Northern Dynasty takes EPA’s Pebble veto to court

Northern Dynasty Minerals‘ (TSX: NDM; NYSE: NAK) shares dropped on Friday after it said it filed two federal court actions over the government’s moves to prevent it from building a mine at its Pebble project in Alaska.

The first and main focus of Northern Dynasty’s legal actions was filed with Alaska’s federal district court, seeking to reverse the U.S. Environmental Protection Agency’s (EPA) veto of development at Pebble.

The company’s moves come just over two months after the Supreme Court dismissed the state of Alaska’s attempt to keep the Pebble project alive after it was essentially shot down by the Environmental Protection Agency more than a year ago. In January 2023, the EPA decided to block Northern Dynasty’s U.S.-based subsidiary from storing mine waste in the Bristol Bay watershed, essentially killing the project.

The proposed mine would have become the largest copper, gold and molybdenum extraction site in North America. However, for almost two decades, Pebble has been met with strong resistance due to its potential environmental and social impacts. The project’s location near the Bristol Bay area in southwestern Alaska is home to the world’s largest sockeye salmon fisheries.

Veto ‘violates statutes’

In its complaint, the company alleges the EPA veto was issued in violation of various federal statutes regarding Alaska’s statehood rights and a land exchange approved by Congress.

Specifically, it claims that the veto decision was based on an “overly broad legal interpretation” of EPA’s jurisdiction, which has since been overruled by the Supreme Court. The agency’s geographic scope exceeds that allowed by the statute, Northern Dynasty says, and it was based on information previously developed by EPA in what it calls “an illegal pre-emptive veto process” designed to reach a predetermined result.

The miner also says the factual basis given to support the veto is directly contradicted by the July 2020 environmental impact statement published by the United States Army Corps of Engineers, which is an important part of the administrative record.

“The EPA has not demonstrated that either the development of the Pebble deposit will have unacceptable adverse effects under Section 404(c), or that there are any impacts to Bristol Bay fisheries that would justify the extreme measures in the final determination (veto),” Northern Dynasty stated in a news release.

“Whatever authority the EPA may have under section 404(c), the general provision in the Clean Water Act cannot authorize the EPA to take action to block the specific economic activity that was Congress’s express purpose for granting these lands to the State of Alaska under the Cook Inlet Land Exchange,” Northern Dynasty CEO Ron Thiessen said.

‘Taking property’

The other legal action was filed with the US Court of Federal Claims in Washington, D.C., claiming that the actions by the EPA represent an unconstitutional “taking” of Northern Dynasty’s property. To that extent, the company asked the court to defer considering this action until the above EPA veto case is resolved.

“Our permitting strategy is focused entirely on winning the EPA veto case and permitting the Pebble project. We have filed a takings case against the federal government to preserve our ability to seek compensation for a violation of our rights in line with the protections under the Fifth Amendment,” the company said.

Still, according to Thiessen, the priority is to advance the district federal court complaint, because “overturning the illegal veto removes a major impediment from the path of getting the permit to build the proposed mine.”

Over an estimated 20-year mine life, Pebble is expected to churn out 6.4 billion lb. of copper; 7.4 million oz. of gold and 300 million lb. of molybdenum, plus 37 million oz. of silver and 200,000 kg of rhenium.

Northern Dynasty’s shares were down 9% to 40¢ apiece on Friday morning, valuing the company at $215 million. Its shares traded in a 52-week range of 28¢ and 58¢.