UPDATE 2-US top court to hear Coeur appeal on Alaska mine

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By James Vicini

WASHINGTON, June 27 (Reuters) - The U.S. Supreme Court said on Friday it would hear an appeal by Coeur d'Alene Mines Corp (CDE.N) of a ruling that invalidated a government permit allowing the company's Alaska gold mine to deposit rock waste into a lake on federal land.

The justices agreed to review a U.S. appeals court's ruling in favor of environmental groups that challenged the permit for Coeur's underground Kensington Gold Mine northwest of Juneau, a site previously mined from 1897 to 1928.

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 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.

The appeals court ruled the permit would violate the federal clean water law. It said the toxicity of the discharge may have lasting effects on the lake and may hurt its ability to sustain aquatic life in the future.

Idaho-based Coeur, one of the world's largest silver producers, argued that depositing tailings in the lake was the most practical and environmentally sound option. It has said it hoped the mine would produce 100,000 ounces of gold a year.

In appealing to the Supreme Court, Coeur's lawyers said the appeals court's ruling will severely harm the nation's mining industry and threatens to disrupt the economies of Alaska and other Western states.

The National Mining Association, an industry group, supported the appeal.

U.S. Justice Department lawyers had agreed with Coeur that the appeals court had erred, but said the question did not appear to be sufficiently important to warrant Supreme Court review at this time.

But if the court decided to hear Coeur's appeal, then the government would support the company's position, they said.

The state of Alaska also appealed to the Supreme Court, saying the case presented a question of national importance.

Earthjustice attorney Tom Waldo, representing the environmental groups, said, "Modern mines have never been allowed to dump tailings into lakes. The federal Clean Water Act prohibits it, and for good reason."

He said the appeals court's decision "confirms a rule of law that has been in place for over 30 years, and we are hopeful that the Supreme Court will come to the same conclusion.

"This misguided plan by the Kensington Mine and the Army Corps of Engineers represents a dangerous assault on all of America's lakes, rivers and streams," he said in a statement.

The Supreme Court agreed to hear the appeals by Coeur and the state, with arguments to be held during the court's upcoming term that begins in October. (Editing by Jeffrey Benkoe and Derek Caney)