Complaint — Alaska v. Southeast Alaska Alaska Conservation Council (No. 07-990)

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Sy . ay rae eae

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Nos. 07-984 and 07-990 SEP 17 2008

neenenerns_ap eco nee 7

IN THE

Supreme Court of the Hnited States

COEUR ALASKA, INC., Petitioner,

v.

SOUTHEAST ALASKA CONSERVATION COUNCIL, ET AL.,

Respondents.

STATE OF ALASKA, Petitioner,

Vv.

SOUTHEAST ALASKA CONSERVATION COUNCIL, ET AL.,

Respondents.

On Writ Of Certiorari

To The United States Court Of Appeals

For The Ninth Circuit

JOINT APPENDIX

Volume 2 of 2

(Pages 287a-555a)

THEODORE B. OLSON THOMAS S. WALDO

Counsel of Record Counsel of Record

GIBSON, DUNN & CRUTCHER LLP EARTHJUSTICE

1050 Connecticut Ave., N.W. 325 Fourth Street

Washington, DC 20036 Juneau, AK 99801

(202) 955-8500 (907) 586-2751

Counsel for Petitioner Counsel for Respondents

Coeur Alaska, Inc. Southeast Alaska

Conservation Council, et al.

[Additional Counsel Listed on Inside Cover]

PETITION FOR WRIT OF CERTIORARI FILED JANUARY 28, 2008

CERTIORARI GRANTED JUNE 27, 2008

MATTHEW D. MCGILL

AARON D. LINDSTROM

GIBSON, DUNN & CRUTCHER LLP

1050 Connecticut Ave., N.W.

Washington, DC 20036

ROBERT A. MAYNARD

PERKINS COIE LLP

251 East Front St. Ste. 400

Boise, ID 83702

Counsel for Petitioner

Coeur Alaska, Inc.

JONATHAN S. FRANKLIN

TILLMAN J. BRECKENRIDGE

FULBRIGHT & JAWORSKI L.L.P.

801 Pennsylvania Ave., N.W.

Washington, DC 20004

(202) 662-0466

TALIS J. COLBERG

Attorney General

STATE OF ALASKA

Department of Law

P.O. Box 110300

Juneau, AK 99811

(907) 465-3600

CAMERON M. LEONARD

Assistant Attorney General

STATE OF ALASKA

Department of Law

100 Cushman St., Suite 400

Fairbanks, AK 99701

(907) 451-2311

Counsel for Petitioner

State of Alaska

Scott L. NELSON

PUBLIC CITIZEN LITIGAITON

GROUP

1600 20th St., N.W.

Washington, DC 20009

(202) 588-1000

Counsel for Respondents

Southeast Alaska

Conservation Council, et al.

GREGORY G. GARRE

Solicitor General

Counsel of Record

RONALD J. TENPAS

Assistant Attorney General

ELLEN DURKEE

LANE MCFADDEN

Attorneys

DEPARTMENT OF JUSTICE

Washington, DC 20530-C001

(202) 514-2217

Counsel for Federal Respondents

DAVID C. CROSBY

Counsel of Record

5280 Thane Road

Juneau, AK 99801-7717

(907) 586-6262

Counsel for Respondent

Goldbelt, Inc.

[List of Additional Counsel Continued from Front Cover]

TABLE OF CONTENTS

Page

Volume I

A.

Relevant Docket Entries from the

United States Court of Appeals for the

Ninth Circuit, No. 06-35679 ......................0.c000 la

Relevant Docket Entries from the

United States District Court for the

District of Alaska, No. 1:05-CV-00012-

Response to Comments Document re-

garding Section 404 Definitions of “Fill

Material” and “Discharge of Fill Mate-

ee ii iilitahinrnadeciitbesinserconsseess 22a

Kline Environmental Research, Ken-

sington Project Lower Slate Lake

Tailings Impoundment: Habitat Crea-

tion and Mitigation Plan (July 14, 2003).....128a

Memorandum from Ed Kline, Kline En-

vironmental Research, to Susan

Hitchcock, Corps of Engineers (Dec. 23,

REESE SE RIN TSS. AES 13la

Memorandum from D. Regas, et al.,

EPA, to R. Smith, EPA Region X (May

BS ulgaiiaiiiiiedindatinsdddadiiadadanss tieahindiabonsanncne l4la

Technical Memorandum from Ed Kline,

Kline Environmental Research, to Rick

GERI, Bag BR sesttinsncescosesevesessessscees 150a

Letter from Dan Easton, State of

Alaska Department of Environmental

Conservation, to John Leeds ITI, De-

partment of the Army (Dec. 6, 2004) ........... 155a

M.

il

Forest Service, Kensington Gold Project

Final Supplemental Environmental

Impact Statement (Dec. 2004) (ex-

Forest Service, Kensington Gold Project

2004 Record of Decision (Dec. 2004) ............ 207a

Coeur Alaska, Inc., Reclamation and

Closure Plan for the Kensington Gold

2 kt | | SE ren IEE 249a

Letter from Ron Klein, State of Alaska

Department of Environmental Conser-

vation, to Rich Richins, RTR Resource

Management, enclosing Certificate of

Reasonable Assurance (May 6, 2005) .......... 256a

Corps of Engineers, Section 404 Permit

I ili aad iladnaiencitindinliin 266a

Volume II

N.

EPA, Record of Decision: Kensington

Gold Project, Section 402 NPDES Per-

ss essnmsicons 287a

EPA, NPDES Permit No. AK-005057

GN i santinncthdietinenssoonsvsoonses 317a

Declaration of Joe Kahklen (Oct. 12,

Corps of Engineers, Revised Record of

BPOCHREGR CREME. BP, BP cccccccccccccvccscccsccccscoces 340a

Corps of Engineers, Section 404(b)(1)

Evaluation for Kensington Gold Project

ee EN, Tt lcashictinipaadndbanatepascencieeiinninbeniescons 378a

ili

Corps of Engineers, Section 404(b)(1)

Evaluation for Cascade Point (Mar. 29,

EI IE CSc 434a

First Amended Complaint (Apr. 4, ,

ER SES Ea os EO oe oe 459a

Opinion of the United States District

Court for the District of Alaska (Aug. 3,

ea Uiiciihickipdiiiiniciiieabiaaenantiiadbyiniiinsinniiniewsenmenss 478a

Declaration of Randy Wanamaker (Aug.

en nenientitnnniapinniniaiiiadiiaicseiepnecsinconsees 497a

Order of the United States Court of Ap-

peals for the Ninth Circuit Granting

Injunction Pending Appeal (Aug. 24,

SUI icisdesicniieicdilpipditiilinddsiabdihidiiadiitpiiitidinedensncsers 509a

Order of the United States Court of Ap-

peals for the Ninth Circuit Denying

Motion to Vacate the Injunction Pend-

ing Appeal (Dec. 8, 2006).................cceeeeeeeee 5lla

Opinion of the United States Court of

Appeals for the Ninth Circuit (May 22,

RESIS ESR Ain oi eo a ee a 517a

Order of the United States Court of Ap-

peals for the Ninth Circuit Denying

Rehearing En Banc (Oct. 29, 2007).............. 552a

. Order of the United States Court of Ap-

peals for the Ninth Circuit Staying the

Mandate (Nov. 14, 2007} ..................cccccceseeee 554a

. Order of the United States Court of Ap-

peals for the Ninth Circuit Directing

Preparation of Reclamation Plan (Nov.

ny EINE ibid iacerlpimiiniaaaiininaenacsauinepieihidatinnionnionins 555a

287a

APPENDIX N

Sam UNITED STATES ENVIRONMENTAL

&) PROTECTION AGENCY

REGION 10

1200 Sixth Avenue

Seattle, WA 98101

RECORD OF DECISION

KENSINGTON GOLD PROJECT

DECISION TO BE MADE

This Record of Decision (ROD) documents the de-

cision by the U.S. Environmental Protection Agency

(EPA) Region 10 to issue a National Pollutant Dis-

charge Elimination System (NPDES) permit for

discharges from the Kensington portal to Sherman

Creek, discharges of treated domestic wastewater to

Lynn Canal, and discharges from the proposed tail-

ings storage facility (TSF) to East Fork Slate Creek.

This project is considered a new source discharge

and, in accordance with Section 511(c)(1) of the

Clean Water Act, is subject to the provisions of the

National Environmental Policy Act (NEPA).

The ROD is issued pursuant to NEPA (42 U.S.C.

§4321 et seq.), the Council of Environmental Quality

(CEQ) NEPA regulations (40 CFR Parts 1500-1508),

and EPA's NEPA imz.2menting regulations (40 CFR

Part 6, Subpart F). EPA participated in the develop-

ment of the Kensington Gold Project Final

Supplemental Environmental Impact Statement

288a

(FSEIS) as a cooperating agency, with the U.S. For-

est Service (USFS) as the lead agency. EPA's

decision to issue an NPDES permit is based upon the

analysis in the FSEIS as supplemented by the U.S.

Army Corps of Engineers (USACE) Clean Water Act

404(b)(1) analysis, which identified alternative D as

the least environmentally damaging practicable al-

ternative. The Notice of Availability of the FSEIS

was published in the Federal Register by the USFS

on December 23, 2004. EPA issued the draft NPDES

permit on June 21, 2004 for a 45-day comment pe-

riod. Public hearings were held in Juneau, Alaska on

July 26, 2004 and in Haines, Alaska on July 27,

2004. EPA's response to comments on the draft

NPDES permit is included in Appendix A.

INTRODUCTION

The Kensington Gold Project is an underground

gold mine located approximately 45 miles north-

northwest of Juneau, Alaska, in the Tongass Na-

tional Forest (Figure 1; FSEIS Figure 1-1). The

Kensington project has undergone three iterations of

environmental review and was previously permitted

in 1998. In 1990, the Kensington Venture (a joint

venture between Coeur Alaska, Inc. [Coeur] and

Echo Bay Exploration) first submitted plans to de-

velop the mine to the USFS. The USFS completed

the Final Environmental Impact Statement (FEIS)

in 1992. The 1990 plan included underground mining

to recover the ore, processing the ore via flotation,

cyanidation, gold refining, and disposal of the tail-

ings in a tailings impoundment built in the Sherman

Creek drainage. The impoundment would have been

sized to accommodate 30 million tons of tailings. The

proposal included discharging wastewater to Lynn

Canal following treatment, and shuttling employees

289a

to the mine site using helicopters. The operation

would have used liquefied petroleum gas to fuel on-

site generators. A marine terminal developed at

Comet Beach in Lynn Canal would have handled

supply deliveries and gold shipments. The Kensing-

ton Venture never obtained all the permits necessary

to build the mine, and in 1995 Coeur became the sole

stakeholder in the property. Coeur then, in 1995,

submitted an amended plan of operations to the

USFS. In June 1996 Coeur revised the 1995 plan in

response to issues raised during scoping.

The 1996 amended plan, included removal of the

cyanide circuit and off-site processing of the flotation

concentrate, backfilling a portion of the tailings in

the mine, and disposal of the remaining tailings in a

20 million ton dry tailings facility (DTF) constructed

between Sherman and Sweeny creeks. Coeur's pro-

posal also included using diesel instead of liquefied

petroleum gas to fuel generators, and discharging

mine water to Sherman Creek and DTF effluent to

Camp Creek. The 1996 plan was analyzed in the Fi-

nal Supplemental EIS and approved by the USFS in

a ROD signed in August 1997. Coeur obtained all

permits necessary for construction from federal,

state, and local authorities, including an NPDES

permit from EPA, issued on May 14, 1998 (Permit

No. AK-005057-1). The permit authorized discharge

of drainage from the Kensington portal, which is

treated and discharged to Sherman Creek. It also au-

thorized the discharge from the permitted DTF to

Camp Creek and domestic wastewater discharge to

Lynn Canal.

In November 2001, Coeur submitted another

amendment to the plan of operations to the USFS.

This plan, which initiated a second supplemental en-

290a

vironmental impact statement, proposed a number of

changes to the approved plan, including changing the

location of the processing facilities, tailings disposal,

and site access and employing a different means of

transportation. The operation would also mine a

smaller portion of the ore body containing higher av-

erage gold concentrations. This amendment also

proposes to use a dock to be built at Cascade Point on

property held by Goldbelt Incorporated, an Alaska

Native corporation. The 2001 amended plan formed

the basis for Alternative B for the December 2004

FSEIS. The USFS selected Alternative D in a ROD

signed on December 9, 2004. Coeur revised its plan

of operations to conform to Alternative D in May

2005. The USFS approved the plan of operations in

June 2005.

The purpose of the proposed action is to consider

changes to the previously permitted project. The

changes were intended to improve efficiency and re-

duce the area of surface disturbance associated with

the 1997 mining plan and to provide more reliable

transportation and access by improving worker

safety during transit to the site and eliminating ship-

ping delays related to weather and sea conditions at

Comet Beach. The improved reliability of access

would allow Coeur to reduce the amount of diesel

storage, as well as inventories of materials and sup-

plies. Tailings disposal would require a smaller area

of surface disturbance under the proposed action

compared to the 1997 plan by utilizing a 20-acre lake

for tailings storage (Lower Slate Lake).

The U.S. Forest Service was the lead agency for

preparation of the Kensington Gold Project Final

Supplemental EIS. EPA, the U.S. Army Corps of En-

gineers, and the State of Alaska Department of

29l1a

Natural Resources (ADNR) were cooperating agen-

cies because of the federal and state authorizations

and approvals required for this project. EPA was a

cooperating agency because of a decision regarding

NPDES permit issuance. In accordance with NEPA,

the FSEIS was prepared to reduce duplication, ex-

cessive paperwork and delay, and to address federal

and state regulatory requirements. Through EPA's

participation as a cooperating agency, we have de-

termined that the FSEIS adequately describes the

potential direct, indirect, and cumulative effects as-

sociated with the Kensington Mine Project.

Sections 301 and 306 of the Clean Water Act

(CWA) require that EPA develop wastewater effluent

standards for specific industries, including gold

mines. These standards are established for both ex-

isting sources and “new sources". Because this

project would be a new source, the New Source Per-

formance Standards (NSPS) for gold mines and mills

are applicable to the project (40 CFR 440.104).

NPDES permit limits and requirements are estab-

lished to ensure compliance with the NSPS and state

water quality standards. The NSPS include effluent

limits applicable to discharges of mine drainage; they

also prohibit the discharge of process water (includ-

ing mine tailings). An exception is provided for

excess flows associated with net precipitation and/or

co-mingled mine water where discharge of such flow

is subject to the comparable effluent limits for mine

drainage. In states that have not been delegated

NPDES permitting authority, such as Alaska, EPA is

authorized to permit point source discharges of efflu-

ent, including process wastewater and stormwater.

Where EPA is the permitting agency, the regulations

provide that issuance of a new source NPDES is sub-

292a

ject to the environmental review requirements of

NEPA.

The 5-year NPDES permit issued by EPA for the

1998 project expired on May 14, 2003, but was ad-

ministratively extended until a new permit is issued

because Coeur submitted a timely application in Oc-

tober 2002. Couer submitted a revised application for

an NPDES permit on March 16, 2004. The final

NPDES application submittal, consistent with the

proposed project revisions, was made on June 15,

2004. The application addresses the current dis-

charge to Sherman Creek, treated domestic

wastewater discharge during construction, and the

proposed discharge from the tailings storage facility

(TSF) in Lower Slate Lake.

PROPOSED MINING OPERATION

The Kensington ore body extends trom the sur-

face to a depth of approximately 3,000 feet and is

irregular in both shape and distribution of gold. Af-

ter a two-year construction period, mining would be

accomplished over a projected period of 10 years us-

ing a long hole, open stoping method. Ore would be

mined at a rate of 2,000 tons per day targeting high-

grade gold ore. Ore would be hauled by truck to the

mill site located near the Jualin mining area. After

crushing, the ore would be transferred to a grinding

circuit. Following grinding, oversized material would

be returned to the head of the grinding operation,

while undersized material would be separated into

coarse and fine materials using centrifugal cyclones.

From the cyclones, heavy material would go to a

gravity concentrator and light material would go to a

conditioning tank that feeds a flotation circuit. Con-

centrate from the gravity concentrator and the

flotation circuit would be dewatered, and approxi-

293a

mately 700 tons per week of concentrate would be

transported from the site. From 2,000 tons of ore per

day, mining and processing would produce approxi-

mately 400 tons of waste rock per day and

approximately 7.5 million tons of tailings over the

lifetime of the proposed project.

Waste rock would be disposed in two disposal ar-

eas near the Kensington portal and near the Jualin

mine area. Tailings would be separated into coarse

and fine fractions. The coarse tailings would be

pumped to the mine areas that need backfill. At least

40% of the tailings would be backfilled. The fine frac-

tions would be disposed in the tailings storage

facility.

Mine drainage is currently combined with runoff

from waste rock piles and other disturbed areas and

discharged to Sherman Creek through Outfall 001,

pursuant to the 1998 NPDES permit. Underground

workings that produce mine drainage, as well as

waste rock, were developed as part of exploration ac-

tivities and will be expanded as active mining

operations are initiated. Water from mine dewater-

ing operations will continue to be collected, clarified,

and filtered underground, if necessary, and then

pumped to an above ground mine water treatment

facility. Although the revised proposal includes ac-

cess to the workings by tunnels from both the

Kensington and Jualin sides of the property, all mine

drainage would be collected and routed to Outfall

001.

Tailings slurry from the mill would flow through

a 3.5 mile pipeline to the TSF, which would be

formed by the natural lake basin of Lower Slate Lake

and a dam constructed at the outlet of the lake. The

darn would be a concrete-faced rockfill dam con-

294a

structed in two phases. The TSF would be designed

to hold 4.5 million tons of tailings. Mid-lake East

Fork Slate Creek would be diverted around the TSF.

Creek water would be removed from behind a con-

structed berm through a 20-inch diversion pipeline.

The TSF will receive water from slurry transport of

tailings as well as undiverted natural inflows from

drainage areas immediately adjacent to the TSF and

overflows from the berm. Water will be recycled from

the TSF to the mill at a rate of approximately 100

gallons per minute (gpm). The discharge from the

TSF (Ouitfall 002) will be treated via reverse osmosis

then combined with the diverted natural flows and

pumped into the East Fork Slate Creek drainage be-

low the TSF.

