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Trial to begin over accusations of environmental crimes at Alaska mine

  • Author: Lisa Demer
  • Updated: September 28, 2016
  • Published September 13, 2015

A first-in-Alaska federal environmental crimes trial over a mining operation is set to begin this month in Anchorage with a single defendant.

Two other managers with XS Platinum Inc. already have pleaded guilty -- one earlier this month -- which opens the possibility they might testify at the trial of Canadian James Slade.

Yet those at the top of the company have yet to answer charges that the effort to restart an old mine near the Southwest Alaska community of Platinum went terribly wrong. The Australians who led XS Platinum have not shown up in U.S. District Court in Anchorage, and prosecutors have been unable to find remnants of the company itself.

In all, five officials or managers were charged with felonies as was XS Platinum. The case is the first federal prosecution in Alaska related to mining under the Clean Water Act.

The focus now is on Slade, who is arguing in court that the government knew what the platinum miners were up to all along. His trial is set to begin Sept. 21 with jury selection and is expected to last about two weeks.

Slade, a contractor from Calgary who served as Platinum's chief operating officer, is accused of six felony charges including conspiracy, violations of the Clean Water Act, and submission of a false report. Prosecutors describe him as the senior on-site corporate representative for most of the 2010 and 2011 mining seasons, when clear Alaska salmon streams near Platinum Creek Mine at the edge of Kuskokwim Bay turned muddy brown with wastewater from the project, according to the indictment against him.

Slade is trying to mount a "public authority defense," arguing that an official of the Bureau of Land Management allowed XS Platinum to continue its mining work even though it was generating water pollution. Prosecutors are asking U.S. District Judge Sharon Gleason to forbid that strategy, saying it is typically used when defendants mistakenly believe they are acting on behalf of law enforcement, like in an undercover drug investigation.

The defense says Slade and XS Platinum had a "cooperative working relationship" with BLM during the two-year period covered by the indictment.

"The evidence will show that XS Platinum operated on express instructions from BLM personnel," his defense team said in a court brief filed Sept. 1. The Holland & Knight team is led by John Irving of Washington, D.C., with Matthew Singer, an Anchorage attorney who has represented mining interests here for years, as the local counsel.

Slade alerted prosecutors in earlier motions that he planned to use that defense and filed a notice of his intention on Aug. 11.

His actions, and those of others at XS Platinum, were under the direction of BLM mining compliance specialist James Whitlock, the notice said.

Whitlock was the mining company's main point of contact, "which made perfect sense given the complex web of regulatory issues that XS Platinum needed to navigate, including not only the Clean Water Act permit at issue, but the reclamation of old tailings piles in the Salmon River, the reestablishment of a fish passage, a long-term Mine Plan of Operations, employee health and safety, and a number of other regulatory issues," the Sept. 1 defense filing said.

Whitlock knew the water was turbid, and both he and the mining company were trying to find the source, the court brief said.

BLM had jurisdiction of XS Platinum's upper river mining claims, where old mining had left huge piles of waste materials behind. Slade argued that the federal agency was willing to work with the miners to clean up the upper Salmon River and nearby streams to allow fish to swim through again.

The turbidity only became a problem after XS Platinum confirmed its intent to mine downriver in the Togiak National Wildlife Refuge, which is under the jurisdiction of U.S. Fish and Wildlife Service, the court filing said.

The argument that Slade was relying on BLM's guidance "is a red herring, and has no basis in law," prosecutors said in their response to the defense notice.

What matters is whether Slade knowingly allowed the discharge of turbid wastewater, polluting streams in the watershed, the prosecution team said in Aug. 26 court filings.

Slade didn't submit evidence that he was acting on behalf of BLM's Whitlock "when he discharged turbid wastewater into the Salmon River and Squirrel Creek, failed to provide monitoring data, aided in the presentation of false statements, and also violated numerous other conditions of the … permit over the course of 2.5 years," prosecutors said. The prosecution team includes Kevin Feldis, an assistant U.S. attorney in Anchorage, and Christopher Costantini, a senior Justice Department environmental crimes attorney in Washington, D.C.

Gleason has not yet ruled on whether to allow that defense strategy. In an earlier pretrial round, she ordered that prosecutors couldn't present evidence of harm to the environment from turbidity or other pollutants, and that the defense couldn't present evidence of lack of harm. But prosecutors have asked her to clarify that, saying that they want to tell jurors about the nature of turbidity and show that it "was not just muddy water as the defendant has suggested." She has asked for more information. She also ruled that Slade's lawyers could not argue for acquittal even if the jury found he violated the law, the jury nullification phenomenon.

In other developments, James Staeheli, who was an hourly plant operator before being promoted to process manager in April 2011, pleaded guilty on Sept. 1 to a single misdemeanor count of violating the company's Clean Water Act permit through discharges of wastewater. He had faced two felony counts and earlier had agreed to plead guilty to a single felony, but then backed out. His sentencing on the misdemeanor is scheduled for Nov. 12.

Robert Pate, a career mining geologist, pleaded guilty to three charges in March. A hearing to figure out a date for sentencing is set for Oct. 9, after Slade's trial.

Meanwhile, Australians Bruce Butcher, who was chief executive officer of XS Platinum, and Mark Balfour, an executive vice president, have "chosen not to appear in response to the charges," Feldis wrote in a status report filed in court Wednesday.

After Slade's trial, the government will "continue to investigate the fate of XSP and its assets," the status report said.

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