Sitting like a turquoise gem in a bowl of hemlock, Sitka spruce and ice, Berners Bay has long been a jewel of Alaska’s Tongass National Forest.

In the spring, swarms of tiny eulachon rush in to spawn, and the bay floods with hundreds of killer whales, humpback whales and sea lions in hot pursuit, along with eagles and seabirds by the thousands. Fishermen flock to its herring, salmon and Dungeness crab. Its chilly, tranquil waters are a favorite destination for kayakers.

Berners Bay also has become one of the epicenters of a new Alaska gold rush. High in the snowy peaks at the top of the bay, miners struck an estimated 1.4 million ounces of gold -- a prize that is looking better every day as investors flee the stock market.

An Idaho-based mining company has pledged to rescue southeast Alaska’s crippled timber and fishing economy by opening an industrial-scale mine above the bay. The problem is how to do it.


The company had planned to pile its leftover debris on a wetlands on the other side of the mountain from Berners Bay -- a solution embraced by environmentalists -- but has shifted to a cheaper alternative. Taking advantage of a little-publicized regulatory change adopted under the Bush administration in 2004, Coeur d’Alene Mines has obtained a federal permit to dump 4.5 million tons of tailings directly into a small sub-alpine lake near the mine, just above Berners Bay.

Conservationists say the plan is unprecedented in 30 years of mining under the federal Clean Water Act.

Lower Slate Lake, whose deep indigo waters are home to about 1,000 Dolly Varden char and a small species of fish known as stickleback, will become a repository for 210,000 gallons a day of thick slurry, laced with aluminum, copper, lead and mercury -- enough to kill all the fish and raise the lake’s bottom by 50 feet.

The waste would be prevented from seeping down the adjacent creek into Berners Bay by construction of a large dam that, environmental groups warn, would have to last for eternity.


The mine tailings on the lake bottom eventually would be sealed and fish would be restocked, the Environmental Protection Agency says. That, state and federal officials say, means the lake would become a prime recreational resource for fishermen and boaters.

The nearby city of Juneau, Native Alaskan leaders and Gov. Sarah Palin have hailed the project as a godsend for a region desperate for jobs amid logging cutbacks, the closure of two big pulp mills and dwindling fishing opportunities.

But a coalition of environmental groups fears the permit for the Kensington mine, as the project is known, could gut the Clean Water Act and turn lakes and streams across the country into dump sites for polluted mine waste. They have made that argument before the Supreme Court, which is expected to rule this spring.

“The agencies’ decision to allow the disposal of millions of tons of chemically processed mine waste into a pristine alpine lake sets a horrible precedent,” the Sierra Club, which joined the Southeast Alaska Conservation Council in fighting the permit, said in a statement. “If Coeur d’Alene mines can do it in the heart of the Tongass, mining companies can do it in almost any lake, river or stream.”


Yet industry officials say the project reflects a long-standing practice of setting up settling ponds for mine waste -- often in wetlands or small streams.

More important, they say, the plan to dump mine tailings into the remote, 23-acre Lower Slate Lake has been hailed by Alaska, the U.S. Army Corps of Engineers and many residents as less environmentally damaging than the plan favored by conservation groups: reducing the tailings to a paste and piling them on 100 acres of wetlands near Lynn Canal. A dry tailings disposal plan, then-Solicitor General Gregory Garre told the Supreme Court in January, would create “enormous stacks of tailings, 100 to 200 feet high, thousands of feet wide, that would actually dwarf the Pentagon.”

At issue before the high court is whether the mine tailings should be regulated by the EPA as pollutant discharges -- meaning they would have to be fully treated before being released into lakes and streams -- or by the U.S. Army Corps of Engineers as “fill,” which would allow untreated pollutants to be discharged into the lake as long as any water that flows out of the lake and down toward Berners Bay is clean.

Environmental groups argue that by ceding most of its jurisdiction over mining waste to the Army Corps, the EPA is shirking its responsibilities under the 1972 Clean Water Act and its own regulations -- which since 1982 have said that new gold mines of Kensington’s type must have “no discharge of process wastewater to navigable waters.”


“There has not been a single permit like this ever issued before,” said Tom Waldo, who argued the case before the Supreme Court for the environmental law organization Earthjustice.

But Steve Borell, executive director of the Alaska Miners Assn., said mines across the state -- which is dotted with wetlands -- couldn’t operate if they couldn’t impound tailings in waterways. “The issue isn’t Lower Slate Lake. The issue is whether or not we are going to shut off putting waste rock anywhere.”

Alaska has seen a boom in gold discoveries recently.

International Tower Hills Mines Ltd. announced last month that it had discovered 6.8 million ounces of gold, one of the world’s biggest deposits, north of Fairbanks.


The proposed Pebble Mine at the headwaters of Bristol Bay, one of the West’s great salmon fisheries, is the site of another newly discovered deposit of at least $80 billion in gold -- and, even more important, copper.

“As a matter of fact, it is a new gold rush,” said Rich Hughes of Alaska’s Office of Minerals Development. The state, he said, is the second biggest gold producer in the world, behind Nevada, and gaining rapidly.

Mineral production was worth $4 billion to the Alaska economy in 2007, generating 5,500 direct jobs. Revenue has sunk slightly due to falling metals prices, but strong gold prices and the huge new discoveries are helping maintain an industry that might otherwise be in decline.

On Friday, gold was selling for more than $940 per ounce.


Conservation groups fear that a Supreme Court decision restoring the Kensington mine permit -- which the U.S. 9th Circuit Court of Appeals revoked last year -- would set a precedent that could allow the Pebble Mine, for example, to deposit massive waste into a nearby lake as well.

On a recent overflight, Berners Bay stretched dappled and gray under luminous clouds of mist. A writhing brown mass of Steller sea lions stretched along a beach, while Lower Slate Lake was an innocuous bowl of snow at the top of an icy ridge. To the south were folds of emerald forest.

“What they concluded was it’s cheaper to dump your waste into a lake than do it the way it’s been done for the last 30 years, since the Clean Water Act,” said Rod Cadmus, an activist with the Southeast Alaska Conservation Council who helped negotiate the abandoned compromise for depositing the mine tailings on land. “And if they do it here, they’ll do it at other mines.”

But spokesman Tony Ebersole of Coeur d’Alene Mines said the lake disposal plan had been rigorously studied and deemed the best for the environment by state agencies and the Corps of Engineers.


“There were 50-some permits issued for this mine. The environmental studies alone cost $20 million, and this was permitted according to the way the process is supposed to work,” Ebersole said.

Many residents of Juneau, about 45 miles south of the mine, see the legal fight as a needless delay of a project that could mean the difference between over 200 long-range, well-paying jobs and having to rely on trickle-down revenue from the cruise ship industry.

Randy Wanamaker, a member of the Juneau borough assembly and of the Tlingit and Haida central tribal council, said Native Alaskans had been guaranteed jobs at the mine and already had an important contract to help develop it.

“We are a tribe of 27,000 people, and we have 82% unemployment among our adults. It’s that bad. In the capital city of the state, we have within the urban population something like 27% of our people who are unemployed -- that’s why the Kensington project is so important to us,” Wanamaker said.


He said city and tribal officials were confident that Lower Slate Lake would be restored and would provide better habitat for fish once the mine’s operations were complete.

“We are not trading environment for jobs,” Wanamaker said. “These are my ancestral homelands. These fishing waters that are around it are important to us. We as a tribal group studied this, we worked with Coeur d’Alene Mines to put into it our concerns about our subsistence lifestyle, and they worked with us.”

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kim.murphy@latimes.com