DESCRIPTION OF PROJECT ALTERNATIVES

NEPA requires that agencies consider alterna-

tives to the proposed action that address the

significant issues identified during the scoping proc-

ess. NEPA also requires that the alternatives

analysis include a No Action Alternative. Because

the FSEIS is a supplement to a NEPA analysis that

resulted in a permitted project (the 1997 mining

plan), the No Action Alternative in this case repre-

sents no changes to the approved project. The FSEIS

also includes an alternative (Alternative Al) that re-

flects a mining scenario that could occur if the No

Action Alternative was selected, i.e., the operator

could choose to lower the production rate and pursue

a smaller portion of "high-grade" gold ore similar to

what is proposed in the proposed action. The follow-

ing discussion and Table 1 provides a summary of

the No Action Alternative (Alternative A), reduced

mining rate of the No Action Alternative (Al), and

three action alternatives (Alternatives B, C, and D).

295a

Section 2 of the 2004 FSEIS provides detailed de-

scriptions of each of the following alternatives for the

Kensington Gold Project.

Alternative A - No Action

The No Action Alternative functions as the base-

line against which the effects of other alternatives

are compared. As noted above, the No Action Alter-

native represents a previous action, which in this

case is the 1997 mining plan that received agency

approval and authorizations in 1998. Alternative A

corresponds to the 1997 SEIS Alternative D. Alter-

native A includes mining the entire ore body and

underground crushing of ore with aboveground

grinding and flotation. Flotation concentrate would

be shipped to a processing facility off-site. There

would be no on-site cyanidation circuit. Employees

would be housed on-site and transported by helicop-

ter for weekly rotations. Supplies, including fuel,

would be delivered to a marine terminal constructed

on Comet Beach. Approximately 25% of the tailings

would be backfilled. The rest of the tailings would be

dewatered before being placed in the DTF. The DTF

would have the design capacity to hold 20 million

tons of tailings and would include an engineered

berm around each cell of the facility. Wastewater

from tailings dewatering would be treated and dis-

charged to Sherman Creek. The production rate

would be 4,000 tons of ore per day and 400 tons of

waste rock per day. The waste rock would be used in

the construction of the DTF. Road and DTF construc-

tion would require the development of sand and

gravel and till borrow areas.

Alternative Al - Reduced Mining Rate, DTF

Alternative Al reflects a mining plan similar to

that described for Alternative A but uses the same

296a

mining rate and tailings production levels consistent

with Alternatives B, C, and D (2,000 tons per day

and 7.5 million tons total, respectively).

Alternative Al would result in 4.5 million tons of

tailings being placed in the DTF, assuming that 40

percent of the tailings would be haat-died. The DTF

would be approximately 65 percent smaller than it

would be under Alternative A. The reduced mining

rate presented under Alternative Al would produce

very limited amounts of waste rock. Because waste

rock would not be available for use in DTF construc-

tion under this alternative, the impact analysis

assumes the same number of acres of sand and

gravel borrow areas would be required as under Al-

ternative A, although the coarse and fine till borrow

areas would be reduced in size. Other aspects of Al-

ternative Al, including wastewater management and

transportation of employees and materials, would be

the same as those described under Alternative A.

Alternative B —- Coeur's Proposed Action

Alternative B reflects a number of changes to the

mine plan compared to the No Action Alternative.

These changes include construction of a TSF in

Lower Slate Lake for tailings disposal instead of the

dry tailings facility, relocating milling operations to

the Johnson Creek drainage, and eliminating the

personnel camp. The operation would mine a smaller

amount of ore with a higher average gold concentra-

tion compared with that proposed under Alternative

A. The production rate would be approximately 2,000

tons of ore per day. Alternative B would include the

development of a tunnel connecting the Kensington

and Jualin areas of the mine. Access to the site

would be from marine terminals built in Slate Creek

Cove and at Cascade Point (Figure 2; FSEIS Figure

297a

1-2). A daily shuttle boat service would transport

employees to and from the project site. The TSF

would be sized to accommodate the disposal of 4.5

million tons of tailings (Figure 3; FSEIS Figure 2-6),

while approximately 3.0 million tons of tailings

would be used as backfill in the mine. Borrow areas

would be developed for construction of the TSF dam

and roads. This alternative includes recycling water

from the TSF to the mill circuit. Alternative B would

require upgrading the 5-mile-long access road and

constructing a 3.5-mile pipeline access road and a 1-

mile cutoff road connecting the other two roads.

Alternative C - Dock Location and Design/ Di-

version

Alternative C is the same as Alternative B except

it includes surface water diversions around the TSF

and a marine terminal at Echo Cove instead of Cas-

cade Point. The dock in Echo Cove would be located

approximately 0.75 mile north of the existing Echo

Cove boat ramp (Figure 2; FSEIS Figure 1-2). Mine

workers would use this dock to reach the shuttle boat

that would transport them to the dock at Slate Creek

Cove. The landing craft ramp at the Slate Creek

Cove marine terminal would be eliminated, minimiz-

ing the amount of fill placed in the intertidal zone.

Alternative C would not include recycling water from

the TSF and the mill circuit. This alternative would

include diversion channels to direct the flow from

Mid-Lake East Fork Slate Creek and overland runoff

from undisturbed areas around the TSF (Figure 4;

FSEIS Figure 2-9). The diversion would discharge to

a spillway at the top of the TSF dam. The diversion

would require a dam on Upper Slate Lake to main-

tain water levels sufficient to reach the spillway at

the TSF dam. The purpose of the diversion would be

298a

to minimize the volume of fresh water in contact

with the tailings.

Alternative D - Modified TSF Design and Water

Treatment

Alternative D was developed to address concerns

about the TSF effluent meeting NPDES permit lim-

its for protection of downstream water quality in

East Fork Slate Creek below the TSF. Alternative D

is the same as Alternative B, except it also includes

diversion of stormwater and surface water around

the TSF, TSF outfall water treatment, and a tailings

cap at closure. Alternative D includes a dam in Mid-

Lake East Fork Slate Creek that would gravity-feed

a pipeline diversion around the TSF (Figure 5;

FSEIS Figure 2-12). Water would be treated prior to

discharge from the TSF via a reverse osmosis treat-

ment system, which would provide solids and metals

removal to ensure compliance with permit limits. Ef-

fluent from the treatment system would discharge to

the diversion pipeline. Alternative D also requires a

cap over the tailings at closure unless the operator

could demonstrate to the USFS, USACE, ADNR, and

EPA that the tailings are not toxic.

ENVIRONMENTALLY PREFERABLE

ALTERNATIVE

The environmentally preferable alternative "or-

dinarily, means the alternative that causes the least

damage to the biological and physical environment;

it also means the alternative which best protects,

preserves, and enhances historic, cultural, and natu-

ral resources" (CEQ, 1981: Forty Most Asked

Questions, no. 6a).

On December 1, 2004, at the request of the U.S.

Forest Service, EPA submitted its designation of an

299a

environmentally preferable alternative for inclusion

in the FSEIS. EPA's selection of an environmentally

preferable alternative was based on the record at the

time, which lacked two important elements. First,

the record lacked a completed ESA analysis by the

National Marine Fisheries Service (NMFS) address-

ing potential impacts to listed species and designated

critical habitat in Berners Bay. Second, the record

lacked a completed Clean Water Act (CWA)

§ 404(b)(1) analysis from the U.S. Army Corps of En-

gineers, which must’ determine the least

environmentally damaging practicable alternative

and address significant degradation.

Based on information available at the time and

on EPA's comparative analysis of the alternatives,

EPA concluded that Alternative A is the Environ-

mentally Preferable Alternative. Alternative A is the

only alternative that avoids the habitat loss and the

loss of natural ecological functions in Lower Slate

Lake during mine operations. Alternative A also

avoids impacts to critical habitat and resources in

Berners Bay that would result from dock construc-

tion, operation, and vessel activities. The USFS and

the ADNR identified both Alternatives A and D as

environmentally preferable.

Since that time; NMFS has issued a Biological

Opinion (BO) and the Corps of Engineers has issued

CWA 404 permits for the project. In the BO, issued

on March 18, 2005, NMFS stated that individual

Stellar sea lions and humpback whales within the

action are may be adversely impacted. However, the

BO concluded that Alternative D, as proposed, is not

likely to jeopardize the continued existence of listed

species, or destroy or adversely modify designated

critical habitat found in proximity to the action area.

300a

NMFS maintained its earlier recommendation to use

an alternative dock location to Cascade Point, pref-

erably outside Berners Bay, to facilitate

transportation of crews to the mine. The BO also in-

cluded a list of conservation recommendations to

minimize adverse effects to the listed species.

The Corps of Engineers CWA 404(b)(1) analysis,

issued with the Record of Decision and CWA 404

permit, on June 17, 2005, concluded that Alternative

D is the least environmentally damaging alternative

based on acreages of wetland impacts. The Corps

also concluded that Alternative D is economically

more attractive than the previously permitted pro-

ject.

The USFS selected Alternative D and approved

the modifications to the 1997 Approved Plan of Op-

erations in its Record of Decision (December 2005).

The State of Alaska has also issued its decisions, au-

thorizations, and certifications for Alternative D.

However, for the reasons discussed in our De-

cember 1, 2004 letter, EPA continues to believe that

Alternative A is environmentally preferable.

EPA DECISION

EPA's decision regarding the Kensington Gold

Project involves the issuance of an NPDES permit

based on Coeur's NPDES permit application, which

reflects Alternative D. The permit sets conditions on

the discharges of pollutants from the mine to

Sherman Creek (Outfall 001), from the TSF to East

Fork Slate Creek (Outfall 002), and domestic waste-

water to Lynn Canal (Outfall 003).

Outfall 001 represents the discharge from set-

tling facilities that collect treated (metals

precipitation and filtration) mine drainage from

301la

mine dewatering operations and runoff from waste

rock piles and other disturbed areas in the Sherman

Creek drainage. Outfall 002 will discharge water

from the TSF, which includes the natural lake basin

of Lower Slate Lake and a constructed retention em-

bankment at the outlet of the lake. Outfall 003 will

discharge treated domestic wastewater for the Ken-

sington Mine camp during construction. No

permanent camp is proposed to remain at the site

during the operation phase of the project. The

NPDES permit includes effluent limitations specific

to each outfall and other requirements to ensure wa-

ter quality protection in each of the water bodies

mentioned above, including compliance with the

Alaska Water Quality Standards (AWQS) for aquatic

life and human health.

EPA made the draft NPDES permit and Fact

Sheet available for a 45-day public review period on

June 21, 2004. The draft permit contained effluent

and receiving water (ambient) monitoring require-

ments as well as requirements that the permittee

develop a Best Management Practices program for

the control of toxic and hazardous pollutants.

The final permit and response to comments are

included in this ROD in Appendix A.

FACTORS CONSIDERED IN THE DECISION

Scope of EPA's Clean Water Act § 402 Authority

EPA's NPDES permitting authority is limited to

issuing permits based on NPDES permit applications

we receive, so long as it is feasible for the project, as

described in the application, to meet water-quality

based limits. Coeur applied for an NPDES permit to

discharge wastewater based on Alternative D. Coeur

has gained approval to begin construction and opera-

302a

tion of the Kensington Mine Project from the USFS,

the USACE, and the State of Alaska, whose consent

or authorization is necessary. Coeur has demon-

strated their ability to implement treatment options

(such as reverse osmosis for outfall 002) that will en-

able them to meet permit limits.

Receiving Waters

The permit authorizes discharges through three

outfalls. Outfall 001 discharges mine water to

Sherman Creek, and is located at latitude 58° 52' 04"

North and longitude 135° 06' 55" West. Outfall 002

will discharge from the TSF to East Fork Slate Creek

at latitude 58° 49' 58" North and longitude 134° 57’

58" West. Outfall 003 will discharge treated domestic

wastewater to Lynn Canal at latitude 58° 51' 58"

North and longitude 135° 8' 28" West.

East Fork Slate Creek and Sherman Creek are

designated by the State as protected for water supply

(drinking, culinary, and food processing; agricultural

irrigation and stock watering; aquaculture; and in-

dustrial); contact and secondary recreation; and

growth and propagation of fish, shellfish, other

aquatic life, and wildlife (18 ACC 70.020(2)). Lynn

Canal is protected for marine water supply (aquacul-

ture, seafood processing and industrial); water

recreation (contact and secondary); growth and

propagation of fish, shellfish, other aquatic life, and

wildlife; and harvesting for consumption of raw mol-

lusks or other raw aquatic life.

Description of Discharges

Outfall 001

Outfall 001 represents the discharge from set-

tling facilities into Sherman Creek. Inflows to the

sediment ponds include treated mine drainage from

303a

mine dewatering operations and runoff from waste

rock piles and other disturbed areas in the Sherman

Creek drainage. The sediment pond has two cells.

Stormwater runoff from waste rock and disturbed

areas is routed to Cell 1 via a riprap lined spillway,

which is sized to handle runoff from a 100-year, 24-

hour precipitation event. A spillway, notched in the

center berm, allows flow from Cell 1 to Cell 2. Cell 2,

which is designed to treat water from mine dewater-

ing operations and high flows from Cell 1, has been

conservatively designed to hold settled solids for the

life of the mine. Discharge from Cell 2 to Outfall 001

occurs through a perforated decant pipe with a de-

sign capacity to handle the 10-year, 24-hour storm

event. Discharge flows from Outfall 001 will initially

increase due to increased mine development area

and will vary over time due to stormwater runoff.

Coeur estimates the rate of mine dewatering to

generally range from 1.33 and 2.45 cubic foot per

second (cfs). All of the flow will be collected in sumps

within the mine where initial settling will occur.

Mine drainage will be pumped to the mine water

treatment system for metals precipitation and filtra-

tion. Settled solids will be added to tailings that are

backfilled into the mine. Filter backwash will be re-

cycled to the underground mine water treatment

system.

Outfall 002

Outfall 002 will discharge water from the TSF to

East Fork Slate Creek. The natural lake basin of

Lower Slate Lake and a constructed retention em-

bankment at the outlet of the lake will form the TSF.

TSF inflows include tailings slurry from mill opera-

tions, precipitation that falls onto the lake, storm

water runoff from upland areas adjacent to the TSF,

304a

and flows from Mid-Lake East Fork Slate Creek (if

the flows are too high for the diversion to accommo-

date). The upstream flow in East Fork Slate Creek

will be collected and transferred to a 20-inch diver-

sion pipeline.

Tailings slurry will flow by gravity from the mill

to the TSF in a 3.5-mile pipeline. The pipeline will be

double-walled high density polyethylene (HDPE)

and/or steel. The tailings slurry will be discharged

into the TSF through perforations in a submerged

portion of the tailing delivery pipeline. The pipeline

will be operated so that a portion of the perforated

segment is always above the bottom of the TSF, al-

lowing the tailings to flow freely from the pipe.

The average slurry throughput to the TSF is pro-

jected to be 354 gpm with an average solids content

of 55 percent by weight (i.e., the water component of

the slurry will be approximately 247 gpm). A portion

of the slurry water will be entrained in the tailings

and will be unavailable for recycle. Coeur will recycle

an average of 100 gpm out of the TSF back to the

mill.

Coeur initially proposed to discharge effluent via

Outfall 002 without treatment other than best man-

agement practices (BMPs) to enhance settling.

However, water quality modeling indicated that total

suspended solids (TSS) limits may not be achieved

without additional treatment. In addition, back-

ground levels of aluminum in East Fork Slate Creek

and Lower Slate Lake occasionally exceed the permit

limits. As a result, Coeur amended its NPDES per-

mit application to incorporate a reverse osmosis (RO)

treatment system into the TSF design. The RO sys-

tem will reduce levels of both aluminum and TSS to

below permit limits and provide additional removal

305a

of other pollutants. A maximum total of 1,100 gpm is

authorized to be discharged out of Outfall 002.

Outfall 003

The discharge of treated domestic wastewater for

the Kensington Mine camp was previously permitted

for use during exploration, construction and produc-

tion. The current project anticipates the use of the

camp through exploration and construction. No per-

manent camp is proposed for the site during the

operation phase of the project. Domestic wastewater

will be treated and discharged from Outfall 003 to

Lynn Canal. The average flow for the plant during

construction is estimated at 30,000 galions per day

(gpd), or 20.8 gpm, based on sizing to accommodate

300 people.

Endangered Species Act (ESA)

Section 7(a)(2) of the Endangered Species Act

(ESA) requires Federal agencies to consult with the

U.S. Fish and Wildlife Service (USFWS) and the Na-

tional Marine Fisheries Service (NMFS), as

appropriate, to ensure that their actions do not jeop-

ardize the continued existence of species listed as

threatened or endangered under ESA, or destroy or

adversely modify their critical habitat.

Through the NEPA process, EPA obtained a list

of threatened and endangered species. On June 21,

2004, EPA sent a copy of the draft NPDES permit

and Fact Sheet to NMFS and USFWS. In the Fact

Sheet, EPA stated we do not expect the discharges

from the facility, which comply with the require-

ments of the permit, to adversely affect endangered

species. On November 17, 2004, the U.S. Forest Ser-

vice and the U.S. Army Corps of Engineers sent a

copy of the Biological Assessment/Biological Evalua-

306a

tion (BA/BE) to NMFS and requested initiation of

formal consultation. NMFS issued a final Biological

Opinion (BO) on March 18, 2005. The BO did not in-

clude any specific conservation recommendation

applicable to the NPDES permit issuance.

Essential Fish Habitat (EFH)

Section 305(b) of the Magnuson Stevens Fishery

Conservation and Management Act of 1996 requires

Federal agencies to consult with NMFS when any ac-

tivity proposed to be permitted, funded, or

undertaken by a federal agency may have an adverse

effect on designated Essential Fish Habitat (EFH).

As stated in the Fact Sheet, EPA has determined

that the issuance of the permit is not likely to have

an adverse effect on EFH in the vicinity of the dis-

charge. Effluent limitations have been incorporated

in the permit based on criteria considered to be pro-

tective of overall water quality in East Fork Slate

Creek, Sherman Creek, and Lynn Canal.

National Historic Preservation Act (NHPA)

The USFS completed a cultural resource survey

of the area of potential effect (APE) for the Kensing-

ton Gold Project in 2003, in compliance with the

requirements of Section 106 of the National Historic

Preservation Act (16 U.S.C. 470 et seq). The USFS

sent determinations of eligibility of 43 historic sites

within the APE to the State Historic Preservation

Office for concurrence. Additionally, Coeur, the

Alaska State Historic Preservation Office, and the

Tongass National Forest entered into a Memoran-

dum of Agreement (MOA) on November 29, 2004 to

ensure compliance with Section 106 of the NHPA

during mine construction, operation, and closure.

