PIERRE, S.D. (KELO) — The South Dakota Board of Minerals and Environment will decide on July 20 whether Wharf Resources can mine gold from an additional 48 acres within its property in Lawrence County.

The board’s chair, Rex Hagg of Rapid City, served as hearing officer for the two-day contested case that wrapped up at mid-day Friday. Hagg said he’s “inclined” to recommend that the board approve Wharf’s request, with an additional condition: Wharf must solve a selenium problem at an old tailings site, where Wharf has been taking rock as part of a voluntary remediation effort.

“It appears the permit (application) complies otherwise,” Hagg said.

Lawyers for Wharf and the state Department of Agriculture and Natural Resources, whose various offices regulate mining as well as water quality, will deliver to Hagg their proposed findings of facts and conclusions of law in the coming weeks. Wharf submitted its initial set Friday, but those didn’t reflect the additional condition regarding selenium.

In 2021, state officials found that selenium in the east branch of False Bottom Creek, specifically at a place known as False Bottom Spring, exceeded the state’s water-quality standard. The state Minerals, Mines and Superfund Program sent a letter notifying Wharf on July 1, 2021, and followed that with a warning letter on November 14, 2021.

The company has since been working with state officials and consultants to identify a solution. The tailings at the historic Bald Mountain mine site are about two miles from the proposed area known as the Boston Expansion where Wharf wants to do additional mining.

A South Dakota law passed in 1982 specifically says the board can deny a mine permit if the operator “is currently found to be in violation of the provisions of this chapter with respect to any mining operation in this state.”

Hagg said Wharf should be required to meet the state water-quality program’s proposed schedule of work regarding the selenium issue at False Bottom Spring. Those additional four steps call for Wharf to:

• Provide DANR the results of Wharf’s pilot study by August 1, 2023;
• Provide DANR the company’s plans and specifications for selenium treatment by April 1, 2024;
• Complete whatever construction is necessary by October 1, 2024; and
• Comply with the state’s standards regarding selenium and selenium effects by January 1, 2025.

The state department also wants Wharf to submit quarterly reports on its selenium efforts starting July 1, 2023.

Kelli Buscher, administrator for South Dakota’s water-quality program, said the selenium exceedance wasn’t found at the department’s monitoring station farther downstream on False Bottom Creek. “That’s a good thing,” she testified.

No other water impairments attributable to Wharf have been found, Buscher said. The department’s official water-quality report, published every two years, began listing False Bottom Creek as “impaired” in 2022.

“You’re confident it can be done?” Hagg asked Buscher about Wharf bringing the impaired stretch of False Bottom Creek back into compliance on selenium. “Yes,” she replied. She said consultants are working on it and the technology is available.

Board member Doyle Karpan of Jefferson asked Buscher what caused the selenium level to increase in recent years. Buscher said Wharf is trying to determine that.

“Is it coming from the Wharf property or another source? I don’t know,” Karpan said.

Board member Bob Morris of Belle Fourche said the selenium issue confused him, too. “I don’t think anybody knows what the root cause is,” he said.

On one hand, Morris said, there was speculation linking the higher level of selenium to the rock Wharf has been placing for years at the tailings site; on the other hand, the selenium level farther down False Bottom Creek didn’t exceed the state standard.

“I just find it, for lack of a better word, a mystery,” Morris said. He wants to know what Wharf eventually learns. He noted Wharf wasn’t required to clean up the old tailings area. “So, my compliments,” he told company officials and their lawyers.

Board member John Scheetz of Spearfish didn’t connect the selenium issue to Wharf’s expansion request. “It seems this issue is an outlier in terms of overall compliance,” he said.

But Scheetz later suggested that the department use a spreadsheet or some other tracking device to record that various permit conditions are met. “Just to ensure public trust of what you say you’re going to do,” he explained. “There’s a lot of things to track.”

Hagg agreed. “It is hard to think of every thing, every detail.”

Wharf’s lead attorney, Dwight Gubbrud, summarized in his closing statement Wharf’s 40-year history of mining gold in western South Dakota, the mine’s 250 employees, the economic benefits to the area and the millions of dollars in local and state taxes paid annually.

“This is a vital industry to the Northern Hills and South Dakota,” Gubbrud said. “It has this one problem and it is a historical problem” from a mine that stopped activities more than 60 years ago.

The department recommended approving Wharf’s expansion permit with conditions. State attorney Steven Blair called the selenium issue “the elephant in the room” and said DANR officials welcomed the opportunity to bring it to the board’s attention.

Wharf is the last large-scale gold mine operating in South Dakota. More than a decade has passed since the board last met for a mine-permit hearing; that was for Wharf, too, in 2012.

The department’s water-quality permit for Wharf expired in 2011 and the company has been operating under the same conditions since then. Buscher’s office is currently going through the process of seeking public comments on a new water-quality permit for Wharf.

Blair acknowledged that the water permit was related to the mine-expansion application but told the board the water permit wasn’t a “condition precedent” to deciding on the mining permit.

One question that won’t be answered until July 20 is whether a quorum of the nine-seat board will be present to decide whether Wharf gets the permit and what any conditions might be.

More specifically, six members participated in the hearing — Gary Haag of Hot Springs, Glenn Blumhardt of Bowdle, Doyle Karpan of Jefferson, Scheetz, Morris and Hagg — and at least five of them must vote for whatever is decided. Scheetz indicated he might have another commitment that day.

“It sounds like we’re going to have five, God willing,” Hagg said, “unless something happens.”