EPA looks askance at Kensington Mine's plan

A key element of an affordable way to develop the Kensington Mine may not meet environmental laws, according to a federal agency whose permits are needed to open the mine.

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The U.S. Environmental Protection Agency submitted its concerns in written comments to the U.S. Forest Service, which is preparing an environmental impact statement.

But the developer, Coeur Alaska Inc., says the proposal is better for the environment than a previously permitted operating plan.

"We feel very confident we can make that demonstration," said Coeur Alaska Vice President Rick Richins.

The latest proposal to operate Kensington, a gold mine 45 miles north of downtown Juneau, depends on using an alpine lake to hold the thickened mixture of water and crushed rock, called tailings, that results from extracting gold.

Under the plan, Lower Slate Lake would be dammed at one end to hold lake waters that would rise as the tailings were piped into it. Some of the lake water would be allowed to flow downstream into Slate Creek, which enters Berners Bay.

In comments submitted last month, the EPA said some aspects of the plan don't appear to comply with the agency's rules and policy. The EPA is one of several federal and state agencies that would issue or deny permits for the mine.

The EPA said its standards require ore mines to recycle back into the mine all of the tailings, unless the developer can show recycling would unduly interfere with mining.

"That recycling thing - it's a nonstarter," said Bill Riley, mining coordinator the EPA's Seattle office, in an interview. "I don't see any way around that."

Richins said the concern about a recycling loop is "probably semantics."

"There is a certain amount of recycle in our process," he said. "I think the EPA is looking for us to maximize the recycle and still maintain the ability to remove the gold from the process."

Coeur didn't develop the mine after getting permits in 1998 because it wasn't profitable to do so at then-current gold prices, company officials have said. The new operating plan would cost about $55 million less for construction, Richins said.

Besides the change in tailings disposal, the new plan would eliminate onsite mining camps, and instead ferry workers and supplies across Berners Bay to Echo Cove near the north end of Glacier Highway.

Coeur has said the mine would create 300 to 400 jobs during its 22 months of construction, and 225 year-round jobs with an annual payroll of $16 million during operation. The mine would last at least 15 years, supporting an additional 180 jobs indirectly, the company has said.

The new proposal received many letters of support from Native corporations, business groups and citizens, who cited its economic benefits.

But environmentalists say it's against federal and state laws to use the lake to hold tailings.

"We've believed for several years that the Slate Lake option was illegal under both state and federal laws," said Gershon Cohen of Haines. He is national project director of the Campaign to Safeguard America's Waters of the Earth Island Institute.

"The precedent they would be setting for dumping mine tailings in a lake would be tremendous," Cohen said. "We would challenge that."

The fundamental question is whether it's legal to categorize the lake as a treatment works rather than as "waters of the United States." Treatment works don't have to meet federal or state water quality standards, although water discharged from the lake would have to do so.

It's unlikely Coeur could meet state water quality standards in the lake because the standards don't allow for depositing substances in fresh water. The standards also severely limit the area in a lake where waste can mix with water.

Converting the lake to a tailings impoundment also could be seen as contradicting the state's policy to protect existing water uses. Slate Lake has a small population of Dolly Varden, mine consultants have said. Coeur intends to move the fish from Lower Slate Lake to Upper Slate Lake during the mine's life, and return fish to the lower lake when the mine is closed.

The EPA and the U.S. Army Corps of Engineers agreed in 1992 that it can be legal to use lakes to hold mine tailings, but the developer has to show that it's the least environmentally damaging way to treat the waste.

The EPA in its written comments expressed concern that the Kensington proposal wouldn't meet that standard.

The EPA also said Coeur's plan to not divert the upstream portion of Slate Creek from entering the tailings lake was contrary to the intent of the Clean Water Act, which is to treat waste, not dilute it, and which tries to keep waste separate from uncontaminated waters.

Richins said Coeur decided not to divert the creek upstream from the tailings lake so the water downstream would meet water quality standards. Man-made channels to divert the stream would further disturb the environment, he added.

Another fundamental question is whether it is legal under state law to use a lake to hold mine waste.

"We think it is - absolutely," said Ed Fogels, a large-mine project manager with the state Department of Natural Resources. "There's certainly nothing in the laws that says it isn't."

It's not unusual for mines to dam streams and create ponds to hold tailings, said Steve Borell, executive director of the Alaska Miners Association. Using a lake for that is just a matter of degree, he said.

A gold mine at Fort Knox, near Fairbanks, was permitted to dam a creek. The resulting pond is good habitat for grayling and burbot, Borell said.

But Pete McGee, a technical engineer with the state Department of Environmental Conservation, said the agency would review whether the lake legally can be used for tailings if Coeur's plan becomes the preferred alternative in the environmental impact statement. State regulations might need to be changed, he said.

"The regs aren't perfectly clear about that (use)," McGee said. "They don't say you can do it, and they don't say you can't."

Even if it's legal to use Lower Slate Lake for tailings, the state will have to be convinced it's a good thing to do, Fogels said.

"The whole notion is whether it's in the state's best interest to sacrifice this lake for the life of the mine and then put it back after it's over," he said. "If we get another lake with fish in it afterwards, that could be do-able."

The draft environmental impact statement is scheduled to be completed by spring 2003.

Eric Fry can be reached at efry@juneauempire.com.