307a

Coastal Zone Management Act (CZMA)

The State of Alaska, Office of Project Manage-

ment and Permitting (OPMP), completed its review

of the Kensington Gold Project for consistency with

the Alaska Coastal Management Program (ACMP)

on April 25, 2005. OPMP found the project, including

the discharge of pollutants such as treated domestic

wastewater and treated non-domestic wastewater

from the Kensington Mine, to be consistent with the

ACMP.

Wetlands (Executive Order 11990)

Wetlands throughout the project area would be

affected by construction and operations. Section 404

of the Clean Water Act authorizes the U.S. Army

Corps of Engineers to issue permits for activities

that would result in the placement of dredge or fill

material in waters of the U.S., including wetlands.

Before a permit can be issued, Section 404(b)(1)

Guidelines require that projects avoid impacts to the

extent possible, minimize impacts that cannot be

avoided, and provide compensatory mitigation for

impacts that occur. Alternative D is estimated to im-

pact a total of 61.7 acres of U.S. waters, including

41.5 acres of wetlands filled, 20 acres of open water

filled, and 0.2 acres of marine waters filled (USACE

ROD, June 17, 2005). The Corps, in their CWA 404

permit and Record of Decision, determined Alterna-

tive D was least environmentally damaging based on

total wetland acreages of impact.

Floodplains (Executive Order 11988)

The Kensington Gold Project is not located

within floodplains. |

308a

Environmental Justice (Executive Order 12898)

EPA's issuance of the NPDES permit will not re-

sult in disproportionate adverse human health or

environmental effects to minority or low-income

communities.

Tribal Consultation and Coordination (Execu-

tive Order 13175)

On January 23, 2004, EPA sent letters to Chilkat

(Klukwan) Village, Chilkoot Indian Association,

Douglas Indian Association, and Tlingit and Haida

Central Council informing the Tribes that the pre-

liminary permit will be sent for tribal review. EPA

also invited the Tribes to initiate formal government-

to-government consultation with EPA in developing

the final draft permit prior to public release. EPA

transmitted the preliminary draft permit and draft

Fact Sheet to the Tribes on April 8, 2004. EPA re-

ceived no comments in response. Each Tribe also

received a copy of the draft permit and Fact Sheet at

the start of the public comment period on June 21,

2004. EPA did not receive any comments from these

Tribes.

MITIGATION MEASURES

Section 2.5 and Tables 2-6 and 2-7 of the FSEIS

identifies potential mitigation and monitoring meas-

ures required as part of Alternative D during

construction, operation, and reclamation. Additional

mitigation measures have been developed as part of

stipulations, special conditions, monitoring require-

ments of other Federal and State permits and

authorizations to ensure that environmental protec-

tion is being achieved.

Alternative D also includes the construction of a

reverse osmosis treatment system to treat the TSF

309a

effluent water. The RO system would ensure compli-

ance with permit limits for total suspended solids

and metals. The treatment plant effluent would dis-

charge into the diversion pipeline, which would flow

to East Fork Slate Creek below the TSF dam.

Once tailings disposal is complete, the tailings

would be capped to isolate any toxic contaminants

unless Coeur could demonstrate to the satisfaction of

EPA that tailings are not toxic. Although the FSEIS

refers to a cover of approximately 4 inches of native

material, the cap design (e.g., horizontal and vertical

dimensions, types of materials, placement methods,

etc.) will depend on the evaluation of the test results

and the site characterization at closure.

The U.S. Army Corps of Engineers, in its CWA

404 permit, requires a special condition for Coeur to

use nontoxic chemical flocculent to enhance the

deposition of suspended particles and reduce turbid-

ity levels in the Lower Slate Lake disposal site.

MONITORING

Under Section 308 of the Clean Water Act and 46

CFR 122.44(i), EPA must require a discharger to

conduct monitoring whenever necessary to determine

compliance with effluent limitations and assist in the

development of effluent limitations. The permit con-

tains both effluent and receiving water (ambient)

monitoring requirements. The data from ambient

mcouitoring is important for determining whether ef-

fluent limits in the proposed permit are adequate,

and may be necessary for the development of water

quality-based effluent limitations when the permit is

reissued. The permit also requires that Coeur pre-

pare a Quality Assurance Plan for all monitoring.

ara

310a

Outfall Monitoring

To ensure compliance with the effluent limita-

tions, Coeur is required to monitor the discharges

from Outfalls 001, 002, and 003 for metals, toxicity,

and other parameters on a routine basis (See Permit

Tables 1-4). The permit also requires that the per-

cent removal for BOD and TSS be calculated on a

quarterly basis for Outfall 003. This would entail

measuring the influent as well as the effluent for

these parameters.

Receiving Water (Ambient) Monitoring

The permit requires Coeur to conduct ambient

monitoring in Sherman Creek, Slate Creek, and

Johnson Creek.

Water Column Monitoring

The permit requires monthly water column

monitoring for metals and other parameters at

locations in Sherman Creek, Slate Creek, and

Johnson Creek. The Sherman Creek and Slate

Creek monitoring will provide data to assess the

characteristics of the receiving stream below the

discharges. Monitoring in Johnson Creek will be

used to determine whether the process areas are

affecting conditions in the creek.

dimen oni in

The permit requires annual sediment monitoring

for metals and other parameters and annual tox-

icity testing to assess the effect of mine effluent

on sediments within the receiving streams. The

permit requires sampling in Sherman Creek at a

location immediately downstream of Outfall 001

and at another location below the fish barrier.

Additional sampling is required at a location be-

3lla

low Outfall 002 in East Fork Slate Creek and in

lower Slate Creek below the fish barrier. Sedi-

ment sampling is also required at a location in

upper Johnson Creek immediately below the

process area.

Biological Testing and Monitoring of

Aquatic Resources

Benthic Invertebrates — The permit requires

benthic invertebrates monitoring using methods

and locations established in baseline surveys in

Sherman and Sweeny creeks. In Slate and John-

son Creeks, Coeur will define reaches to be

sampled that are representative of potential im-

pacts from Outfall 002 and the process area,

respectively. Each reach will be delineated for all

possible sampling sites. Every third or fourth

sampling site will be sampled until a total of 6

samples are collected. Sampling will be con-

ducted once during the construction period and

annually thereafter.

Resident Fish — Abundance and condition of

Dolly Varden char in Sherman, Slate, and John-

son creeks will be monitored using annual

snorkel observations or electrofishing techniques

comparable to those employed in previous base-

line studies. Surveys will be conducted in: upper,

middle, and lower Sherman Creek; East Fork

Slate Creek and Lower Slate Creek; and Johnson

Creek. These surveys will focus on fish greater

than 25 mm. Data to be derived from the surveys

include: 1) population estimates by species, habi-

tat type, and stratum, and 2) condition factor by

stratum.

Anadromous Fish — Annual surveys of spawning

salmon in Sherman, Slate and Johnson creeks

312a

will be conducted to assess the size of the es-

capement. Surveys will consist of weekly stream

counts throughout the spawning season docu-

menting the distribution of salmon within the

surveyed areas. Outmigrating juvenile pink

salmon from the Sherman, Slate, and Johnson

creek drainages will be sampled during the

spring following each year of adult counts. Quan-

titative methods, such as screw trap or inclined

plane trap will be used to estimate the relation-

ship between adult escapement and _ fry

protection.

The quality of spawning substrate used by pink

salmon will be monitored to detect possible

changes caused by potential introduction of fine

sediments into lower Sherman, Slate, and John-

son creeks. Sediment samples will be collected in

July prior to spawning activity.

Aquatic Vegetation — Annual visual surveys of

visual impacts of aquatic vegetation in Sherman,

Slate, and Johnson creeks will be conducted dur-

ing the summer months.

RECLAMATION

Section 2.3.19 of the FSEIS discusses the general

reclamation procedures for all the alternatives and

summarizes how major mine components would be

reclaimed. A more detailed closure and reclamation

plan specific to Alternative D is presented in Appen-

dix 1 of the Final Plan of Operations.

BEST MANAGEMENT PRACTICES (BMP) PLAN

Section 402 of the Clean Water Act and federal

regulations at 40 CFR 122.44(k)(2) and (3) authorize

EPA to require Best Management Practices (BMP)

Plan in NPDES permits. The BMP Plan will be used

313a

to control the discharge of toxics or hazardous pol-

lutants by way of spillage or leaks, sludge or waste

disposal, and drainage from raw material storage.

The BMP Plan must be maintained at the mine facil-

ity and amended whenever there is a change in the

facility or in the operation of the mine which materi-

ally increases the potential for an _ increased

discharge of pollutants. Annually, the BMP Plan

must be reviewed and certified.

PUBLIC INVOLVEMENT

The public involvement process is presented in

Section 1.5 of the FSEIS. The following is a chronol-

ogy of the public involvement process for the FSEIS

and NPDES permitting process:

September 13, 2002 The Notice of Intent (NOD was

published in the Federal Regis-

ter and announced the USFS'

intention to develop an SEIS

under NEPA for the Kensing-

ton Gold Project. The NOI

initiated the 30-day public

scoping period.

Sept. 19 & 21,2002 Scoping open houses held in

Juneau and Haines, respec-

tively.

January 23, 2004 Draft SEIS released to the pub-

lic for review and comment.

Feb. 24 & 26,2004 Public meetings on the Draft

SEIS were held in Juneau and

Haines, respectively.

June 21, 2004 EPA, U.S. Army Corps of Engi-

neers, and the State of Alaska

issued draft permits and draft

31l4a

decisions/authorizations (draft

NPDES permit, CWA 404 pub-

lic notices, draft State CWA

401 certifications, draft State

decisions and authorizations)

for public comment.

July 26 & 27,2004 Public hearings on draft Fed-

eral and State permits and

decisions/authorizations were

held in Juneau and Haines, re-

spectively.

CONCLUSIONS

Based on the NPDES permit application received

by EPA, Coeur's demonstration that the project can

meet permit limits, and the findings of the FSEIS,

EPA is issuing an NPDES permit, with discharge

limits, for Alternative D. The permit authorizes

treated mine water discharges from Outfall 001 to

Sherman Creek, treated TSF discharges from Outfall

002 to East Fork Slate Creek, and treated domestic

wastewater discharge during construction from Out-

fall 003 to Lynn Canal. The final NPDES perm is

included in Appendix A.

Further information regarding this Record of De-

cision (ROD) may be obtained by contacting:

Hanh Shaw

NEPA Compliance Coordinator

U.S. Environmental Protection Agency

1200 Sixth Avenue, OWW-130

Seattle, WA 98101

E-mail: shaw.hanh@epa.gov

Telephone: (206) 553-0171

Facsimile: (206) 553-0165

315a

Approving Official:

/S/ Michael F. Gearheard 6/28/2005

Michael F. Gearheard, Director

Office of Water and Watersheds

316a

Creek Cove

Alternative A Al B Cc D

(Coeur’s

Proposed

i Action)

Alternative 1998 Same as A Recycle | Same as B | Same as B

Description | permitted | w/reduced process | except with| except with

project mining rate water; no recycle | treatment

no treat- of TSF

ment of effluent by

TSF efflu- reverse

ent osmosis

and cap-

ping of the

sediment

post-

operation

Tailings DTF DTF Lower Lower Lower

Disposal Slate Lake | Slate Lake | Slate Lake

TSF TSF TSF

20 million | 4.5 million | 4.5 million | 4.5 million | 4.5 million

tons; 25% tons; 40% | tons, 40% | tons; 40% | tons; 40%

backfilled | backfilled | backfilled | backfilled | backfilled

Diversion | Stormwater | Stormwater No Ditch di- Pipeline

diversion diversion | diversion version diversion

around DTF | around DTF around around

TSF-would TSF -

require would re-

damming | quire dam

of Upper | in Mid-lake

Slate Lake | East Fork

and raising | Slate Creek

water level

20 ft. to al-

low gravity

flow

Access/Marine| On-site Same as A | No on-site | Same as B | Same as B

Facilities housing: housing; except

workers daily crew | daily crew

transported shuttle shuttle

by helicop- between | service be-

ter (12 RT marine |tween Echo

per week), terminals | Cove and

marine at Cascade Slate

terminal at Point and Creek

Comet Slate Cove; no

Beach Creek Cove; landing

(4 RT per | craft ramp

day) at Slate

DTF - drystack tailings facility

TSF - tailings storage facility

RT - round trip

318a

This permit and@ the authorization to discharge shall

expire at midnight, August 31, 2010

The permittee shall reapply for a permit reissuance

on or before March 1, 2010, 180 days before the ex-

piration of this permit if the permittee intends to

continue operations and discharges at the facility be-

yond the term of this permit.

Signed this 28th day of July 2005.

/s/Michael Gearheard

Michael Gearheard

Director, Office of Water & Watersheds

Region 10

U.S. Environmental Protection Agency

319a

TABLE OF CONTENTS

I iii ccciitcentndaendhipndiitipeenictintinvessreeseses 1

4 LIMITATIONS AND MONITORING

ti caiciiicices tineatteniiciniesenvecoscoees 3

A. Effluent Limitations and Monitoring

TUE chichardibhiniainadipniadinainilinandeiennenenves 3

B. Effluent Limitations and Monitoring

TEE iibddciddiibiiciadiiiabii i icaiineniiticninnennincanee 7

C. Effluent Limitations and Monitoring

Requirements - Outfall 003 ..........00000000... 10

D. Whole Effluent Toxicity Testing

GR IID Sic cestenesnencsscsescesseses 11

E. Receiving Water Monitoring...................... 15

F. Quality Assurance Plan (QAP).................. 20

I. BEST MANAGEMENT PRACTICES

TT iiiaidi bi ditailindidaninliepigidadieseianenieinsereensetosn 21

TE tiiehickindiisibdunntianintedeninipinieesioessasesceens 21

B. Development and Implementation

EEE REE SE ce De 21

ELS TEES Ee ee 21

D. Elements of the BMP Plan ........................ 22

ELS SLO OE 23

F. BMP Plan Modification ............................. 23

Ill. MONITORING, RECORDING AND

REPORTING REQUIREMENTS ................... 24

A. Representative Sampling (Routine

and Non-Routine Discharges).................... 24

B. Reporting of Monitoring Results ............... 24

C. Monitoring Procedures.......................2..00008 25

D. Additional Monitoring by Permittee ......... 25

cc ccccceccreescesersccsccenceses 25

F. Retention of Records .............................0000. 25

G. Twenty-four Hour Notice of Noncom-

STEIGER 25

H

. Other Noncompliance Reporting............... 26

VI.

320a

I. Changes in Discharge of Toxic Sub-

I dtiiniiticielnisunitiidineeseninendpnreentansescccnsoneses

J. Compliance Schedules ........................:s00ee

COMPLIANCE RESPONSIBILITIES............

EES A I

Penalties for Violations of Permit

a D>

i ia rateenibonnbiniiidl

I i aie

Proper Operation and Maintenance..........

Bypass of Treatment Facilities..................

IT Ce ee

cise srindnctapeipimtennceenninnnenden

ceric cniindcdisadeaniaiianee

Anticipated Noncompliance .......................

EN EE LIE OED occccseseccesesessccncosseseoes

ee

ic acc cinceosasnacainiinn

Duty to Provide Informatio .......................

Se IINIID cocccccccssccocnccesastsrnssececenents

Signatory Requirements ............................

Availability of Reports .....................::ceeeeee

Inspection and Entry ..............cccccccscccscssses

cas llsccciiaailbaainessdiatinieelessinilill

Ea iciactcicescesiidiriettsinicenimmnntannaninaiiiial

CM MOMNOODPOSRDONME

321la

I. LIMITATIONS AND MONITORING

REQUIREMENTS

During the effective period of this permit, the Per-

mittee is authorized to discharge pollutants from the

outfalls specified herein to Sherman Creek, East

Fork Slate Creek, and Lynn Canal within the limits

and subject to the conditions set forth herein. This

permit authorizes the discharge of only those pollut-

ants resulting from facility processes, waste streams,

and operations that have been clearly identified in

the permit application process.

A. Effluent Limitations and Monitoring -

Outfall 001

The permittee must limit and monitor dis-

charges from outfall 001 as specified in

Table 1, below. All figures represent maximum

effluent limits unless otherwise indicated. The

permittee must comply with the effluent limits

in the tables at all times unless otherwise in-

dicated, regardless of the frequency of

monitoring or reporting required by other pro-

visions of this permit.

1. Table 1

Table 1 - Outfall 011 Effluent Limitations

_ and Monitoring Requirements

Effluent Monitoring

Sasdnces Limitations Requirements

, | ae meh . Max. | Avg. Sample | Sample | Sample

Parameter CaCOz | Units | Daily | Monthly |Frequency”|Location| Type

influent (1) 24 hr

Aluminum® — ug/L 143 71 weekly | EMuent | ~

(ED comp.

Ammonia, mg/l. 24hr

Total — py 4.0 2.0 weekly E come.

, 24 hr.

Arsenic — ug/L -_- _ monthly VE comp.

. , 3 24 hr

Cadmium 60sH<100 | ug/L 0.3 0.1 weekly VE

comp.

322a

Table 1 - Outfall 011 Effluent Limitations

and Monitoring Requirements

Effluent Monitoring

Hardness Limitations Requirements

, | 28 mg/L Max. | Avg. Sample | Sample | Sample

Parameter’ | CaCO, | Units | Daily |Monthly|Frequency”|Location| Type

24 hr.

100sH<200| ug/L 0.4 02 weekly VE comp.

24 hr.

H2200 ug/L 0.7 0.4 weekly VE comp.

3 » 24 hr.

Copper 50sH<100 | ug/L 7.3 3.6 weekly VE comp.

24 hr.

100SH<200| ug/L 14.0 70 weekly VE comp.

2 24 hr.

H2200 ug/L 26.9 13.4 weekly VE comp.

Chromium, > 24 hr.

Total mt ug/L ‘a 6 weekly Ve comp.

M4 4 —_ * 24 hr.

Chromium VI _ ug/L 16 8 VE comp.

. 24 hr.

Iron _ ug/L 1700 800 weekly VE comp.

3 » 24 hr.

Lead 60sH<100 | ug/L 2.2 LI weekly VE comp.

24hr

100SH<200 | ug/L 5.2 2.6 weekly VE comp.

. 24 br.

Hz200 ug/L 12.6 6.3 weekly VE comp.

, 24 hr.

Mangancsc — ug/L _ weekly VE comp.

5 24 hr.

Mercury” _ ug/l. | 0.02 0.01 weekly VE pono

Nickel? 50sH<100 | ug/l. | 477 | 228 weekly ve «=| C24 Br.

comp.

