Emigrant Gulch

Emigrant Gulch is shown north of Yellowstone National Park.

A Montana district court has ruled that state regulators ignored environmental issues and illegally approved an exploratory drilling project in the mountains north of Yellowstone National Park.

In a decision issued Friday, Park County District Judge Brenda Gilbert ruled that the Montana Department of Environmental Quality needs to complete a more extensive environmental review of Lucky Minerals Inc.’s plans to drill for gold in Emigrant Gulch, a narrow canyon near Chico Hot Springs.

The decision said DEQ failed to take a “hard look” at the project’s potential impacts to wildlife and water quality. Gilbert wrote that DEQ gave “unwarranted deference” to the company’s proposal when it approved the work last year.

Gilbert’s ruling delivers a win to the Park County Environmental Council and Greater Yellowstone Coalition, which sued DEQ last year after it approved Lucky Minerals’ drilling plans.

“This court decision vindicates the very serious concerns that the Park County community has been voicing since the very beginning,” said Jenny Harbine, an Earthjustice attorney who represented the plaintiffs. “The court agrees that this project poses some real risks to the natural environment.”

Kristi Ponozzo, DEQ’s public policy director, said in an email that the agency is still reviewing the decision.

“When we have fully reviewed the decision, we will determine how to proceed,” Ponozzo said.

Shaun Dykes, vice president of Lucky Minerals, said the decision doesn’t make sense, and that the level of analysis the court is requiring is unnecessary for what he considers a simple project.

“I find it absolutely ridiculous,” Dykes said.

The ruling doesn’t immediately block drilling. The company still holds an exploration license that would allow it to drill as soon as July 15. Dykes said the company’s board of directors would make a determination on how to proceed in the coming days.

Harbine said they’ll use any legal avenue available to block the company’s work if it does attempt to proceed with drilling.

The ruling comes nearly three years after Lucky’s plans to look for gold were first announced. The Canadian company wants to drill for gold on private land deep in the mountains east of the Paradise Valley.

Opponents of the project worry the work would ultimately lead to an industrial-scale mine that could harm the environment, water quality and the region’s tourism-based economy. Lucky Minerals officials have dismissed those concerns, arguing that mining could be done safely and would benefit the local economy.

In 2016, the Obama administration issued a temporary moratorium on new mining claims on 30,000 acres of public land near where Lucky wants to drill. U.S. Forest Service officials have proposed extending that ban to last 20 years and a decision is expected later this year.

U.S. Sen. Jon Tester, D-Montana, and Rep. Greg Gianforte, R-Montana, have introduced bills to make the ban permanent. Mine opponents have been lobbying for those bills, which they believe would prevent Lucky from expanding enough to make a mine profitable.

In an emailed statement, Greater Yellowstone Coalition executive director Caroline Byrd praised the court’s decision but urged passage of the permanent ban, including asking for more support from U.S. Sen. Steve Daines, R-Montana. Daines has said he supports both bills but has declined to become a sponsor of the Senate version.

“We won this battle today, but if we want permanent protection for Paradise Valley’s future, we need Sen. Steve Daines to co-sponsor the Yellowstone Gateway Protection Act and help get it passed through Congress,” Byrd said.

Lucky has spent some time looking elsewhere. The company has invested in an exploration project in Ecuador. Dykes said they’re working to identify drilling targets there now.

Michael Wright can be reached at mwright@dailychronicle.com or at 582-2638. Follow him on Twitter @mj_wright1.

Michael Wright covers the environment and wildlife issues for the Chronicle.

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