* Army Corps of Engineers acted within law, court rules
* Environmentalists urge Obama to repeal Bush rule
* Company expects to bring mine into production in 2010
* Coeur shares up 5.4 percent
(Adds company comments, stock rise in paragraphs 6-9)
By James Vicini
WASHINGTON, June 22 (Reuters) - The U.S. Supreme Court
ruled on Monday for Coeur d'Alene Mines Corp by upholding a
government permit that will allow the company's Alaska gold
mine to deposit rock waste into a lake on federal land.
In a closely watched environmental case, the justices
overturned a U.S. appeals court ruling that had invalidated the
permit for Coeur's underground Kensington Gold Mine northwest
of Juneau.
In 2005, the U.S. Army Corps of Engineers granted the
company's Alaska unit a permit to put 4.5 million tons of rock
waste, or mine tailings, into the lake over a decade.
The Corps of Engineers, not the federal Environmental
Protection Agency, has the authority to permit the slurry
discharge, and the Corps acted in accordance with the law in
issuing the discharge permit to Coeur, Justice Anthony Kennedy
wrote in the Supreme Court's majority opinion.
The deposits would have raised the height of 23-acre Lower
Slate Lake by 50 feet, so the company proposed building a
90-foot-high dam at the site in the scenic Tongass National
Forest.
Shares of Coeur D'Alene rose 5.4 percent to $11.38 on the
New York Stock Exchange shortly before the close.
"We now look forward to bringing Kensington into
production, which we are now targeting for the second half of
2010," Chairman, President and Chief Executive Officer Dennis
Wheeler said in a statement applauding the ruling.
The mine's potential for 125,000 ounces of annual gold
production represents a 135-percent increase from Coeur's
current gold production levels, he said. Coeur, which operates
mines in Nevada, Bolivia and Mexico, is predominantly a silver
producer.
Wheeler said Kensington, where construction was halted
during the appeals process, is expected to provide an estimated
370 direct and indirect jobs in Juneau and Southeast Alaska.
Coeur has said the mine has proven and probable reserves of 1.5
million ounces of gold.
The appeals court sided with environmentalists and ruled
the permit violated the federal clean water law. It said the
toxicity of the discharge might have lasting effects on the
lake, killing all the fish and nearly all aquatic life.
Idaho-based Coeur argued that depositing tailings in the
lake was the most practical and environmentally sound option.
Both Coeur and the state of Alaska appealed to the Supreme
Court. The federal government supported their appeals.
Environmentalists argued that modern mines had never been
allowed to dump tailings into lakes, and the appeals court
ruling confirmed a rule of law in place for more than 30
years.
Writing for the six-member court majority, Kennedy said
deference must be given to the reasonable decision by the Corps
of Engineers.
Justices John Paul Stevens, Ruth Bader Ginsburg and David
Souter dissented.
Officials at Earthjustice, one of three environmental
groups involved in the case, expressed disappointment over the
ruling.
"The Clean Water Act was intended to halt the practice of
using lakes, rivers, and streams as waste dumps," said Tom
Waldo, who argued the case. "Today's decision does not achieve
these purposes."
The officials said the Bush administration rule giving the
Corps of Engineers authority in such matters had reversed
thirty years of successful regulation under the Clean Water
Act. They urged President Barack Obama to act immediately to
repeal the rule.
(Reporting by James Vicini; Additional reporting by Steve
James in New York; Editing by John Wallace and Lisa Von Ahn)
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