. 24hr

100sH<200| ug/L 85.7 42.7 weekly VE comp.

24 hr.

H2200 ug/L 154.0 76.8 weekly VE comp.

, mg/L 24 hr.

Nitrate -- as N 20 10 weekly E comp.

— . 24 hr.

Selenium — ug/L 8.2 41 weekly VE comp

; . 24hr

Silver® 50s11<100 | ug/L. 12 06 weekly VE comp.

> 24 hr.

100sH<200! ug/L 4.1 2.0 weekly VE comp.

' , 24hr

H2200 ug/L 13.4 6.6 weekly VE come.

‘Zinc® 60sH<100 | ug/L 66.6 33.2 weekly § VE a6 be.

l ; : L a. 2

323a

Table 1 - Outfall 011 Effluent Limitations

and Monitoring Requirements

Effluent Monitoring

Slasdness Limitations Requirements

hb mg/l. Max. Avg. Sumple Sample | Sample

Parameter CaCOy | Units | Daily |Monthly|Frequency”|Location| Type

. 24 hr

100sH<200| ug/L 119.8 59.7 weekly VE comp.

Hz200 | ug/L | 2156 | 107.5 | weekly ms (| CU.

CcOrDp.

_

24 hr.

TDS = mg/L 1000 1000 weekly E oom.

TDS anjons/ 24 hr.

cations Pa me/L. os = quarterly E comp.

24 hr.

Sulfate - rog/L 200 200 weekly E comp.

bidi = , .

a — | NTU |scePermit Part 1.A5.| weekly E grab

Turbidity, nN

natural condi- _ NTU — =_ weekly — grab

ground

tion

mg/L down-

Hardness _ CaCO, _ _ weekly pe-vanacortl grab

pH = 8.U. |see Permit Part 1.A.4.| Continuous E Recorder

‘ : 24 hr.

TSS _— mg/L 30 20 daily VE comp.

Flow — gpm — _ Continuous VE Recorder

Temperature — °C - -- Weekly E grab

Dissolved »

Oxygen — mg/L -- -- Weekly E grab

Chronic Whole 94 hr

Effluent _ TU, 1.6 1.1 Monthly E

Toxicity’ (WET) —

‘.

2-

Parameters must be analyzed and reported as tota) recoverable unless otherwise noted

Weekly sampling shall occur on the same day of each week, unless the Permittee can document that

sampling could not be performed due to extreme conditions. In such cases, a detailed explanation of

the reason sampling could not be performed shal! be prepared and kept with the analytical results

for that day

Reporting of a maximum daily limit violation is required according to Permit Part II1.G

Chromium VI (Cr V1) must be analyzed during the next sampling event when results are received

showing 4 tota] chromium measure exceeding 11 ug/L - the sample holding time for chromuum V1 is

24 hours Cr VI must be analyzed and reported as dissolved

Mercury must be analyzed and reported as total.

This monitoring shal! include a standard and complete suite of thase cations and aniona contributing

to TDS including but not lumited to boron (B), sodium (Na), potassium (K), calcium (Ca), magnesium

(Mg), Nuoride (F), chloride (Cl), sulfate (SO4), total alkalinity, hardness, pH, and electrical conduc-

tivity

See Permit Part 1.D. for whole effluent toxicity testing requrements

324a

2. Until underground activities commence,

the following monitoring frequencies shall

apply. These frequencies shall also apply

during a long term shut down of the mine.

These frequencies shall be implemented af-

ter a 6 month closure period.

TABLE 2

Monitoring Requirements for Outfall 001

(During Non-Mining Periods)

Monitoring Requirement

Effluent Paramcter' Units Sampling Sample

Frequency Type

Aluminum ug/L Quarterly Grab

Ammonia, Total ug/L Quarterly Grab

Arsenic ug/L Quarterly Grab

Cadmium ug/L Quarter’ Grab

Copper ug/L Quarterly Grab

Total Chromium ug/L Quarterly Grab

Iron ug/L Quarterly Grab

Lead ug/L Quarterly Grab

Mercury” ug/L Quarterly Grab

Nickel ug/L | Quarterly _ Grab

Nitrate mg/L _ Quarterly Grab

Selenium ug/L Quarterly Grab

Silver ug/L Quarterly Grab

Zinc ug/L Quarterly Grab

Total Dissolved Solids mg/L Quarterly Grab

TDS anions/cations mg/L Annually Grab

Sulfate mp/l. Quarterly Grab

Hardness® mg/L Monthly - Instream Grab

pH* $.u. : Quarterly Grab

Total Suspended Solids _mg/L 4 Daily - Grab

Flow MGD Continuous Recorder

Temperature a Quarterly Grab

WET, Chronic Tu. Annually Grab

1 The Permittee shall conduct analysis for total recoverable and dissolved.

2 Mercury shall be analyzed as total.

3. The Permittee shall sample the receiving water hardness downstream of

the discharge.

4 The Permittee shall monitor and report the number of pH excursions out-

side the range of 6.5 to 8.5 Standard Units

{5 Chronic toxic units (See Definitions).

325a

. The permittee must not discharge any

floating solids, visible foam in other than

trace amounts, or oily wastes that produce

a sheen on the surface of the receiving wa-

ter.

. The pH must not be less than 6.5 standard

units (s.u.) nor greater than 8.5 Standard

units (s.u.). During continuous monitoring

required in Table 1, the Permittee shall

monitor the total time outside the range for

the month, the length of each excursion

and the number of pH excursions outside

the range of 6.5 to 8.5 Standard Units

(s.u.). The Permittee shall report the total

time outside the range for the month as

well as the number of individual excursions

which exceed 60 minutes.

. The turbidity measured in nephelometric

turbidity units (NTU) must not be more

than 5 NTUs above the natural condition.

The natural condition sample taken from

Sherman Creek must be taken upstream of

the discharge point within an hour of the

effluent sample.

. The permittee must collect effluent sam-

ples from the effluent stream after the last

treatment unit prior to discharge into the

receiving waters.

. Minimum Levels. For all effluent monitor-

ing, the permittee must use analytical

methods that can achieve a minimum level

(ML) less than the effluent limitation, if

possible. For parameters that do not have

effluent limitations, the permittee must

326a

use methods that can achieve MLs less

than or equal to those specified in Table 6

(Permit Part I.F.1.).

8. Chromium VI has an average monthly ef-

fluent limit that is not quantifiable using

EPA approved or approvable analytical

methods. EPA will use 10 ug/L (the ML for

EPA Method 218.4) as the compliance

evaluation level for this parameter.

9. For purposes of reporting on the DMR, for

a single sample, if a value is less than the

MDL, the permittee must report "less than

{numeric value of the MDL}" and if a value

is less than the ML, the permittee must re-

port "less than {numeric value of the ML)."

For purposes of calculating monthly aver-

ages, zero may be assigned for values less

than the MDL, the {numeric value of the

MDL} may be assigned for values between

the MDL and the ML. If the average value

is less than the MDL, the permittee must

report "less than (mumeric value of the

MDL)" and if the average value is less than

the ML, the permittee must report “less

than {numeric value of the ML}." If a value

is greater than the ML, the permittee must

report and use the actual value.

B. Effluent Limitations and Monitoring -

Outfall 002

The permittee must limit and monitor dis-

charges from outfall 002 as specified in the

Table 3, below. All figures represent maximum

effluent limits unless otherwise indicated. The

permittee must comply with the effluent limits

in the table at all times unless otherwise indi-

327a

cated, regardless of the frequency of monitor-

ing or reporting required by other provisions of

this permit.

1. Table 3

Table 3 - Outfall 002 Effluent Limitations

and Monitoring Requirements |

Effluent Monitoring

oe a idettations Requirements

Maximum | Average| Sample Sample

Daily Monthly |Frequency’} Type

Aluminum ug/L 143 71 weekly |24 hr. comp.

Ammonia, Total pr 3.5 1.7 weekly Grab

Arsenic ug/L — -- monthly [24 hr. comp.

Cadmium’ ug/L 0.2 0.1 weekly [24 hr. comp.

Copper*® ug/L 3.8 1.9 weekly /|24 hr. comp

Chromium, Total* | ug/L = _ weekly [24 hr. comp.

Chromium VIi** ug/L 16 8 — 24 hr. comp.

Iron ug/L 1700 800 weekly [24 hr. comp.

Lead* ug/L 0.9 0.5 weekly {24 hr. comp.

Mangancse ug/L - weekly (24 hr. comp.

Mercury** ug/L 0.02 0.01 weekly /|24 hr. comp.

Nickel® ug/L 26 13 weekly |24 hr. comp.

Selenium’ ug/L 8.2 4.1 weekly | 24 hr. comp.

Silver® ug/L 0.4 0.2 weekly (|24 hr. comp.

Zinc? ug/L 37 18 weekly [24 hr. comp.

TDS mg/L 500 500 weekly [24 hr. comp.

arceraggga mg/L — quarterly [24 hr. comp.

Nitrates mg/L | = weekly grab

Sulfates mg/1 250 | 250 weekly (24 hr. comp.

Turbidity, effluent | NTU | see Permit Part 1.B.4. weekly grab

mots natural NTU _ weekly grab

pH 8.U. see Permit Part 1.B.3. | Continuous | Recorder

TSS mg/l. 20 30 daily 24 hr. comp

Outfall Flow gpm 1,100 — Continuous | Recorder

Temperature °C a — weekly grab

nen mel weekly | — grab

eee Stee TU, 1.6 11 Monthly (24 hr. comp.

328a

Table 3 - Outfall 002 Effluent Limitations

and Monitoring Requirements

1 -

2.

Parameters must be analyzed and reported as total recoverable unless oth-

erwise indicated.

Weekly sampling shall occur on the same day of each week, unless the Per-

mittee can document that sampling could not be performed due to extreme

conditions. In such cases, a detailed explanation of the reason sampling

could not be preformed shall be prepared and kept with the analytical re-

sults for that day.

Reporting of a maximum daily limit violation is required according to Per

mit Part III.G.

- Cr VI must be analyzed during the next sampling event when results are

received showing a total chromium measure exceeding 11 ug/L - the sample

holding time for Cr VI is 24 hours. Cr VI must be analyzed and reported as

dissolved

- Mercury must be analyzed and reported as total.

- See Permit Part I.D. for whole effluent toxicity testing requirements.

2. The permittee must not discharge any

floating solids, visible foam in other than

trace amounts, or oily wastes that produce

a sheen on the surface of the receiving wa-

ter.

The pH must not be less than 6.5 standard

units (s.u.) nor greater than 8.5 standard

units (s.u.). The Permittee shall monitor

the total time outside the range for the

month, the length of each excursion and

the number of pH excursions outside the

range of 6.5 to 8.5 Standard Units (s.u.).

The Permittee shall report the total time

outside the range for the month as well as

the number of individual excursions which

exceed 60 minutes.

The turbidity measured in nephelometric

turbidity units (NTU) must not be more

than 5 NTUs above the natural condition.

The background level for turbidity shall be

measured at a point upstream of the dis-

329a

charge point in the diversion around the

TSF.

. The permittee must collect effluent sam-

ples from the effluent stream after the last

treatment unit prior to discharge into the

receiving waters.

. Minimum Levels. For all effluent monitor-

ing, the permittee must use analytical

methods that can achieve a minimum level

(ML) less than the effluent limitation, if

possible. For parameters that do not have

effluent limitations, the permittee must

use methods that can achieve MLs less

than or equal to those specified in Table 6

(Permit Part I.E.1.).

. Chromium VI has an average monthly ef-

fluent limit that is not quantifiable using

EPA approved or approvable analytical

methods. EPA will use 10 ug/L (the ML for

EPA Method 218.4) as the compliance

evaluation level for this parameter.

. For purposes of reporting on the DMR, for

a single sample, if a value is less than the

MDL, the permittee must report "less than

{numeric value of the MDL)" and if a value

is less than the ML, the permittee must re-

port “less than {numeric value of the ML}."

For purposes of calculating monthly aver-

ages, zero may be assigned for values less

than the MDL, the {numeric value of the

MDL} may be assigned for values between

the MDL and the ML. If the average value

is less than the MDL, the permittee must

C. Effluent Limitations

330a

report "less than {numeric value of the may

and if the average value is less than the

ML, the permittee must report “less than

{numeric value of the ML}.” If a value is

greater than the ML, the permittee must

report and use the actual value.

and Monitoring

Requirements - Outfall 003

The permittee must limit and monitor dis-

charges from outfall 003 as specified in the

Table 4, below. All figures represent maximum

effluent limits unless otherwise indicated. The

permittee must comply with the effluent limits

in the table at all times unless otherwise indi-

cated, regardless of the frequency of

monitoring or reporting required by other pro-

visions of this permit.

1. Table 4:

Table 4

Effluent Monitoring

Pinetes Units ' Limitations Requirements

Maximum); Avg. Weekly Sample Sample

Daily Monthly Avg. Frequency Type

Flow gpd 60,000 | 30,000 — Daily Recording

Biochemi-

cal Oxygen . ‘ . .

Semend mg/L 60 30 45 Weekly Grab

(BOD;,) - > = | 7

Total |

Suspended 2 ,

Solids mg/L 60 30 45 Weekly Grab

| (TSS) is Te Saoeer

Fecal 4/100 150,000 | 100,000 -- Weekly Grab

Coliform ml .

Chlorine’ mg/L 0.02 _ Weekly Grab

pH $.U. See Permit Part I.C.3. Weckly Grab

1 - Monitoring required only if chlorine is used. See Permit Part I.C.6., below.

33la

2. The permittee must not discharge any

floating solids, visible foam in other than

trace amounts, or oily wastes that produce

a sheen on the surface of the receiving wa-

ter.

. The pH must not be less than 6.5 standard

units (s.u.) nor greater than 8.5 standard

units (s.u.).

. Influent (prior to treatment) measures of

BOD, and TSS shall be done on a quarterly

basis. From this information, percent re-

moval shall be calculated and reported on

the DMR in January, April, July, and Sep-

tember for the previous quarter. Percent

removal shall meet or exceed 85% for both

332a

APPENDIX P

DECLARATION OF JOE KAHKLEN

JOE KAHKLEN declares under penalty of per-

jury as follows:

1. My name is Joe Kahklen. I reside at 800 F

Street, Unit D6, Juneau, Alaska, 99801. I am the

Chairman of the Board of Directors of Goldbelt, In-

corporated ("Goldbelt"). I am making this declaration

in support of the Motion of Goldbelt to intervene as a

defendant in this litigation.

2. lam a Tlingit Indian. The name Tlingit trans-

lates roughly to "the real people." My traditional

name is Kokeesh, my moiety is Raven, and my clan

is Dog Salmon. | was the first CEO and President of

Goldbelt when it was formed in 1974, and I have

been active in corporate affairs ever since.

3. Berners Bay and surrounding lands, including

Cascade Point and the lands on which the Kensing-

ton Gold Project will be developed are within the

aboriginal territory of the Auk Kwaan Tlingit, whose

descendants are the modern day shareholders of

Goldbelt.

4. Berners Bay is an important subsistence

hunting and fishing area for Juneau Tlingit. Goldbelt

would not be a party to any development that signifi-

cantly impacted use of the area for subsistence

activities. Goldbelt and its shareholders have par-

ticipated in the process of assessing the environ-

333a

mental impacts of the Kensington project - including

the impacts of constructing the Cascade roint dock

and transporting mine workers across Berners Bay.

Goldbelt and Coeur have agreed to extraordinary

mitigation measures to insure that the resources of

Berners Bay will not be harmed. Significantly, the

plaintiffs do not challenge the adequacy of the Sup-

plementa] Environmental Impact Statement, which

concluded that with the mitigation required by the

Forest Service's decision, the impacts of the project

on Berners Bay will be minimal.

5. In the years since first contact with non-

Native cultures, Tlingit lands, including Berners

Bay, were encroached upon and wrongfully appro-

priated by individuals in populated areas, such as

Juneau, and by the United States government for in-

clusion in the Tongass National Forest. The Tlingit

received partial compensation for the loss of their

lands as a result of a judgment issued by the United

States Claims Court in 1968.

6. In 1971, Congress further addressed the issue

of Alaska Native land claims by enacting the Alaska

Native Claims Settlement Act ("ANCSA"), which

granted some 45 million acres of land and $1 billion

as compensation for the extinguishment of Native

aboriginal title. In order to receive benefits under

ANCSA, Alaska Natives were required to organize as

corporations under Alaska law. Land entitlements

were organized primarily around traditional village

sites, with village corporations receiving surface es-

tate and regional corporations the subsurface estate.

Because the territory of Tlingit in the Juneau area

had been subsumed into the City and Borough of

Juneau, however, Tlingit in the Juneau area (along

with three other communities) were -incorporated

334a

under a separate section of ANCSA into so-called

“urban corporations," with the right to select 23,040

acres of land in reasonable proximity to their mu-

nicipalities. Congress expected that these lands

would be selected for their economic potential, which,

in Southeast Alaska at the time meant timber.

7. In 1974, the Juneau area Tlingit organized

Goldbelt Incorporated, which currently has more

than 3,000 shareholders. In due course the Secretary

of the Interior made withdrawals of land for selection

by Goldbelt, including lands on Admiralty Island

within the Admiralty Island National Monument.

Environmental groups, including the Sierra Club

(which is a plaintiff in this litigation) immediately

brought suit challenging the legality of the Admi-

ralty Island withdrawals. To avoid the delay and

expense of that litigation, in 1979 Goldbelt agreed to

exchange its Admiralty Island selections for less sen-

sitive lands on the mainland, including approxi-

mately 1,000 acres of land on and around Cascade

Point on the south shore of Berners Bay.

8. The Berners Bay lands, which have high val-

ues because of their easy access from the Juneau

road system, are critical to the economic future of

Goldbelt and its shareholders. In recognition of this

fact, the City and Borough of Juneau has designated

portions of Goldbelt's lands near Cascade Point as a

"new growth area," and Goldbelt, at great expense,

has developed a phased plan for development of the

area, beginning with dock facilities at Cascade Point.

A dock at this location would have substantial value

as a ferry terminus to northern Lynn Canal and the

communities of Haines and Skagway, as a service

site for fishing vessels, and as an embarkation point

335a

for whale watching and other tourism activities, in

addition to servicing the Kensington Mine.

