of the 90 percent of appealed cases and cert will be denied—there will be no hearing.
I don’t know if Coeur’s lawyers have broken the news to the company that they lost. But they need to come to that realization soon. And when they do, new lawyers (at least) should be in order.
Where Coeur can go next will be in the next post.
March 21, 2007 at 2:23 am
gadfly
What to do?
I am the gadfly, and like all gadflies, I am only considered an annoyance by the company—if I even rise to that level of importance. (One of the Coeur management team gave me the name.) So with that caveat, I will give my opinion on what courses of action are available.
In its press release, Coeur said it was taking the plaintiffs’ up on their offer to negotiate. The release almost made it sound like they were going to beg on bended knee—groveling came to mind. There have been many attempts at negotiation before and none have worked, so it will be interesting to see if the new “posture” helps. The plaintiffs have hinted that the mine plan approved in 1997 might be acceptable. They objected in 1997, but didn’t sue. As I personally witnessed, they weren’t at all inclined to endorse this plan when they sued this time. Nevertheless, many people—even some mining people—seem to think the 1997 plan might not be too unreasonable. But I doubt that they have given it much thought.
The 1997 plan called for a large dry tailings mountain on the shore of Lynn Canal, right on the ferry and cruise ship route. It also called for an underground mill and a large crew camp on Lynn Canal. There were no facilities on the Berners Bay side. Logistical support and crew rotation was by helicopter rather than boat.
So with this in mind, the thought of just switching to the old plan is not so easy. Virtually all of the mine facilities—including all of the disturbance of the Slate Lake tailings site—have already been constructed. Does Coeur remove and reclaim these? Do these get combined with the 1997 tailings plan? Clearly a new and substantial environmental analysis (read long) is necessary. Impacts are much higher than the original plan. And perhaps more important, the Plaintiffs have long portrayed themselves as protecting Berners Bay. It will be hard to negotiate a solution that leaves most of the mine in Berners Bay.
This looks very difficult to me. But I suppose it is possible with enough groveling and a high gold price.
What else? One idea is another regulatory fix. This is political and may or may not be possible. I expect it would be very difficult and could be time consuming. If I were Coeur, I would have my new lawyers—scoping this out in DC as I write.
Other things? The coming Ninth Circuit decision will forbid point discharge of process water into Lower Slate Lake. Because of lawyer bungling, this will be “law of the case” and absent a regulatory fix, Coeur will just have to live with it. But perhaps they can have a plan where they don’t point discharge process water. It might look like this: They would pump out the lake, build a filter plant next to their water treatment plant, make a dry product, and put in the lake bed. They may not even have to pump the lake out. (There are lots of details that need to be considered and I haven’t considered them all.) They already have a permit to fill the lake—and the substance of that permit (a section 404 permit) hasn’t been challenged. The environmental impacts of this proposal are almost identical to those analyzed in the EIS, so it seems quite likely that the changes suggested here could be done under quicker and simpler “amendment” processes that apply to 404 permits and Forest Service plans of operation. Litigation opportunities for the plaintiffs are always there, but they would be limited. Costs would be higher—but, hey, what’s the choice?
And, finally, the final choice—throw in the towel and shut it down.
March 21, 2007 at 3:09 pm
gadfly
One thing I fogot about Coeur’s proposed configuration–the one overturned by the court. All of the water discharged from the tailings pond was to be treated and of course subject to the normal NPDES discharge permit.