VANCOUVER — There’s more battling ahead for Northern Dynasty Minerals (TSX: NDM; NYSE-MKT: NAK) as it prepares to dispute its case to the U.S. Federal court against the U.S. Environmental Protection Agency’s (EPA) decision to veto development of its world-class Pebble deposit, 321 km southwest of Anchorage, Alaska.
Ron Thiessen, president and CEO of Northern Dynasty, said during a session at Vancouver’s Resource Investment Conference in January that the company is “on the cusp of a resolution,” and expects that a final decision will be reached this year.
The behemoth porphyry copper-gold deposit — which has measured and indicated resources of 57 billion lb. copper and 70 million oz. gold in 6.4 billion tonnes — is located at the headwaters of Bristol Bay, home to the world’s largest wild salmon fishery.
The fishery generates US$1.5 billion annually, supports tens of thousands of local jobs in the region, and supplies the world with half of its sockeye salmon.
The project was paralyzed in 2014 when the EPA enacted section 404c of the Clean Water Act to prohibit mining in the region, as it would create “unacceptable adverse impacts on the environment.”
But Thiessen argues that the EPA “hijacked” the project and ignored the company’s US$150-million environmental baseline report, instead pursuing its own studies in a quest to “pre-emptively kill” the proposed mine.
“Our report was done by the world’s best scientists and engineers and we provided it to the EPA, but they chose not to use it,” he told the audience. “It simply would not support their preconceived conclusions of Pebble, so they had to go out and concoct their own study, which was specious in and of itself.”
The EPA study, called the “Bristol Bay Watershed Assessment,” was launched in 2011, and first drafts of the report were drawn the next year — five months after Northern Dynasty submitted its baseline study report.
Thiessen said it likely cost the agency US$5 million to complete its assessment, in stark contrast to the US$150-million dollar report the company spent four years compiling.
Northern Dynasty says its own investigations show “incontrovertible evidence” that the EPA reached final decisions about Pebble before undertaking any scientific inquiry, and had manipulated the scientific process, while conspiring with environmental activists.
A 16-month long review conducted by the EPA’s inspector general cleared the agency of any wrongdoing in mid-January, and said the study followed guidelines and met requirements for peer review.
The inspector general did note, however, that an EPA employee may have “misused his position” by reviewing and providing comments on the section 404c petition drafted by Alaskan Native tribes before it was submitted to the agency.
The EPA Senior Counsel for Ethics agreed with the possible misuse, as agency employees “must remain impartial in dealings with outside parties, particularly those that are considering petitioning or have petitioned the agency to take action on the matter.”
However, the EPA was unable to draw any specific conclusions related to the employee’s potential misconduct, as 25 months of email correspondence had been wiped from record and the employee has since retired and left the country.
Thiessen said that the U.S. federal court will draw its own conclusions in the months to come, and the company’s next step will be to collect depositions in March from EPA members — including testimony from the retired employee — to build its case.
“The federal court has ordered the EPA to disclose and provide us with more material, and when we look through that, we see error upon error, travesty upon travesty, and it has to stop,” he said. “The EPA themselves cannot allow a precedence like this to stand. If they did it would undermine all their regulatory proceedings. There are quality people working at the EPA, they want to do the right thing and be what a regulator is meant to be — which is to come through the process with an unbiased opinion and evaluate it.”
Thiessen continued that “Pebble is not a dead duck. We are on the cusp of a resolution … We have $150-million worth of facts and science, and that’s what wins at the end of the day — merit.”
Thomas Collier, CEO of Pebble Ltd. Partnership and former chief of staff at the U.S. Department of the Interior during the Clinton era, explained to The Northern Miner in a phone interview that the pending litigation would give Northern Dynasty a fair right to the permitting process.
“The way these permits work in the States, and have done for 44 years under the [Clean Water Act] statute — is you file an application for an environmental impact statement (EIS), and the U.S. Army Corps of Engineers run the permitting process … and come up with a recommendation,” he said, noting that for a project of Pebble’s scale, the permit could take five years. “Then with us, for the first time ever in history, the EPA decided to institute a veto before we even filed our application for a permit, and before an EIS has been done.
“The environmental community, particularly our biggest opponent — the Natural Resources Defense Council — calls the EIS process the ‘magna carta’ of environmental protection,” Collier continued. “And yet here, they didn’t want to do one because … they’re scared the environmental process might approve the mine project.”
Collier also pointed out that under section 404c, Congress grants the EPA authority to veto permits for “specified disposal sites,” but for Pebble, the EPA identified the “broadest possible area where mining activity could occur,” totalling 431 sq. km, or 57 times larger than anything ever vetoed under the act.
He also said that in the EPA’s assessment, the agency used “worst-case mining scenarios” to draw its conclusion that mining in the region would damage the environment.
“What we’re seeking in this litigation is two things: first is to have this veto process overturned, and second is to have this watershed assessment they’ve done be a document they can no longer rely upon,” he said. “To move forward with a veto of this project in the future, they would need to create another scientific record. And the record they would most likely rely upon would be the EIS that we would do.”
Collier adds that the company would like to see these issues resolved outside of court this year. If this doesn’t happen, the political decision-making over Pebble’s future would fall upon a new U.S. administration.
If the company succeeds either way, it would resume its permitting schedule with hopes to produce at Pebble by 2024.
Former partners in the project Anglo American (US-OTC: NGLOY; LSE: AAL) and Rio Tinto (NYSE: RIO) pulled out in 2013 and 2014, taking massive writedowns.
Northern Dynasty has traded within a 52-week range of 28¢ to 73¢, and last closed at 44¢. The company has 221.9 million shares outstanding for a $96-million market capitalization.