9. Having, in effect, forced Goldbelt off of Admi-

ralty Island and into Berners Bay and Cascade Point

in particular, the same environmental groups, lead

by the plaintiffs in this litigation, have bitterly op-

posed every effort of Goldbelt to realize any economic

benefit from its Berners Bay lands. In 1998, these

group successfully opposed Goldbelt's application for

a dredge and fill permit to construct a dock at Cas-

cade Point. The Corps of Engineers’ decision was

based in part on a finding that there was no demon-

strated public or economic need for a dock at that

time. That requirement is presently satisfied by the

inclusion of the Cascade Point marine terminal in

the Kensington Gold Project Plan of Operations and

the need to ferry workers to the mine site.

10. In 1999, SEACC and the Sierra Club ap-

pealed a Forest Service decision authorizing

construction of a right-of-way to allow administrative

access to Goldbelt's lands at Cascade Point.

11. The marine terminal cannot be constructed

without a conditional use permit ("CUP") from the

City and Borough of Juneau ("CBJ"). SEACC strenu-

ously opposed Goldbelt's application for a CUP.

When it became clear that a permit would be

granted, SEACC succeeded in having the CBJ Plan-

ning Commission and Assembly insert a condition in

the CUP that the dock could be used solely to trans-

port workers via a single ferry to the Kensington

mine site. So conditioned, the CUP was granted on

October 15, 2004.

12. In 2003, Goldbelt once again applied for a

dredge and fill permit to construct a dock at Cascade

Point to serve as a marine terminal for transporting

336a

workers to the mine site. Although the 404 permit

application was in the name of Goldbeit as the prop-

erty owner, the dock is an integral part of the

Kensington Gold Project Plan of Operations. The en-

vironmental impacts of the dock were considered in

the Supplemental Environmental Impact Statement

prepared for the Plan of Operations and associated

federal permits. On July 15, 2005, the Corps issued a

404 permit for the Cascade Point marine terminal.

The Corps has advised Goldbelt, however, that use of

the dock for any purpose other than mine worker

ferry »perations, as required in Goldbelt's CUP from

CBJ, may require re-noticing and amendment of the

Corps' permit. Goldbelt has expended considerable

time, effort and resources in pursuing a permit for a

marine terminal at Cascade Point in reliance on

Coeur's plans for the Kensington Mine.

13. As a consequence of SEACC's opposition,

Goldbelt's proposed Cascade Point dock is a dedi-

cated facility that is only viable if the mine goes into

operation. If SEACC, the Sierra Club and Lynn Ca-

nal Conservation succeed in invalidating the Plan of

Operations and blocking construction of the Kensing-

ton Mine, the practical and legal effect will be to

block construction of the Cascade Point dock, as well.

A recent Op-Ed piece by a representative of plaintiff

Lynn Canal’ Conservation (Attachment A) makes it

clear that stopping the commute of mine personnel

between Cascade Point and Slate Creek Cove is a

principal, if indirect, aim of the litigation. SEACC

has formally requested the Corps of Engineers to re-

consider and deny Goldbelt's 404 permit for Cascade

Point on the ground that the dock is dedicated to

mine service (thanks to their efforts) and Coeur could

transport workers from another site (Yankee Cove)

not owned by Goldbelt. Attachment B.

337a

14. In all its proposals for development of the

Kensington mine, Coeur Alaska has shown sensitiv-

ity to the needs of the Native Community. In 1996,

Coeur entered into an agreement with a consortium

of Southeast Alaska Native organizations, including

Goldbelt that, among other provisions, gives a bid-

ding preference to members of the coalition in

contracts for construction and servicing the mine.

Because Goldbelt is the Native Corporation in closest

proximity to the Kensington mine, in 2000, Goldbelt

and Coeur entered into a separate agreement con-

templating leases of land (including the Cascade

Point dock site) and future contracting consideration,

including contracting for worker transportation and

ferry service across Berners Bay for commuting

Coeur employees. Coeur's Plan of Operations, under

challenge in this litigation, is premised on use of

Cascade Point and ferry service provided by Gold-

belt. Thus, the litigation threatens a direct an

immediate economic impact to Goldbelt.

15. Coeur has also made commitments for local

and Native training and hire. Unemployment and

underemployment among Goldbelt shareholders is

significantly higher than for non-Natives. Many of

the jobs that are available to Goldbelt shareholders

are in the seasonal tourism industry, where wages

are low and fringe benefits are not customary. The

Kensington mine represents the most promising new

source of meaningful, well paying jobs with benefits

for our shareholders.

16. ‘To summarize, the pending litigation is just

the latest in a consistent series of actions by the

plaintiffs designed to prevent any and all develop-

ment of Goldbelt's lands at Berners Bay. Their

efforts to derail the Kensington Mine, if successful,

\

338a

will not only kill Goldbelt's dock at Cascade Point,

but also will deliver a crushing blow to the hopes of

Goldbelt and its shareholders to benefit from the

economic prosperity that the mine would bring to the

community of Juneau.

17. Because of its historical roots in Berners Bay

and its involvement in the permitting process, Gold-

belt is in a position to provide the court with

information that may not be available to other par-

ties. Paragraph 83 of the complaint, for example,

contains misleading information concerning the im-

portance of Cascade Point as a herring spawning

area. Dive surveys performed by Goldbelt and pro-

vided to the Corps of Engineers demonstrate that the

small amount of herring spawning habitat that will

be impacted is marginal. The Alaska Department of

Fish and Game reports that Cascade Point is used

infrequently for spawning. Because of the impor-

tance of the mine to Goldbelt and its shareholders,

Goldbelt is also in a unique position to provide the

Court with information concerning balancing of the

equities.

18. No other party can adequately represent

Goldbelt's interests in this litigation. The primary in-

terest of the federal agencies and the State of Alaska

is in defending the permitting process. They will not

be harmed if the mine is enjoined. Coeur's principal

interest is in opening and operating the mine.

Transportation and housing of employees are sub-

sidiary issues. The plaintiffs have argued that.

transportation and housing could be accommodated

in several ways that would not require a marine

terminal at Cascade Point -- such as transportation

by helicopter (Alternative A, or the "no action" Alter-

native favored by plaintiffs) or use of the permitted

339a

dock facility at Yankee Cove outside Berners Bay on

Lynn Canal. These alternatives are more costly, less

effective to the purposes of the Plan of Operations,

and involve significantly higher safety risks. Never-

theless, at some point, one oi these alternatives

might scem to Cocur preferable to the costs and un-

certainty of protracted litigation.

DATED this 12th day of October, 2005, at

Juneau, Alaska.

/s/Joe Kahklen

Joe Kahklen

340a

APPENDIX Q

REVISED

DEPARTMENT OF THE ARMY

RECORD OF DECISON

&

PERMIT EVALUATION

APPLICANT: COEUR ALASKA, INCORPORATED

and Goldbelt, Incorporated

APPLICATION NO.: POA-1990-592-M and POA-1997-245-N

WATERWAY: Lynn Canal and Berners Bay

This document constitutes the United States (U.S.)

Department of the Army, Corps of Engineers' (Corps)

Record of Decision (ROD), compliance determination

according to the National Environmental Policy Act

(NEPA), the U.S. Environmental Protection Agency's

(USEPA) Section 404(b)(1) Guidelines! (Guidelines),

and the public interest review for Coeur Alaska, In-

corporated, (hereafter referred to as "“Coeur"),

proposed Kensington Gold Project.

The U.S. Forest Service (USFS) initiated the NEPA

process to identify and analyze alternatives to the

amended Mining Plan of Operation submitted to the

USFS for the operation of the Kensington Gold Mine.

The USFS was the lead Federal agency for the pro-

ject, and the Corps was a cooperating agency to the

Environmental Impact Statement (EIS) published in

1 40 CFR 230

341a

February 1992, and to the Supplemental EIS (SEIS)

dated August 1997. The Corps has been a cooperat-

ing agency on and throughout the current Final

SEIS (FSEIS) process, which was completed in De-

cember 2004, when the USFS published the FSEIS

and the USFS' ROD. Alternative D is the USFS's

preferred alternative and has been adopted by

Coeur.2 The Corps authorized Alternative D, to two

different permittees in separate permits (e.g., to

Coeur for the Kensington Gold Project and to Gold-

belt, Incorporated (hereafter referred to as

‘'Goldbelt") for the Cascade Point marine facility).

The aforementioned documents® included a complete

project impact analysis and review of the direct, sec-

ondary, cumulative, and reasonably foreseeable

impacts of the project as well as pertinent alterna-

tives. These analyses have also resulted in minor

changes to the proposed activities.

I have independently reviewed and evaluated the in-

formation in the EIS, the DSEIS and the FSEIS, in

accordance with 40 CFR 1506.3 and 33 CFR 230.21,

and have found them to be accurate assessments,

and therefore appropriate for the purposes of the

2 The applicant had originally applied for Alternative B

(described in Section VI, later in this ROD), Alternative D

was not in the Draft of the FSEIS, hereafter referred to as

the DSEIS, but originated later as a result of comments

received from Federal, State and local agencies, as well as

the land manager (USFS), with respect to the DSEIS.

3 These documents are all available at the USFS, 8465

Old Dairy Road, Juneau, AK 99801. A copy of each was

incorporated into the case file.

342a

public interest review and alternatives analysis re-

quired by 33 CFR 320.4(b)(4) and 40 CFR 230.10.

The Corps hereby adopts the FSEIS for the Kensing-

ton Gold Project, and those parts of the Kensington

Gold Project EIS and SEIS not changed by the

FSEIS.

I. DECISION: I have decided, in light of the

overall public interest, to issue two Corps permits

pursuant to Section 10 of the Rivers and Harbors Act

of 1899 (33 U.S.C. 403), and pursuent to Section 404

of the Clean Water Act (CWA) (33 U.S.C. 1344)

(10/404 permit). One permit will be issued to Coeur

to authorize the discharge of processed mine tailings

into Lower Slate Lake, and the discharge of fill ma-

terials into waters of the U.S. to construct a marine

dock facility at Slate Creek Cove in accordance with

the attached drawings (Attachment E), Alternative D

in the FSEIS and this ROD.

The second permit will be issued to Goldbelt for the

Cascade Point Docking Facility. See Plans of Gold-

belt, attachment A.

The Corps' ROD is based upon information contained

in the EIS, DSEIS, the FSEIS and the USFS's ROD,

the stated views of Federal, State, local agencies, the

interested public, current national policy and appli-

cable laws and regulations. This decision has been

made in conformance with the USEPA memoran-

dum, entitled, "Clean Water Act Regulation of Mine

Tailings", dated May 17, 2004. The possible conse-

quences of all alternatives, including the USFS's

preferred alternative, have been evaluated in terms

of environmental effects, social well-being, and the

343a

public interest. All factors which may be relevant to

my decision were considered, including the cumula-

tive effects thereof. These factors included, but were

not limited to conservation, economics, aesthetics,

general, environmental concerns, wetlands, cultural

values, fish and wildlife values, flood hazards, flood

plain values, land use, navigation, shore erosion and

accretion, recreation, water supply and conservation,

water quality, energy needs, safety, mineral needs,

consideration of property ownership, and in general,

the needs and welfare of the people.

Turbidity, total suspended solids (TSS), aluminum,

and chromium are the principal components and

elements of concern within the tailing storage facility

(impoundment). The tailings deposited into the im-

poundment will have been processed to remove

sulfides and the contained gold. The ore will be

crushed and ground, with the sulfides and gold min-

eralization removed by a floatation circuit. This

would leave trace concentrations of metals bearing

sulfides, metal oxides, metal sulfates, and carbonate

salts. Up to 40% of the tailings will be placed back

underground in a wetted cement mixture. No cya-

nide or arsenic will be added to the ore as a reagent

to recover gold. In fact, the gold concentrate will be

shipped offsite for final recovery. The water in the

impoundment will not be directly discharged into

4 These and other factors, which were addressed in the

DSEIS and FSEIS, Chapters 3 (Affected Environment)

and 4 (Environmental Consequences), which adequately

addressed the environmental and public Interest factors.

No new factors have been identified as a result of this re-

view.

344a

any receiving water. The water from the tailings

storage facility will be pumped by pipeline to a water

treatment facility before discharge to the East Fork

of Slate Creek. To ensure water quality standards for

the project are met, all water from the impoundment

will have to go to and through a water treatment

plant during operation. The discharge from the water

treatment plant is subject to an NPDES permit. To

ensure that the tailings are reclaimed in accordance

with approved plans, the USFS and ADNR will hold

reclamation bonds on the operation to ensure that all

reclamation standards are met. See Section XI, Sub-

part G.

Attachments to Record of Decision:

Plans of Goldbelt

Kensington Mine Section 404(b)(1) analysis.

List of Reference Documents

Revised Special Conditions for Coeur permit

Revised permit application tables and drawings,

Coeur

Signed Department of the Army Permit Evalua-

tion and Decision Documents for Goldbelt,

Incorporated: (1) POA-1997-245-2 (Cascade

Point Dock), and (2) POA-1997-245-M (Road

from Echo Cove to Cascade Point),

G. The Section 404(b)(1) Analysis and Public Inter-

est Review for POA 1997-245-N (Cascade Point

Dock).

The documents listed in Attachment C were submit-

ted to the Corps by the applicant and by various

Federal and State agencies as supporting documents,

and specified documents or portions of the listed

documents have been incorporated into this ROD by

reference.

3 BOOP

345a

Il. PROPOSED PROJECT: The location and

description of the proposed work was described in

the Corps public notice, dated June 21, 2004. The 45-

day comment period, originally commensurate with

the comment period of the DSEIS, was later ex-

tended at the request of various Federal resource

agencies to August 20, 2004.

Coeur's proposal is to mine gold from subsurface

mineral deposits located within the Tongass Na-

tional Forest on Federal and private patented lands,

just north of Berners Bay, Alaska.

Coeur proposed® in June 2, 2004 in a revised applica-

tion to place structures, and to discharge an

approximate total of 5,451,700 cubic yards (cy) of fill

material into an approximate total of 91.7 acres of

waters of the U.S., including wetlands, in conjunc-

tion with the construction of the following new mine

facilities and associated infrastructure:

Acres of US Proposed

Proposed Waters To Be Fill Volume

Facilities Impacted (cy)

Process Arca 5.3 88,000

Tailing Dam 1.4 145,000

Access Road 12.0 26,000

Laydown Area 5.0 4,800

Waste Rock Disposal 4.8 311,000

Borrow Areas 4.2 0

Mine Tailings 45.5 4,800,000

Tails Placement Facilities 8.9 15,000

Topsoil Stockpile 1.0 33,000

Slate Creek Terminal 3.6 28,900

TOTAL 91.7 5,451,700

5 The location and description of the proposed work was

described in the Corps public notice, dated June 21, 1004.

346a

These activities included the discharge of fill mate-

rial in waters of the U.S., and the placement of

several structures (floats, docks and piles) in naviga-

ble waters of the U.S., in conjunction with the

construction of a marine dock facility in Slate Creek

Cove.

The individual components of the proposed work in-

cluded the following activities: (1) the construction of

building pads for milling facilities, administrative,

and support facilities; (2) construction of a tailings

dam; (3) construct fill pads associated with the tail-

ings pipeline, access roads, a discharge pipe, and a

pump-back sump (located at the toe of the proposed

dam); (4) construction of a waste rock disposal site;

(5) construction of abutments for the main access

road, which would run from Slate Creek Cove to the

process area, plus fills associated with the construc-

tion of various’ bridges (abutments, _ etc.);

(6) construction of a staging and laydown area, as

well as an infiltration gallery in Johnson Creek;

(7) approximately 4,800,000 cy (or 4.5 million tons) of

fill material would be discharged into approximately

45.5 acres of waters of the U.S.; (8) material and top-

soil stockpiles for use in concurrent and closure

reclamation activities; (9) construction of 2-foot high

berms encircling settling and storage ponds; and,

(10) construction of a marine dock facility in Slate

Creek Cove. Galvanized metal piling would be used

to anchor various floating components of the dock fa-

cility.

Coeur did not include the Cascade Point docking fa-

cility in their Department of the Army (DA) permit

application. The Cascade Point docking facility ap-

plication was submitted separately by Goldbelt,

Incorporated, and previously evaluated as an inde-

347a

pendent activity by the Corps in our decision docu-

ment for that project. This ROD now analyzes

Cascade Point as a component of the Kensington

Gold Project. Two different permit decisions are be-

ing made; one for the Kensington Mine Project, and

another for a docking facility at Cascade Point. We

re-examined our previous conclusion that the Cas-

cade Point facility was a separate and independent

project. Based on a review of all available informa-

tion including, but not limited to, the FSEIS,

Goldbelt's submissions, and the City & Borough of

Juneau's Conditional Use permit, we determine that,

without the Kensington Mine, the Cascade Point fa-

cility would not be constructed in the foreseeable

future. Although we recognize that Goldbelt intends

the dock to be used for other purposes in the future,

such plans are insufficient for us to evaluate it as an

independent activity. We therefore conclude that a

destination docking facility at Cascade Point is a

component of the Kensington Mine project. It is ana-

lyzed in the FSEIS, this ROD, and in attachments F

(as modified by attachment G) and G (both incorpo-

rated into this ROD).

The applicant originally applied for Alternative B, as

reflected in the Corps public notice, stating that ap-

proximately 5,451,700 cubic yards of fill material

would be discharged into 91.7 acres of waters of the

U.S., including wetlands. The applicant later

adopted the USFS's preferred Alternative D, with

the volumes and acreages described in Section VI be-

low, prior to publication of the FSEIS.

Ill. PURPOSE AND NEED FOR ACTION: The

basic purpose is to develop a working, profitable gold

mine for the Jualin/Kensington ore body. This will be

accomplished by extracting the gold ore and reducing

348a

it by removal and disposal of non-marketable compo-

nents, and by transporting the gold concentrate to

market. There are several transportation links and

construction activities implicit in the overall mining

operation.

The overall mine operation project would need the

following components: (1) building pads for milling

facilities, administrative and support facilities;

(2) tailings disposal facilities; (3) fill pads associated

with pipelines; (4) a waste rock disposal site; (5) ac-

cess roads and bridge abutments; (6) staging and

laydown areas; (7) an infiltration gallery; (8) mate-

rial and topsoil stockpiles; (9) two marine dock

facilities; and (10) berms to encircle settling and

storage ponds.

