The U.S. Environmental Protection Agency has offered the proposal of allowing the Pebble Limited Partnership to apply for permits to develop a less than average-size porphyry mine at the world's largest undeveloped copper-gold-molybdenum deposit.

Falling short of an outright ban of building a mine at Pebble, the EPA is proposing Clean Water Act Section 404(c) permit restrictions aimed at limiting the footprint of any mine allowed to be developed at the enormous porphyry copper deposit in Southwest Alaska.

The limits proposed by EPA were hailed as a victory by many of Pebble's staunchest critics.

"Far from a pre-emptive veto, the EPA's actions simply place an understandably high standard for any mining company wishing to apply for permits in Bristol Bay," said Tim Bristol, director of Trout Unlimited's Alaska program. "These restrictions will ensure that no unacceptable adverse impacts will occur from mining development in Bristol Bay."

While relieved that the EPA fell short of proposing an outright ban on mining at its world-class copper deposit, the Pebble Partnership continues to believe the EPA is stepping beyond the bounds of its authority by imposing any kind of restriction prior to permitting.

"While today's announcement from the US Environmental Protection Agency Region 10 is only a proposal at this time, we are pleased to note the agency has rejected requests to preemptively veto the Pebble Project in favor of imposing specific conditions on future development," said Pebble Partnership CEO Tom Collier. "That said, we believe that EPA does not have the statutory authority to impose conditions on development at Pebble, or any development project anywhere in Alaska or the U. S., prior to the submission of a detailed development plan and its thorough review by federal and state agencies, including review under the National Environmental Policy Act."

A growing number in Washington D.C. agree the agency has stepped beyond the bounds of its authority, and some say the agency has broken the law in its effort to stop or restrict Pebble prior to permitting.

Less than average

During a July 18 announcement that marked the official launch of a 60-day public comment phase of the CWA Section 404(c) process, EPA unveiled a list of parameters that it considers to be the upper end of streams and wetlands that should be allowed to be disturbed while mining at Pebble.

The proposed determination recommends that mining the Pebble deposit should not be allowed to result in:

The loss of five or more miles of streams with documented salmon occurrence;

Loss of 19 or more miles of streams where salmon are not documented, but that are tributaries of streams with documented salmon occurrence;

Loss of 1,100 or more acres of wetlands, lakes, and ponds that connect with streams with documented salmon occurrence or tributaries of those streams; or

Stream-flow alterations greater than 20 percent of daily flow in nine or more linear miles of streams with documented salmon occurrence.

These restrictions are predicated on the disturbance EPA predicts the development and operation of a 250,000-million-ton mine at the Pebble deposit - along with the associated mill, tailings storage and other on-site facilities - would create over a predicted 20-year mine-life.

"It is up to the mining company to determine if it can develop a mine that gets below the impact levels expressed in the restrictions," EPA Region 10 Administrator Dennis McLerran informed the media July 18.

EPA derived its estimates of the footprint impacts during a process of evaluating three hypothetical mine scenarios as part of its Bristol Bay Assessment.

EPA said the 250,000-million-ton mine used to determine the maximum impacts that it thinks should be allowable represents the average size of the world's porphyry copper mines.

Two significantly larger scenarios considered - a 2-billion-ton mine with a 25-year mine life and a 6.5-billion-ton mine with a 78-year mine-life - were modeled after plans included in a preliminary economic assessment completed for Northern Dynasty Minerals Ltd., majority owner of the Pebble Partnership, in 2011.

During a July 18 media briefing, EPA Region 10 Administrator McLerran repeatedly pointed to the PEA derivation of the mining scenario as legitimizing the assumptions made by his agency. The scoping level study, however, was never sanctioned by the Pebble Partnership and was not intended to represent the mine that would ultimately be proposed for permitting.

This was addressed by the authors of the PEA.

"It should be noted that the project description the Pebble Partnership ultimately elects to submit for permitting under the U.S .National Environmental Policy Act may differ from the development cases presented in this preliminary assessment," cautioned Wardrop, the engineering firm that completed the PEA.

