Alaska mine owners agree to penalty for violations

The owners and operators of the inactive Rock Creek Mine in Nome have agreed to pay more than $880,000 in a civil penalty to resolve violations of a storm water discharge permit, federal authorities said Tuesday.

According to court documents, Alaska Gold Co. and its parent company, British Columbia-based NovaGold Resources Inc., violated their construction permit on multiple occasions over a 15-month period beginning in April 2007 by discharging too much silt and sediment into Rock, Lindblom and Glacier creeks in violation of state water quality standards.

"Today's settlement shows that the government will hold accountable any company that does not fully comply with storm water requirements," John C. Cruden, acting assistant attorney general for the Justice Department's Environment and Natural Resources Division, said in the statement. "We expect all companies to take the necessary steps to control storm water discharge from their operations."

Rock Creek started pouring gold in October, but suspended operations a month later. At the time, NovaGold said "complications have arisen" in meeting environmental requirements. The company said Alaska regulators may impose financial penalties or additional mitigation or monitoring requirements.

Among other problems it cited at the time were "unanticipated mechanical problems including an electrical failure with the milling circuit and the company has ongoing concerns with the efficiency of the process and recovery circuit," adding that extreme Arctic weather has also been a problem for the project.

Alaska Gold was delayed from completing storm water facilities at Rock Creek mine because of lawsuits filed by environmental groups over the mine's construction permits and severe weather in Nome in 2007 and 2008, the company said in a statement. It also noted that the EPA did not allege its storm water facilities, completed in September 2008, were inadequate or there was any harm to fish or wildlife during 15-month period.

The Rock Creek mine was expected to produce about 100,000 ounces of gold annually. NovaGold anticipated generating $25 to $35 million in cash flow yearly from Rock Creek, the first modern, open-pit "hard rock" mine on the Seward Peninsula.

The mine had created tension in Nome, which was founded in 1901 as a gold mining town. Business leaders had supported the development, but many residents worried about dust from the mine blowing onto homes and fish camps, and about dangerous mining chemicals like cyanide leaking into the water supply.

The Rock Creek mine and mill complex was built on Alaska Native and mining company land about six miles north of Nome, a Norton Sound community on Alaska's western coast. Construction started in October 2006.

"Whether it's in a far corner of Alaska or in a crowded urban area, storm water rules protect our waterways from polluted runoff," Michelle Pirzadeh, EPA's acting regional administrator in Seattle, said in the statement. "The construction at Rock Creek Mine resulted in virtually unchecked runoff of silt and sediment to important fish habitat. Companies taking on construction projects of this scale need to do so responsibly and in accordance with the law."

The agreement and judgment were filed Tuesday at the U.S. District Court in Anchorage. They are subject to a 30-day public comment period and court approval.

NovaGold Resources is also a partner in the proposed $4.5 billion Donlin Creek mine in southwest Alaska, about 275 miles west of Anchorage.