Coeur's need is to relocate® the major mine compo-

nents from the Kensington Mine site adjacent to

Lynn Canal, to the Jualin Mine site location in the

Johnson Creek watershed (approximately two miles

to the southeast across a southern ridge extension of

Lion's Head Mountain), and at Slate Cove, on the

northwest side of Berners Bay. This action would al-

low Coeur to transport ore from the mine directly’ to

a mill on the Jualin side of the peninsula for process-

6 The locations of certain structures, as yet not con-

structed, were referenced in the previous Corps

authorization. The current proposal would relocate these

structures on 'paper' to new locations.

7 The ‘high-grade’ ore body that would be mined is lo-

cated on the eastern side of Lions Head Mountain. Thus,

locating the mill on the eastern side would shorten the

distance from ore body to portal to mill.

349a

ing, from where the processed tailings material

slurry would then be piped by gravity feed directly to

the alpine lake disposal site (Lower Slate Lake).

Coeur needs to establish a marine dock facility in

Slate Creek Cove for the transport of mine personnel

safely to another destination port and move gold con-

centrate efficiently and reliably off the mine site.

IV. SCOPE OF ANALYSIS [33 CFR 325,

Appendix B, 7(b)j: When an applicant proposes to

conduct a specific activity (e.g., the actions proposed

by Coeur in the Corps' public notice, dated June 21,

2004), requiring authorization from the DA, and it is

merely one component of a larger project (e.g., an on-

going mining operation), the District Engineer (DE)

shall establish the scope of the ROD and/or permit

evaluation assessment to address the impacts of the

specific activity requiring Corps authorization and

those portions of the entire project over which the

DE has sufficient control and responsibility to war-

rant Federal review. Sufficient control and

responsibility is considered to exist for portions of

the project beyond the Corps’ jurisdiction where the

Federal involvement is sufficient to turn an essen-

tially private action into a Federal action. These are

situations where the environmental consequences of

the larger project are essentially products of the

Corps’ permit action. (See 33 CFR 325 Appendix B,

Paragraph 7.b.)

For this proposal, works initially identified as requir-

ing Corps authorization are limited to the placement

of structures, and the discharge of dredged or fill ma-

terial into waters and navigable waters of the U.S.

However, the DE is considered to have control and

responsibility for portions of the project beyond the

limits of Corps jurisdiction where the Federal in-

350a

volvement is sufficient to turn an essentially private

action into a federal action. These are cases where

the environmental consequences are essentially

products of the Corps permit action. Typical factors

to be considered in determining whether sufficient

control and responsibility exists include (1) whether

or not the regulated activity is ‘merely a link' in a

corridor type project; (2) whether adjacent uplands in

the immediate vicinity of the regulated activity af-

fected the locations and configuration of the

regulated activity; (3) the extent to which the entire

project will be within the Corps jurisdiction; and

(4) the extent of cumulative Federal control and re-

sponsibility.

Combined Federal controls are influenced by the fact

that the work would be conducted in part on Feder-

ally administered lands (Tongass National Forest —

USFS), and in part on State of Alaska administered

lands (Alaska Tidelands — marine dock facility); the

water leaving the impoundment behind the dam is

subject to the (USEPA) regulations (i.e., subject to

the USEPA's authorization to discharge under the

National Pollutant Discharge Elimination System

(NPDES Permit); and other Federal laws (e.g., En-

dangered Species Act, Fish and Wildlife Coordination

Act, the National Historic Preservation Act, the Ma-

rine Mammal Protection Act, the Coastal Zone

Management Act, etc.).

There are alternatives available to the applicant,

that would allow various activities of the Kensington

Gold Project to function without the need for Corps

authorization, e.g. use of uplands®,9. Additionally,

8 FSEIS, Section 2.2, Overview of Project Alternatives.

35la

logistics, technological or economic concerns, and/or

other Federal or State regulatory findings could af-

fect the practicability of some of the listed

alternatives.

The scope of analysis for this action includes not only

the impacts, alternatives, and project benefits result-

ing from the primary proposed actions (two marine

docking facilities and a mine tailings disposal site) as

identified above, but also the infrastructural items,

e.g., the road system, pipelines, and material stock-

pile sites. Other project-related impacts not within

the scope or a product of Corps authorization have

been summarized and identified in the direct, secon-

dary and cumulative impact analysis sections of the

FSEIS. 1°

V. BACKGROUND: In July of 1992, the USFS

approved a Plan of Operations (POO) for the Ken-

sington Gold Project. The POO called for

underground mining; ore processing with on-site

cyanidation; a tailings impoundment; marine dis-

charge of process wastewater; and various support

facilities, including the use of liquefied petroleum gas

for power generation. Comet Beach was the proposed

landing site for all supplies and fuel. A man camp

was proposed for the workers. The Corps evaluated a

DA permit application for the creation of an im-

poundment in Sherman Creek Valley, and the

disposal of mine tailings behind that dam. The Corps

completed a public notice, public meetings, public

9 ROD, Section VI. Alternatives, below.

10 See FSEIS, Section 4.21, Cumulative Effects.

352a

hearings on this proposal, but never issued a DA

permit for that facility.

In August 1997, the USFS approved a revised POO

for the Kensington Gold Project. The modified plan

called for off-site processing of a floatation derived

gold concentrate; placement of tailings in a dry tail-

ings facility accessed through a pipeline, with 25% of

tailings to be paste (wetted cement mixture) back-

filled in the underground workings; diesel fuel would

be used for power generation; and the tailing slurry

would be piped to a dewatering plant and the re-

claimed water returned for reuse. Comet Beach was

the proposed landing site for supplies and fuel. A

camp was proposed for the workers. The Corps of

Engineers received a DA permit application for this

new facility design. The Corps completed a public no-

tice, public meetings, and public hearings on this

proposal. After a thorough evaluation of the project

the Corps of Engineers issued a permit for the dry

tailings facility and the support infrastructure.

Between the times the 1997 FSEIS evaluated the

Kensington Mine Project and the revised Kensington

Mine Project proposal in 2001, Coeur gained control

of the Jualin Mine site and this changed the land

status and gold resource calculations which resulted

in a need to modify the Plan of Operation. The previ-

ous POO sited all of the mining and milling

operations on west side of Lion's Heads Mountain

ridge with access and support facilities located at

Comet Beach on Lynn Canal. In the 2004 FSEIS,

this scenario is represented by all "A" Alternatives.

The 2001 revised POO resulted in the siting of the

marine dock facility, the mill, access road, and wet

tailings storage facility on the east side of Lion's

Heads Mountain ridge. Except for the eventual con-

353a

nection by indirect tunneling for air flow purposes,

support of waste rock disposal resulting from edit

development (tunneling), and water treatment facili-

ties located on the west side, no alternatives were

contemplated or considered for a split operation, e.g.

a mill operation on one side of the ridge and tailings

disposal on the other. Comet Beach would still be

used for support of the west side developments.

In November 2001, Coeur submitted an amendment

to its approved 1998 Plan of Operations to the USFS.

The amendment modified site access and eliminated

the dry tailings facility in favor of placing the tail-

ings into an impoundment in Lower Slate Lake. With

the elimination of the dry tailings facility (113 acres

in size), two gravel borrow areas (totaling 43 acres),

which were located underneath wetlands, were also

eliminated. The ore would go through a floatation

circuit and the concentrate would be shipped offsite

for processing. The proposal included 40% of the tail-

ings being placed underground as a paste backfill.

The mine site now includes both the Kensington and

Jualin sites. Access to the-mine site would be from

the Jualin side, and include a marine dock facility in

Slate Creek Cove off of Berners Bay. A daily com-

mute for the mine workers was proposed, and the

man camp eliminated from the proposal. In Decem-

ber of 2004, the USFS finalized the Supplemental

Environmental Impact Statement and issued their

Record of Decision for the modified Kensington pro-

ject. The DA has been a cooperating agency on the

SEIS for this project and this ROD constitutes the

Corps decision on the latest mine project design pro-

posal.

354a

VI. ALTERNATIVES CONSIDERED:

For the reasons discussed below, the Corps has con-

cluded that alternative D with the inclusion of the

water treatment plant and water diversion is the

least environmentally damaging practicable alterna-

tive. The No Action Alternative (listed as Alternative

A in the FSEIS) is not environmentally preferable for

the reasons discussed in Section VII below. Since Al-

ternative D has the least environmental impact, it is

the environmentally preferable alternative. This sec-

tion discusses two categories of alternatives. The

first category is alternatives for a tailings facility

with related components. The second is alternative

docking destinations.

Determination of the Corps’ Jurisdiction. The USFS

conducted wetland and vegetation mapping of the Al-

ternative A lands (located in the Sherman Creek and

Sweeney Creek watersheds) and published the re-

sults in the 1992 EIS!1!, for the Kensington Gold

Project. The USFS' mapping method was the proce-

dure outlined in the 1989 Federal Manual for

Delineating Jurisdictional Wetlands. However,

"Since that time, the 1992 Energy and Water Devel-

opment Appropriations Act mandated the use of the

1987 Corps of Engineers Wetlands Delineation Man-

ual for wetland delineations instead of the Federal

Manual for Delineating Jurisdictional Wetlands

(Federal Interagency Committee for Wetland De-

lineation, 1989). The Corps of Engineers has

reevaluated the August 1990 wetland delineation

performed for the Kensington Project, and as a result

has determined that the wetland determinations

11 FEIS, Chapter 3, Vegetation, pages 3-45 through 3-48.

355a

would remain the same based on the 1987 man-

ual."12 The Corps conducted an onsite field visit on

August 6, 1996, to verify the wetland delineation

prior to giving approval. '

x**AK K *

12 FEIS, Chapter 3, Vegetation, pages 3-45 through 3-48.

13 See Corps' Memorandum dated August 12, 1996, file

number POA-1990-592-D.

356a

... safety problems, which is an unacceptable risk

to workers. Also, see Section VIII of this ROD for

a discussion of cost issues.

Conclusion. The Corps has considered the poten-

tial alternative destinations listed above and

concluded that the proposed Cascade Point dock-

ing facility is the least environmentally damaging

practicable alternative destination docking facil-

ity. Three docking facilities were considered

reasonable in terms of proximity to the Slate

Creek Cove dock. The Corps has determined Cas-

cade Point, Echo Cove, and Yankee Cove to be

reasonable alternative destination docking facili-

ties in terms of proximity, because they are close

enough to the north end of Berners Bay to allow

for daily commuting. The other sites discussed

above are more distant and would not allow for

daily commuting. This is because more than a

three-hour commute results in more than a 14

hour workday for the miners, and is unsafe, Ref-

erence the memorandum to the file, entitled,

"Coeur Miner's Work Day", dated February 14,

2006. Use of the more distant docking facilities

would therefore require construction of a residen-

tial camp near the mine site, at greater expense

and environmental impact.49 The more distant

docking facilities are not practicable destinations

and were not carried forward for further review.

Use of Yankee Cove would result in more expo-

sure to rough seas in Lynn Canal. The Lynn

Canal route (outside Berners Bay) would be dan-

49 Kensington Gold Project, Corps of Engineers 404(B)(1)

Practicability Analysis, Prepared by Coeur, October 2004.

357a

gerous and unavailable for worker transport over

extended winter periods. For this reason, the

Corps does not consider Yankee Cove a practica-

ble destination port. Therefore, Cascade Point

and Echo Cove are the only remaining destina-

tions that are practicable. Of these two

practicable alternative destinations, Cascade

Point is the least environmentally damaging, and

thus is the environmentally preferable alterna-

tive. The environmental impacts of each are

described above.59

Vil. ANALYSIS OF THE LEAST ENVIRON-

Permanent Losses.*? All variants of the Dry Tailings

Facility would result in the permanent loss of 34 to

113 acres of aquatic habitat (special aquatic site),

which consists of forested and scrub-shrub wetlands.

The wetland functional values of the Dry Tailings

Facility were determined to be medium for wildlife

50 See Attachments B (Section 404(b)(1) Analysis), and

G. Also, see Section XI, later in this ROD.

51 The majority of the wetlands to be impacted would be

heavily forested, with some scrub shrub mix. Other wet-

lands (Wet Tailings Storage Facility) would be lake

oriented (e.g., lacustrine emergent. This was discussed in

the FSEIS, and summarized in the Summary of Potential

Impacts of Each Alternative, under the headings of Re-

sources, and impacts (by function and value).

52 See 404(b)(1) Evaluation.

53 FSEIS, Chapter 3, Section 3.12.3, and Chapter 4, Sec-

tion 4.12.3.

358a

habitat, production export and flood flow alteration,

and low for riparian support. Placement of fill mate-

rial into this area would reduce these wetland

functions to zero. Upon final reclamation, the Dry

Tailings Facility might regain some habitat value,

but no wetland functions. This would not be expected

to occur in the short term.

The functional value at the Dry Tailings Facility site

as well as at the site of the connecting road system

would cease immediately with the initial mechanical

land clearing operations. The continued presence of

humans and equipment would ensure that the pro-

ject site was devoid of all habitat values, or ‘zero-

function'.54 Once all fill material has been dis-

charged, and after reclamation activities have been

completed, and the area has been deserted by hu-

mans, other functions (e.g., wildlife habitat) would

develop over time. These would be functions specific

to an v»land, non-forested habitat, and the conver-

sion of wetlands to uplands would be permanent.

Under Alternatives A through A-3, additional wa-

ters, including wetlands, would not be reclaimed for

all other project component areas. Some permanent

loss (up to approximately 70 acres) would remain in

addition to the DTF. These areas have similar func-

tions and values to the DTF area, with some higher

value areas near Sherman creek.

54 Zero-function is defined here as having no vegetation

or water sources present, and having only bare ground

and therefore providing no habitat functions such as food

sources, cover from predation, nesting sites, etc., all of

which is supportive of wildlife and/or fish populations.

359a

Construction of the Wet Tailings Storage Facility

would result in the permanent loss of 3.44 acres of

aquatic habitat (within the footprint of the dam).

This includes high value wildlife habitat.

The docking facility at Cascade Point will require

permanent filling of approximately 1.3 acres of ma-

rine waters. This location has a rocky sand and

gravel substrate with some fucus and kelp plant

communities. It provides some herring spawning

habitat. Some recolonization of this plant life is ex-

pected after placement of fill. The loss of this area is

small in the context of Berners Bay and is considered

a minimal loss of functions and values.

Temporary losses: The FSEIS stated that "For the

purposes of this analysis, it is expected that all fish

and most other aquatic life (such as macroinverte-

brates, periphyton, and zooplankton) in Lower Slate

Lake would be lost during operations as a result of

this action. Some individuals might survive, but

marginal food sources and the lack of suitable habi-

tat as the lake elevation rises appear to be the major

limiting factors."°° Functional habitat values in the

Wet Tailings Storage Facility area include high val-

ues for wildlife habitat (located primarily along the

lake edge), and moderate values for fish habitat, and

low values for carbon/detrital export, with low to

moderate values for sediment/shoreline stabilization

55 See FSEIS, Section 4.9.3, page 4-38, Integrity of

Freshwater Habitat.

360a

and nutrient cycling.56.16 The inundation of adjacent

forested and scrub-shrub wetlands by the rising lake

waters would reduce the wildlife habitat values of

those wetlands. There will be a conversion of one

aquatic habitat type (wetland) for another (open wa-

ter).

Lower Slate Lake will be used as the settling pond

and disposal site for the tailings generated from the

mill. The mill will crush, grind, and float the sulfides

out of the material. The sulfides contain the gold and

will be processed off site. There will be no cyanide or

arsenic added to the milling circuit. The tailings

have been analyzed for the ability to generate acid

drainage, and to develop metals that could become

mobile. The tests described in the FSEIS App. C

have shown that the tailings will not be a generator

of acid or heavy metals. The tests were performed on

both the tailings and the tailings decant water. The

components of the tailings decant water that were

identified as contaminants include aluminum, chro-

mium, pH, and Total Suspended Solids. The tests

have concluded that the pH around the discharge

pipe will be toxic to the aquatic environment. This

will dissipate very rapidly. The TSS will be harmful

to the fish in the immediate area of the discharge.

The suspended solids will be discharged to the lower

depth portion of the lake. The aluminum levels from

the tailings decant water will rapidly decrease to

natural levels as the pH is neutralized. Aluminum

will pose 4 low risk to aquatic life. This is because

56 FSEIS, Sections 3.9 (Aquatic Resources: Freshwater),

3.11 (Wildlife), and 4.9.3 (Effects Common to Alternatives

B, C, and D), and 4.11 (Wildlife).

361la

the aluminum concentrates in the tailings is less

than that in the lake sediment and the decant water

levels are similar to existing concentrations in the

lake. The chromium would be in a reduced form, and

because of sub-aqueous disposal and the low oxygen

conditions, would not be oxidized to a more toxic

form. There would be a low potential for chromium to

be a risk to aquatic life. Impacts to the aquatic com-

munity from physical stress are a greater risk than

increased chemical concentrations. Aquatic life will

die primarily from being covered with tailings and

from the TSS.

The lake will recover over time. The tailings will be

placed at a depth to prevent remobilization after clo-

sure from wave action. The tailings will be under

water and out of the energy of wind driven waves.

Post closure water concentrations of chromium and

aluminum would pose a minimal risk to aquatic life.

Capping of the tailings will assist in re-establishing

lake bottom habitat. It is expected that the lake

eventually will provide at least equivalent productiv-

ity as the current conditions of Lower Slate Lake.

The reclamation of the lake will result in more emer-

gent wetlands/vegetated shallows with moderate

values for fish habitat, nutrient recycling, car-

bon/detrital export and sediment/toxicant retention,

and high values for wildlife habitat. This functioning

emergent wetland/vegetated shallows lake complex,

including 15 acres of emergent wetland/vegetated

shallows as part of a 62 acre lake, is more valuable to

the aquatic ecosystem than a permanently filled wet-

land (DTF) that has lost all aquatic functions and

values.

The Federal and State resource agencies have condi-

tioned the respective permits to require habitat and

362a

mortality monitoring activities in the Wet Tailings

Storage Facility. Collected information would be

used to determine the effects of the discharge of tail-

ings on the lake habitat. The surface of the lake

waters should rise, by project closure, to its maxi-

mum height above the lake's original surface, and

the lake waters would eventually inundate approxi-

mately 39 acres of adjacent forested and scrub-shrub

wetland habitats5’, converting these to a deepwater

habitat. This would constitute a conversion of one

type of water of the U.S. to another: converting adja-

cent forested and/or scrub-shrub wetlands to non-

vegetated waters. These non-vegetated waters would

convert, by either natural or artificial58 means (ac-

tive lake restoration), to emergent wetlands/

vegetated shallows (special aquatic sites). The an-

ticipated end result would be a lake of approximately

62 acres in area (47 acres of deepwater habitat and

15 acres of emergent wetlands/vegetated shallows

along the fringe). This conversion process would con-

57 The applicant intends to clear these land areas me-

chanically prior to inundation of the lake waters.