While drawing PEA conclusions, Wardrop said the Pebble Partnership's ongoing engineering and stakeholder engagement would influence the project design ultimately submitted for permitting..

"EPA's proposal is based on a watershed assessment that its peer reviewers found to be no better than a screening document, and that EPA's professionals have recognized is missing the information needed for a permitting decision," Collier commented on the conclusions drawn. "EPA's proposal is also based on mining scenarios that are outdated and, in any event, would never qualify for environmental permits."

Though not discussed in EPA's assessment or proposed determination, an underground mine, by its very nature would have a smaller footprint that could conceivably fall inside the parameters being put forward by EPA, while mining a larger portion of the Pebble deposit.

During a 2008 presentation in Fairbanks, Tom Albanese floated the idea of developing an underground mine to extract the higher-grade resource at Pebble East. At the time Albanese was CEO of Rio Tinto, which held a roughly 20 percent interest in Northern Dynasty shares.

An underground mine was briefly discussed in the 2011 PEA prepared for Northern Dynasty as a potential scenario for mining the deeper higher-grade portions of the deposit.

"A potential underground mine has not been considered as a primary case in this study. Further assessment of this option is warranted to evaluate methodologies of enhancing relative economics of an underground mine and confirming its performance," Wardrop advised.

Litigation continues

The Pebble Partnership, however, is not yet ready to go underground. Instead, the company is steadfast in its pursuit of an injunction to stop the EPA from imposing limitations on its proposal before the company gets a fair hearing under the established state and federal permitting process.

"EPA's attempt to preemptively impose conditions on future development at Pebble, in the absence of completing an Environmental Impact Statement, as is required of every major development project in the United States, is causing significant and even critical harm to our business interests and our abilities to fairly advance our project," Collier decried in response to EPA's latest move. "For this reason, we fully intend to continue our litigation against EPA in order to halt the pre-emptive and unprecedented regulatory process under Section 404(c) of the Clean Water Act, and invalidate the conditions proposed by EPA Region 10."

In the complaint filed in the U.S. District Court for Alaska during May, the Pebble Partnership asserts that, in the absence of a permit application, EPA's action exceeds its authority under the CWA and is contrary to the Alaska Statehood Act, the Cook Inlet Exchange legislation, and other federal laws.

"Litigation is necessary in order to get the agency's attention and bring some rational perspective back to the U.S. permitting process. While we would prefer to avoid this lawsuit, we are fully prepared to defend ourselves against the precedent-setting, unlawful actions of this agency," Collier explained at the time of the filing.

"The correct, legal, and defensible way forward is for EPA to suspend its pre-emptive 404(c) process and allow us the full opportunity to have our project reviewed by federal and state regulatory agencies, including EPA, under NEPA. Until that happens we must defend ourselves against actions by EPA that are contrary to the law," he added.

The Pebble Partnership points out that there is no environmental risks associated with allowing it to advance the project to permitting, a process in which EPA would hold sway.

"Our legal action does not in any way seek to diminish EPA's legitimate role under the CWA, or its right to participate as a regulatory agency within the Clean Water Act permitting process - including a comprehensive review under the National Environmental Policy Act," Collier explained.

The state of Alaska has intervened as plaintiff in the case and the United Tribes of Bristol Bay, which describes itself as a consortium working for the protection of the Bristol Bay watershed from large-scale metallic sulfide mines, has intervened as a defendant.

The Alaska Peninsula Corp., a Native corporation that owns surface land rights in the Bristol Bay region near Pebble, is also a plaintiff in the lawsuit against EPA.

D.C. weighs in

As the Pebble Partnership and state of Alaska seek a court order to stop EPA from pressing ahead with its attempt to limit development at Pebble, a growing number of officials in Washington D.C. are questioning the legality of EPA's action related to Pebble, and the methods the agency used to get to this point.