Otherwise, the vegetation would inhibit movement of the

raft carrying the slurry line, and preventing an even

deposition of material onto the lake bottom.

58 The Kensington Gold Project's Mining Plan of Opera-

tions contains a Reclamation Appendix, which includes

the Lake Restoration Plan. The DA recognizes that this

Restoration Plan is a conceptual plan, and that future re-

visions will be evaluated and approved as appropriate.

Capping of the mine tailings in the impoundment is re-

quired by ADEC. The final reclamation plan will assure

that the latest methods are used to maximize success.

363a

tinue during and after the life of the project. The

lake and its emergent fringe wetlands/vegetated

shallows would provide potential fish habitat after

final lake restoration had been completed and would

include food sources, protection from predation, nest-

ing capabilities, etc., whereas the lake's open waters

would provide an open space for fish and other motile

organisms.°? The FSEIS concluded that after closure

Lower Slate Lake could be restored to at least

equivalent aquatic habitat.

For all alternatives, wetlands on which other project

components (e.g., connecting roadways, borrow sites,

building and material storage fill pads, etc.) will be

located, all have high values for wildlife habitat, and

carbon/detrital export, with moderate values for

sediment and/or nutrient cycling.69 The temporary

discharge of fill into the forested and scrub-shrub

wetlands for the construction and operations of these

structures would result in reduced wildlife habitat

vaiues during the life of the project. However, at pro-

ject closure (and completion of all required

reclamation) there will be moderate to high (when

fully recovered) functions for wildlife habitat in these

reclaimed areas.

The proposed marine docking facility at Slate Creek

Cove has low to moderate fish habitat values. The

placement of structures (e.g., piles and floats) and

the discharge of fill into the intertidal waters for con-

59 FSEIS, Sections 4.9 (Aquatic Resources: Freshwater)

and 4.9.3 (Effects Common to Alternatives B, C, and D.

60 See FSEIS, Sections 3.9 (Aquatic Resources: Freshwa-

ter) and 3.11 (Wildlife).

364a

struction of an abutment for a docking facility would

result in short term increases in suspended sedi-

ments in the water in the areas adjacent to the work

activities. However, because the nearshore sedi-

ments are primarily coarse materials and cobbles,

these materials would settle rapidly to the bottom,

thus decreasing the magnitude and duration of the

suspended sediment concentrations. In addition, the

site is subject to the ebb and flow of the tide, and

therefore, this added component of the marine tidal

system would ensure that the subtidal and intertidal

habitat values of the Cove would not be adversely

impacted.61 Reclamation of the site would result in

removing a’! structures, and excavating the majority

of the fill from below the High Tide Line, and flatten-

ing the rest to form a rocky subtidal substrate, all in

conformance with the reclamation plan.

I t Envi tally D ing Practicabl

Alternative Acreage Calculations.®* (Note: The

numbers below do not fully reflect the Reclamation

and Closure Plan for the Kensington Gold Project,

since the Reclamation Plan is a conceptual plan, and

future revisions will be evaluated and approved by

the Corps as appropriate.)

Based on information provided in the FSEIS, the ap-

plication form and other documentation in the Corps’

case files, and in the referenced documents (Attach-

ment C), and calculating the acreages of impact® to

61 FSEIS, Section 4.10.3, Effects of Alternatives B, C,

and D (Aquatic Resources: Marine).

62 Data taken from the FSEIS.

63 See Least Damaging Acreage Calculations.

365a

waters of the U.S. by project closure, Alternatives B,

C, and D have the least permanent impacts (3.44

acres) to the aquatic environment over the antici-

pated life of the project. This conclusion remains the

same when adding the impacts of the 1.3 acres of fill

material for the Cascade Point breakwater for Alter-

natives B and D (not included in the net loss column

below).

ALTERNATIVES

A Al A2 A3 B C D

Initial Impact To

Waters of the U.S. 268.1 171.2 187 207 972 1184 986

(Acres)

NET LOSS (Acres)

‘ 164 108.2 124 144 3.44 3.44 3.44

After Reclamation

See Section VI, above, for a detailed description of

each alternative.

In Alternatives A through A3, the filling of the Dry

Tailings Facility area would all result in the perma-

nent conversion of wetlands to uplands. Further as

explained in Section VI above and Section VIII be-

low, these alternatives are not _ practicable.

Permanent loss of these wetlands is an adverse envi-

ronmental impact. In Alternatives B, C, and D,

construction of the Wet Tailings Storage Facility

would result in the conversion of wetlands to a

deepwater habitat (due to the rising water level), the

edges or shallow portions of which will eventually

become emergent wetlands/vegetated shallows.

These conversions of one type of water of the U.S. to

another are not a significant permanent adverse im-

pact to the aquatic environment, and the temporal

losses discussed above would not result in significant

permanent adverse impacts to the aquatic environ-

ment. Our evaluation places special emphasis on the

366a

persistence and permanence of the effects described

in this ROD and the FSEIS [see 40 CFR 230.10(c)].

The permanent loss of wetland functions and values

in the Alternative A variants is more damaging and

outweighs the temporary losses to the lake and its

associated functions and values.

See Section XI, Subpart E, below, for a further dis-

cussion of the information provided in the acreage

calculations. The Corps concludes that Alternative D

is the least environmentally damaging practicable

alternative because the impacts to the aquatic eco-

system are less harmful than the impacts of the

Alternative A variants, which include permanent

wetland losses, and it incorporates a water treat-

ment system to ensure water quality is met.

Vill. PROJECT COST CALCULATIONS

SUMMARY

We previously determined that the Alternative A

variants were practicable alternatives. This was

based on an assumption that since Alternative A had

been permitted in 1998, it was still practicable to

Coeur. We have reexamined that determination and,

for the reasons explained below, now determine that

neither Alternative A, nor any of its variants, is

practicable.

The applicant submitted an "Alternative Material

Disposal Sites Cost Analysis"64 with an expense

breakdown for each of the proposed preferred ac-

tions, as well as for each of the _ respective

alternatives. This analysis, which included logistics,

technology and cost considerations, demonstrated to

64 Coeur Letter to the Corps, dated November 23, 2004.

367a

the Corps that the applicant did not consider Alter-

native A to be a practicable alternative. Also, the

Alaska Department of Natural Resources (ADNR)

analyzed data provided by the applicant, and con-

cluded®5, "Therefore, we do not consider Alternative

A to be a ‘practicable’ or 'reasonable’ alternative from

the standpoint of cost or economics." The Corps re-

viewed and _ reevaluated the ADNR analysis

documentation and other relevant ....

kA KK *

65 Letter dated December 1, 2004, from the State of

Alaska's Department of Natural Resources, Office of Pro-

ject Management and Permitting, and addressed to David

Cox of the USFS.

368a

Commuting Ferry vs. Personnel Camp

A daily commuting ferry as described in Section VI of

this ROD eliminates the need for an operational per-

sonnel camp. Coeur explained in its October 2004

Practicability Analysis that the annual cost to trans-

port personnel to a camp is $5.296 million, compared

to $1.49 million for Berners Bay access. Operating

costs for a camp are estimated at more than $3 mil-

lion annually. Operating a camp also requires

substantial on-site fuel transportation and storage. It

is our determination that Coeur's economic analysis

supports the conclusion that a personnel camp is not

practicable for cost reasons.

IX. FINDINGS

1. OTHER REQUIRED AUTHORIZATIONS:

A. The Alaska Department of Environ-

mental Conservation (ADEC) has issued

a Certificate of Reasonable Assurance,

dated May 6, 2005, with 15 conditions.

Conditions on this Certification are listed

on Attachment D of the ROD.

The Certificate also stated, with refer-

ence to the proposed disposal of

processed mine tailings into an alpine

lake, that "The Tailing Disposal Facility

(TDF) proposed to be constructed in Slate

Creek will be considered a ‘disposal site’

under federal law and policy (see 40 CFR

§ 230.3(i)), and is hereby authorized as a

‘treatment work' under State law (see AS

46.03.900(33)). Thus, State of Alaska wa-

ter quality standards will not have to be

met within that area. 18 AAC 70.010(c).

Water discharged from the TDF shall

D.

369a

meet NPDES permit limitations, and the

receiving water, East Fork Slate Creek,

must meet State water quality stan-

dards."

The Alaska Department of Natural Re-

sources, Office of Project Management

and Permitting, Alaska Coastal Man-

agement Program, has issued a Final

Consistency Response (Concurrence),

dated April 25, 2005.

The USEPA, Region 10, has issued an

Authorization to Discharge under the

National Pollutant Discharge Elimina-

tion System (NPDES Permit), dated

September 1, 2005.

See Attachment G for Cascade Point

Docking Facility findings.

2. COMMENTS RECEIVED:

A.

Coeur prepared several document sum-

maries, each addressing comments

received from Federal and State Agen-

cies, to the Corps Public Notice, dated

June 21, 2004, and to the Public Hear-

ings, which were held by the USEPA in

accordance with the USEPA's National

Pollutant Discharge Elimination System

(NPDES) regulations. The public hear-

ings were held on July 26, 2004, in

Juneau, Alaska, and on July 27, 2004, in

Haines, Alaska (see case file).

370a

FEDERAL AGENCIES

US ENVIRONMENTAL PROTECTION

AGENCY [USEPA).

Comment dated August 20, 2004. Also,

see Coeur’s Response #18 (Attachment

C). USEPA's comment letter, with three

attachments, pertained to Goldbelt's

proposed marine terminal at Cascade

Point’, and to the proposed changes to

the Kensington Mine's Plan of Opera-

tions, which includes a marine terminal

at Slate Creek Cove and a discharge into

Lower Slate Lake. The USEPA's com-

ments respective to Coeur's project

centered on the 404(b)(1) Guidelines, and

after several pages of instructive discus-

sion relative to 40 CFR 230.10, the

USEPA "...rated Alternatives A and Al?!

as 'Lack of Objection’ and Alternatives B

and C as ‘Environmental Objections’."

The USEPA concluded the cover letter

with a request "...to work collaboratively

with you and the State to achieve a satis-

factory outcome."

USEPA ISSUE #1.".... the wetlands

analysis in the DSEIS is biased due to

the lack of accurate and detailed wet-

lands mapping on the Kensington side of

the project area. Therefore, there is in-

70 See Permit Application POA-1997-245-M

71 Note that Alternative Al here is the same as Alterna-

tive A2 in this ROD.

37la

sufficient information to make a reason-

able judgment about the comparative

effects of Alternatives A/Al and Alterna-

tives B/C on wetlands."

CORPS RESPONSE TO USEPA: The

wetlands were properly delineated in ac-

cordance with the 1987 Manual on both

sides of Lion's Heads Mountain and thus

there ‘is adequate information to analyze

the potential impacts upon wetlands. See

the discussion in Section VI (Alternatives

Considered) of this ROD.

USEPA ISSUE #2. "With regard to the

ecological risk of the tailings disposal op-

tions, the DTF (Dry Tailing Facility]

(Alternatives A/A1) minimizes the expo-

sure pathways by lining the dry stack

cells, capping the dewatered tailings,

treating DTF runoff in a storm water de-

tention and sediment pond, and

discharging a very small volume of

treated water into a small creek devoid of

fish. In contrast, the Lower Slate Lake

tailings impoundmen* ‘Alternatives B/C)

directly exposes the entire lake to the

tailings, which have exhibited consider-

able toxicity (per the failed amphipod

bioassay)."

CORPS RESPONSE TO USEPA: Lower

Slate Lake is the least environmentally

damaging practicable alternative loca-

tion for the tailings disposal. The tailings

will be capped at the cessation of opera-

tion unless information is presented to

the contrary. See ADEC condition #15.

372a

Testing of the tailings and water column

of the impoundment will be completed

quarterly to insure projected water qual-

ity modeling is accurate. See ADEC

condition #8. In accordance with 33

U.S.C. 1341(d), all 401 conditions are in-

corporated Into the Department of the

Army permit.

See Section XI of this ROD, Subpart B,

Evaluation and Testing, and Constraints.

USEPA ISSUE #3. "Humpback whales

are listed as an endangered species un-

der the Endangered Species Act, and

Steller sea lions are listed as a threat-

ened species (although populations of

both species appear to be increasing in

Southeast Alaska."

CORPS RESPONSE TO USEPA: See the

discussion in Section 1X.2.8. ENDAN-

GERED SPECIES ACT (ESA) CON-

SULTATION PROCESS, in this ROD.

USEPA ISSUE #4. "The DSEIS also

documents the potential impacts that

each alternative may have on recreation,

including noise, wakes, lights, safety is-

sues, and visual impacts."

CORPS RESPONSE TO USEPA: See the

FSEIS, Sections 4.13 (Land Use and Rec-

reation), 4.14 (Visual Resources), 4.15

(Socioeconomics), 4.18 (Noise), and 4.21

(Cumulative Effects) .

USEPA ISSUE #5. "After the federal

agencies published the DSEIS, but before

EPA approved the draft NPDES permit,

373a

EPA determined that the proposed efflu-

ent limits for some of the above

pollutants could not be made without

additional treatment. The applicant then

revised the NPDES permit application to

include a reverse osmosis (RO) wastewa-

ter treatment system and a pipeline

diversion of Upper Slate Lake flows

around Lower Slate Lake."

CORPS RESPONSE TO USEPA: Coeur

has agreed to construct a Reverse Osmo-

sis, or water treatment facility, to aid in

the removal of pollutants from water dis-

charged from Lower Slate Lake, as well

as construction of a pipeline diversion (of

waters around the impoundment and

downstream to the dam spillway). These

components are part of Alternative D.

USEPA ISSUE #6. "Due to the demon-

strated toxicity of ne tailings samples in

the bioassay tests, and the limited appli-

cation of other standard test on

contaminant mobility and pathways,

EPA believes that the tailings slurry is a

carrier of contaminants (as defined in the

Guidelines at 40 CFR 230.3)." (per the

failed amphipod bioassay).

CORPS RESPONSE TO USEPA: There

is no conclusive test data showing that

toxic substances in the tailings caused

amphipod mortality. The poor survival of

the amphipods in the test cell may be at-

tributed to smothering, the nature of how

the material was placed, or the floatation

agent(s) used in the bulk sample. See

374a

FSEIS App. C and the discussion in Sec-

tion VII above. Tests upon the tailings

have conclusively shown that the tailings

will not generate an acid discharge or re-

sult in a metals leachate being generated.

We agree that all fish and most aquatic

life would be lost during operation,

(FSEIS 4.9.3). The FSEIS concluded that

after closure Lower Slate Lake could be

restored to at least equivalent aquatic

habitat (see FSEIS 4.9.7). Capping of the

impoundment tailings was added as a

permit condition by ADEC to isolate any

potential contaminants from the water

column and to provide habitat for re-

colonization in the storage facility. The

State of Alaska issued a 401 Certificate of

Reasonable Assurance for Alternative a

ADEC also stated that "the available in-

formation suggests that the toxicity risks

associated with the tailings will be low

during and after mining operations."72

Conditions were incorporated by ADEC to

ensure that no potential contaminants

would leave the disposal site condition

#15. ADEC included a requirement for

testing of the material on a quarterly ba-

sis condition #8. In addition the Corps

agrees to add the following condition to

the permit #10. The waters and the dis-

charged processed mine tailing sedi-

ments, located in Lower Slate Lake, shall

be tested, at lake closure or just prior to

cessation of discharges of mine wastes

into Lower Slate Lake, in accordance

375a

with appropriate testing requirements (at

the ....

* eK K XK

Mitigation also includes funding by Coeur for the

monitoring activities in Berners Bay. These activities

will be conducted by the NMFS and the Alaska De-

partment of Fish and Game.

Coeur has, in part as mitigation for unavoidable im-

pacts to waters of the U.S., and in part as a result of

agreements reached during the Endangered Species

consultation process with the USFS and Coeur,

agreed to provide funding to the NMFS and to the

Alaska Department of Fish and Game, with the in-

tent that these agencies will conduct the following

monitoring activities in Berners Bay;

e Hydrocarbon monitoring in water, sediment,

and mussel tissue. This would be an annual

program with a 6-year commitment of moni-

toring.

e Annual aerial surveys of herring spawning

monitoring in Berners Bay. This is an annual

commitment with up to 10 flights per year.

e A trained observer will conduct marine mam-

mal and bird surveys during ferry commutes

across Berners Bay during the eulachon run.

The Corps has considered each of the mitigation

items listed above and has concluded that all of these

taken as a group satisfy the requirement of mitigat-

ing for the unavoidable impacts of the project.

XII. Compliance with Environmental Re-

quirements: ‘he issuance of permits for the

proposed project is in compliance with applicable en-

vironmental requirements. The development of the

376a

DSEIS and the FSEIS was accomplished in accor-

dance with the National Environmental Policy Act of

1969, as amended. Recommendations of the USFWS

prepared pursuant to the Fish and Wildlife Coordi-

nation Act of 1958, as amended, have been fully

considered in the permit decision, Coordination with

the NMFS pursuant to Section 7 of the Endangered

Species Act of 1973, as amended, has been com-

pleted. The recommendations of the USEPA have

been fully considered. An evaluation of the discharge

of fill material and dredged fill material as required

by Section 404(b)(1) of the Clean Water Act, 40 CFR

230, was completed and is attached to this docu-

ment!37, The discharge complies with the guidelines,

with the inclusion of the’ appropriate and practicable

conditions listed in Attachment D to minimize pollu-

tion and the adverse effects to the affected

ecosystem. I find that issuance of permits as de-

scribed above is in conformance with these

guidelines. The Alaska Department of Natural Re-

sources has issued a Coastal Zone Management

Consistency Determination, and ADEC has issued a

Certificate of Reasonable Assurance, with conditions.

Both of these documents will be incorporated into

and become part of the Corps permits.

XIII. Section 176(c) of the Clean Air Act Gen-

eral Conformity Rule Review. The proposed

project has been analyzed for conformity applicabil-

ity pursuant to regulations implementing Section

176(c) of the Clean Air Act. It has been shown that

the activities proposed under this permit will not ex-

ceed de minimis levels of direct emissions of a

137 See Attachment B and G.

377a

criteria pollutant or its precursors and are exempted

by 40 CFR Part 93.153. This no effect determination

has been coordinated with the U.S. Environmental

Protection Agency and the Alaska Department of

Environmental Conservation. Any later indirect

emissions are generally not within the Corps con-

tinuing program responsibility and generally cannot

be practicably controlled by the Corps. For these rea-

sons a conformity determination is not required for

this individual permit.

XIV. Determination. I find that the issuance of

the Corps permits, as described by regulations pub-

lished in 33 CFR Parts 320 through 330, with the

scope of work as described in this document is based

on a thorough analysis and evaluation of all issues

set forth in this ROD. There are no less environmen-

tally damaging, practicable alternatives available to

the applicants that will achieve the purposes for

which the work is being proposed; the proposed work

is deemed to comply with established Federal, State

and local laws, regulations, and codes; the issuance

of these permits is consistent with National Policy,

statutes, and administrative directives; and on bal-

ance, issuance of Corps permits to Coeur and

Goldbelt for the proposed work is not contrary to the

public interest. As explained in Subpart H, above, all

practicable means to avoid and/or minimize envi-

ronmental harm from the _ selected, permitted

alternatives have been adopted and required by

terms and conditions of these permits.

29 Mar 2006 #§____/s/Timothy J. Gallagher

Date Timothy J. Gallagher

Colonel, Corps of Engineers

District Engineer

378a

APPENDIX R

Department of Army, Corps of Engineers

Alaska District

Section 404(b)(1) Guidelines Evaluation

KENSINGTON GOLD PROJECT

POA-1990-592-M

This document, which will be attached to and become

part of the Corps Record of Decision (ROD), consti-

tutes a Section 404(bX1) Guidelines (Guidelines)

Evaluation of Coeur Alaska's (Coeur) proposed Ken-

sington Gold Project as described in Coeur's final

Department of the Army (DA) permit application.

This evaluation addresses the potential environ-

mental effects from the discharges of dredged or fill

material to waters of the United States (U.S.), in-

cluding wetlands, associated with the project. These

effects are described in the U.S. Forest Service

(USFS) Final Supplemental Environmental Impact

Statement (i SEIS) for the Kensington Gold Project.

A site-specific evaluation is presented here for the

project in sufficient detail for final decision-making

379a

and compliance with the Guidelines requirements.

Information presented here will be summarized in

the ROD. Attachment C to the ROD lists references

drawn upon for this evaluation.

Coeur proposes to discharge an approximate total of

3,487,950 cubic yards (cy) of fill material into an ap-

proximate total of 98.6 acres of waters of the US.,

including forested and scrub shrub wetlands, in con-

junction with the construction of new mine facilities

and associated infrastructure. The applicant's stated

purpose for the project would be the "relocation of

the major mine components from the Kensington

Mine site at Comet Beach on Lynn Canal, to the

Jualin Mine site (approximately two miles to the

southeast), at Slate Cove, on the west side of Berners

Bay, in order to access the ore body from the Jualin

side of the peninsula." The project is discussed in the

FSEIS, and includes several inter-related project

components. The overall mine operation project

would need the following components: (1) building

pads for milling facilities, administrative and sup-

port facilities; (2) tailings disposal facilities; (3) fill

pads associated with pipelines; (4) a waste rock dis-

posal site; (5) access roads and bridge abutments;

(6) staging and laydown areas; (7) an infiltration gal-

lery; (8) material and topsoil stockpiles; (9) a marine

dock facility; and (10) berms to encircle settling and

storage ponds.

The applicant's preferred alternative, Alternative D,

as described in the FSEIS, will be addressed in this

Guidelines evaluation. The proposed work descrip-

tion includes activities which are not subject to

Section 404 of the Clean Water Act (Section 404),

and they are not part of this evaluation. This in-

cludes the placement of structures (floats, docks and

380a

piles), in navigabie waters of the U.S. for the con-

struction of a marine terminal in Slate Creek Cove,

which are subject to Section 10 of the Rivers and

Harbors Act of 1899. The activities subject to Section

404 are the discharges of dredged or fill material into

waters of the U.S.

Coeur submitted a practicability analysis along with

a cost analysis breakdown for their proposed actions

(Lower Slate Lake disposal site, the Slate Creek

Cove marine terminal, and infrastructure (roads,

building pads, etc.) associated with the mining op-

eration), to include an analysis for each of the

primary alternatives considered.! An evaluation of

these documents as well as other information sources

indicates that, though the previously permitted site

(Alternative A in the FSEIS) was once determined to

be practicable, it is not currently practicable to the

applicant due to cost and logistics. By contrast, the

applicant's preferred alternative (Alternative D) is

the least environmentally damaging practicable al-

ternative.?

1 See discussion in the Corps ROD.

2 Alternative Material Disposal Sites Cost Analysis.

38la

PROJECT COMPONENT:

MATERIAL DISPOSAL

(LOWER SLATE LAKE)

I. Evaluation of Compliance with 404(b)(1)

Guidelines [restrictions on discharge,

40 CFR § 230.10(a)-(d)]

a. Alternatives Test. Refer to information dis-

cussed in the DSEIS, plus the Applicant’s Section

404(b)\(1) Evaluation, dated November 17, 2004, for

additional references.

Yes No

(1)Is there a practicable alternative to *4

the proposed discharge, which would have UL)

less adverse impact on the aquatic ecosys-

tem, so long as the alternative does not

have other significant adverse environ-

mental consequences? (For this require-

ment practicable alternatives may include

activities which do not involve discharges

to waters of the U.S. or discharges at

other locations in waters of the U.S.)

The applicant submitted a Practicability

Analysis and a Cost Analysis breakdown

for the proposed action, Alternative A

along with its respective alternative (de-

scribed in file number POA-1990-592-2),

also referred to as Alternative A. The

Alaska Department of Natural Resources

(ADNR) analyzed the practicability of the

applicant's preferred alternative versus

382a

Alternative A, and determined? that al-

ternative A was neither practicable nor

reasonable from the standpoint of cost or

economics. The Corps reviewed these

documents and other relevant information

and independently determined that the

previously authorized site was not practi-

cable to the applicant due to cost and

logistics, and that based on the similart-

ties (location, logistics of material

transport, construction and operation of

the facility, etc.) of the alternative variants

of Alternative A (Alternatives Al through

A3), these three variations were also not

practicable. In addition, the Corps also

determined Alternative A and its three

variants were not less environmentally

damaging as they would result in the

permanent loss of 34 to 113 acres of wet-

lands, which are a special aquatic site

and are afforded greater protection under

the Section 404(b)(1) Guidelines. Alterna-

tive D would result in the permanent loss

of 3.44 acres of wetlands due to dam con-

struction, the temporal loss of 20 acres of

deep water habitat (Lower Slate Lake),

and the conversion of 39 acres of wetland

to deepwater habitat (lake). After project

closure and reclamation, the lake would

measure 62 acres and would be restored to

3 ADNR Letter, dated December 1, 2004, addressed to

the USFS.

383a

the equivalent habitat value that existed

prior to the project. This would include 47

acres of deepwater habitat and 15 acres of

emergent wetlands /vegetated shallows.

(ii) If the project is in a special aquatic °

site and is not water dependent, has the U =

applicant clearly demonstrated that there NA NA

are no practicable alternative sites avail-

able? Not applicable. Fill material would

be discharged to construct a dam in 3.44

acres of wetlands adjacent to the creek

outlet of Lower Slate Lake. However,

dams are a water dependent activity as

they must be located in the outlet creek

and its adjacent wetlands in order to ful-

fill their basic purpose of impounding

water, The currently permitted material

disposal site,® otherwise referred to as Al-

ternative A, or the No Action Alternative,

is a@ Palustrine Forested & Scrub-shrub

Wetland, whereas the applicant's pre-

ferred alternative, Lower Slate Lake, is a

deep-water habitat (20 acres) with a nar-

row and irregular emergent wetland

fringe. The mine tailings would be dis-

posed of in the deepwater habitat (Lower

Slate Lake), which is not a special aquatic

4 An * is marked above the answer that would indicate

noncompliance with the Guidelines.

5 DEIS, Sections 3.12.3, and 4.12. Also, see POA-1990-

592-M.

384a

site under the Guidelines. See the ROD for

a discussion of project costs,® as well as

ADNR 's letter addressed to the USFS,

dated December 1, 2005. See the FSEIS,

Section 2, for a discussion of alternatives.

Documentation in the FSEIS examined al-

ternative material disposal locations’ and

determined that the lake site was the only

acceptable one for their purposes. The

Corps examined the proposed site as well

as the permitted site, and all available in-

formation and determined that the lake

site is the least environmentally damaging

practicable alternative.

b. Special restriction. Will the discharge:

Refer to the Applicant’s Section 404(b)(1) Evalua-

tion, dated November 17, 2004, for additional

references.

(i) Violate State water quality stan-

dards?8 Not applicable. DSEIS: Section

4.6, Appendix A: Surface Water Quality.

FSEIS: Section 4.6.7 See Section 401 Wa-

ter Quality Certification, issued by the

Alaska Department of Environmental

Conservation, dated May 6, 2005.

‘=

6 ROD, Section VII. Project cost Calculations Summary.

7 USFS FSEIS, Section 2.4 Project Alternative and

Components Considered but not Studied in Detail.

8 ADEC letter to the Corps, dated December 6, 2004.

385a

*%

(ii) Violate toxic effluent standards (un-

der Section 307 of the Act)? DSEIS: U

Section 4.6, Appendix A: Surface Water

Quality. FSEIS: Appendix A: Water Qual-

ity Analysis.

(iii) Jeopardize endangered or threatened *

species or their critical habitat? DSEIS: U

Sections 4.10 and 4,11. FSEIS: Sections

4.10,3, and 4.11.2. Also, refer to attached

Rod, discussion of comments received,

with specificity to ESA consultation.

(iv) Violate standards set by the Depart- *

ment of Commerce to protect marine UU CJ

sanctuaries? Not Applicable (NA). There NA NA

are no marine sanctuaries on or near the

project site.

c. Other restrictions. Will the discharge con-

tribute to significant degradation of “waters of

the United States” through adverse impacts to:

Refer to the Applicant’s Section 404(b)(1) Evaluation,

dated November 17, 2004, for additional references.

Also, see the FSEIS: Appendix A, Water Quality

Analysis. |

Yes No

(i) Human health or welfare, through pol- *

lution of municipal water supplies, fish, UU

shellfish, wildlife and special aquatic

sites? See DSEIS: Sections 4.8, Ground-

water Qualiiy; 4.6, Surface Water Quality;

and 4.12, Soils, Vegetation, and Wetlands.

FSEIS: Section 4.7.3, Groundwater Qual-

ity; 4.5.6, Surface Water Quality; 4.12.3,

Wetlands.

386a

(ii) Life stages of aquatic life and other *

wildlife? DSEIS: Sections 4.11, Wildlife; WU

and 4.12, Soils, Vegetation, and Wetlands.

Also, refer to Section XI of the ROD.

(iii) Diversity, productivity and stability *

of the aquatic life and other wildlife or

wildlife habitat or loss of the capacity of

wetlands to assimilate nutrients, purify

water or reduce wave energy? DSEIS:

Sections 4.6; 4.9; 4.11; and 4.12.

FSEIS:4.9.6., 4.11.2., and 4.12.3.

(iv) Recreational, aesthetic and economic *

values? DSEIS: Sections 3.13 through U

3.15; and 4.13 through 4.15. FSEIS:

4.13.3., 4.14.3., 4.15.3.

d. Actions to minimize potential ad- .

verse impacts (mitigation). Will all O

appropriate and practicable steps

(40 CFR § 230.70-77, Subpart H) be

taken to minimize the potential ad-

verse impacts of the discharge on the

aquatic ecosystem? [Refer to the Ap-

plicant’s Section 404(b)(1) Evaluation,

dated November 17, 2004, for additional

references.| DEIS: Section 2.5. FSEIS:

Section 2.5.1: Mitigation. For follow-up,

refer to ROD, Section VII, Subpart G.

__ __ —<———

|

OTL Factual Stemtaiomtion ve |

: — 230.11) |

The determinations of potential short-term or long-

term effects of the proposed discharges of dredged or

387a

fill material on the physical, chemical and biological

components of the aquatic environment included

items a — h, below, in making a findings of compli-

ance or non-compliance.

Subpart C: Potential Impacts on Physical & Chemi-

cal Characteristics of the Aquatic

Ecosystem;

Subpart D: Potential Impacts on Biological Charac-

teristics of the Aquatic Ecosystem;

Subpart E: Potential Impacts on Special Aquatic

Sites; and

Subpart F: Potential Impacts on Human Use Char-

acteristics.

Subpart G: Evaluation and Testing

There is potential for short-term or long-term ad-

verse effects (in light of Subparts C-G, listed above)

of the proposed discharge as related to:

Yes No

a. Physical substrate determinations

[FSEIS: Section 4.12.1; Appendix C]. 0

_————

The project site is a deep water lake with an ir-

regular emergent wetland fringe. The lake

bottom soils are primarily sandy silt, underlying

organic mats. During the life of the project, the

lake substrate would be covered by processed

mine wastes, consisting of grains that are sand

sized to very fine material. No dredging or other

impacts to the substrate would occur. However,

the substrate under the proposed dam is primar-

ily emergent wetland, all of which would be

mechanically land cleared rior to the deposition

of fill to construct the dam.

388a

b. Water circulation, fluctuation and

salinity determinations

[FSEIS: Section 3.6 through 3.10) ® O

The lake is fairly shallow, approximately 51 feet

deep, with little stratification. There are no wa-

ter currents, other than wind driven. The

proposed dam would permanently block flow out

of the lake and there would be little fluctuation

in water level. Salinity is not applicable to this

freshwater lake.

c. Suspended particulate/turbidity

determinations /FSEIS, Appendix C -

Ecological Risk Assessment of Aqueous

Tailings Disposal at the Kensington

Goldmine] =)

The introduction of mine tailings into the lake

would result in an increase of total suspended

solids (TSS)). The TSS would be discharged at

the deepest portion of the lake via a slurry pipe-

line and silt curtains would be required to

minimize the size of the silt plume. A nontoxic

chemical flocculent would be added to the slurry

to enhance the deposition of suspended particles

in the Lower Slate Lake disposal site. These ef-

fects would persist as long as the tailings

discharge occurred. Upon project closure the tail-

ings would be capped and _ suspended

particulate/turbidity levels would be equal to

pre-project conditions.

389a

d. Contaminant determinations

[FSEIS, Appendix C - Ecological Risk

Assessment of Aqueous Tailings

Disposal at the Kensington Goldmine] O

Testing was performed on the tailings material

to be placed in Lower Slate Lake. The principal

contaminants of concern would be aluminum,

chromium, pH, and Total Suspended Solids.

There are anticipated to be short term effects.

Over the short and long term acceptable con-

straints are available and would _ be

implemented to ensure contaminants are re-

duced to acceptable levels within the disposal

site and would not be transported beyond the

limits of the disposal site.

e. Aquatic ecosystem structure and

function determinations

[FSEIS: Section 4.9 and 4.12] C)

The USFS and the Corps determined that with

the introduction of processed mine waste, all of

the macroscopic and most if not all of the micro-

scopic life in the lake would die. This would be a

temporal effect as after project closure the lake's

aquatic ecosystem structure and functions would

be restored and expanded.

f. Proposed disposal site determination

(disposal sites and/or size of mixing

zone are acceptable) O &

[FSEIS: Section 2, Description of

proposed actions and other Alternatives].

390a

g. Determination of cumulative effects

on the aquatic ecosystem

[FSEIS: Sections 4.12 and 4.21] Oj

After project closure there would an approximate

increase in size of the lake by greater than 260%

to approximately 62 acres with a water depth of

about 30 feet. This would be a beneficial impact.

h. Determination of secondary effects

on the aquatic ecosystem

[FSEIS: Section 4] O

Secondary effects of the dam and tailings dis-

charge would include an increase in the size of

Lower Slate Lake and the surface water eleva-

tion of Lower Slate Lake. In addition, there

would be noise and air quality impacts from the

operation of heavy equipment used to construct

the dam.

III. Technical Evaluation Factors ae

— CFR § 230 Subparts C-F |

a. Potential Impacts on Physical and

Chemical Characteristics of the

Aquatic Ecosystem (Subpart C)

FSEIS-Section 4.0 Environmental Im-

pacts

quedIUsIsS

JUBIYIUAIS JON

O

kK

1. Substrate

[FSEIS: Sections 4.3 and 4.4, Appendix C]

x)

2. Suspended particulates/turbidity C)

[FSEIS, Appendix C - Ecological risk As-

sessment of Aqueous Tailings Disposal at

the Kensington Goldmine]

3. Water Cj

[FSEIS: Section 4.5 through 4.10]

4. Alteration of current patterns and L

water circulation

[FSEIS: Section 4.5]

5. Alteration of Normal Water fluctua- CJ

tions/hydro period

[FSEIS: Sections 4.5 and 4.7]

6. Alteration of salinity gradients ‘=

[FSEIS: Sections 4.3/

392a

b. Potential Impacts on the Biologi-

cal Characteristics of the Aquatic

Ecosystem (Subpart D)

1. Threatened and Endangered species

(§ 230.30) [See ROD, Endangered Spe-

cies Act, Consultation Process].

NA. There are no threatened or endan-

gered species or their critical habitat

within this portion of the project area.

CO

2. Aquatic Food Web (§ 230.31) /FSEIS:

Sections 4.9 & 4.10]

The discharge of the mine tailings would

result in elimination the lake’s food web

during operation. However, this function

would be restored upon closure of the dis-

posal facility.

3. Other wildlife /FSEIS: Section 4.11].

Modification of the lake would result in

impacts to wildlife, such as waterfowl,

deer, bear and various small mammals.

O

c. Potential Impacts on_ Special

Aquatic Sites (Subpart E)

1. Wetlands

[FSEIS: Sections 4.9 & 4.12].

The project site (Lower Slate Lake)is pri-

marily a deep water habitat with a

narrow emergent wetland fringe. Con-

a

393a

struction of the dam to create the im-

poundment would result in the permanent

loss of 3.44 acres of wetlands. The expan-

sion of the lake would involve inundating

approximately 39 acres of adjacent for-

ested and — scrub-shrub _ wetlands,

converting them to deep water habitat.

2. Sanctuaries and refuges

[FSEIS: Section 4.11]

NA. There are no sanctuaries or refuges

in the project area.

O)

O

3. Mud Flats — NA.

There are no mud flats in the project area.

O)

O

4. Vegetated Shallows —

There are vegetated shallows in Lower

Slate Lake. These would be inundated

and converted to deepwater habitat. After

project closure the lake would be restored

to a mixture

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