"It is important to remember that, in addition to the lawsuit brought by Pebble and the State of Alaska against EPA, there are a number of investigations yet underway with respect to EPA's Bristol Bay Assessment and its pre-emptive regulatory process - including one by the Office of the EPA Inspector General and another by the House Committee on Oversight and Government Reform. There are also two bi-partisan bills pending in the US House and Senate seeking to clarify that EPA does not have authority to preemptively veto or otherwise restrict development projects prior to the onset of federal and state permitting.

The Regulatory Certainty Act, sponsored by Rep. Bob Gibbs, R-Ohio, the latest such legislation, seeks to make it clear when EPA does, and does not, have the authority to prohibit or restrict a project under section 404 of the Clean Water Act.

In short, H.R. 4854 would limit the EPA's right to exercise its 404(c) authority to the duration of the permitting process, preventing the agency from singularly stopping or restricting a project before developers have an opportunity to apply for permits, or pull permits that have already been granted but not violated.

The bill passed out of the House Transportation and Infrastructure Committee with a 33-22 vote.

"After three years of hearings in my subcommittee, it is clear that U.S. EPA is out of control and has disregarded the intent of Congress and its longstanding partnership with the states in administering the Clean Water Act," said Gibbs, who chairs the Subcommittee on Water Resources and Environment. "We all want to protect the environment but EPA has attempted multiple power grabs to unilaterally expand its own jurisdiction and authority over the states."

Rep. Don Young, R-Alaska, blasted the EPA for its attempt to restrict development of Pebble, which is located on lands selected by Alaska for it mineral potential.

"For the EPA to put forward these types of restrictions, prior to any permit applications and without due process, is alarming to say the least," Alaska's sole congressman admonished. "As I've said in the past, the EPA's expansive, jurisdictional power grab is a very serious threat to Alaska's sovereignty and the future of any development on state, Alaska Native, or privately owned lands both in Alaska and across the United States."

Sen. Lisa Murkowski, R-Alaska, had a similar take on EPA's determination.

"The EPA is being disingenuous in saying that this decision is only going to impact mining in a particular area of Alaska," Murkowski said. "The EPA is setting a precedent that strips Alaska and all Alaskans of the ability to make decisions on how to develop a healthy economy on their lands. This is a blueprint that will be used across the country to stop economic development," Murkowski said.

Sen. Mark Begich, D-Alaska, was more measured in his response, saying EPA's actions are targeted at Pebble.

"As I've often stated, I believe Pebble is the wrong mine in the wrong place. However, I remain a strong supporter of the mining industry and mines in other regions of Alaska and remain committed to ensuring that this process does not allow any precedent to be set that could restrict other responsible mining projects in Alaska or the U.S.," Begich said.

Already, the Chippewa Federation, a group of six tribes, has petitioned the EPA to use its CWA Section 404 authority to protect the Bad River Watershed in the Lake Superior region of northern Wisconsin from exploration and potential development of an iron project.

Wisconsin Public Radio News reports the EPA has set a meeting with the Chippewa Federation for Aug. 16, a day after the agency has scheduled public hearings to take public testimony on its 404(c) process at Pebble.

Unless the District Court judge grants the Pebble Partnership its request for an injunction, EPA plans to push ahead with the 404(c) process.

As part of the 60-day comment period that started on July 18, the environmental agency has scheduled hearings to get additional public input on its proposed determination. These will start with a hearing in Anchorage on Aug. 12, followed by six hearings in Bristol Bay communities over the ensuing three days.

Following the comment period, the EPA Region 10 office has the choice of withdrawing from the process or sending a recommended determination to EPA headquarters in Washington D.C. for a final determination. The recommended determination could mirror the July 18 proposed determination or be revised based on review of public comments. Either way, the Pebble Partnership and Army Corps of Engineers will be afforded one final opportunity to weigh in before EPA posts a final determination.

Author Bio

Shane Lasley, Publisher

Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.

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