The U.S. Forest Service said Monday it is "deeply concerned" about a proposed copper mine next to the Boundary Waters Canoe Area Wilderness and may deny the mineral leases that are critical for the controversial project to proceed.

Citing the risk of contamination to a pristine watershed from all phases of mining, the Forest Service took the highly unusual step of asking for public comment on the project proposed by Twin Metals Minnesota, a subsidiary of a giant Chilean mining conglomerate, and announcing a public hearing in Duluth on July 13.

Gov. Mark Dayton, who earlier this year expressed "grave concerns" for the wilderness area he described as Minnesota's crown jewel, quickly commended the Forest Service and supported its view of the risks.

"I share the view expressed today by the Forest Service," he said in a statement.

Twin Metals officials, reached Monday afternoon, declined to comment immediately.

While not fatal, the announcement is a serious blow for the $2.8 billion mining project proposed for the edge of the Kawishiwi River that flows into the Boundary Waters. Twin Metals said in a recent report that it plans to start seeking regulatory approval in 2018 for an underground mine that would take about three years to build and eventually employ 850 people.

It is the second copper-nickel project wending its way through the regulatory process in northeast Minnesota. The first, PolyMet Mining's Corp.'s NorthMet project, this year completed a 10-year environmental review and is expected in the coming months to ask for a permit to mine. That mine would drain toward the St. Louis River and Lake Superior, and it also has triggered a long and vocal statewide debate over environmental protection vs. economic development in a part of the state prized for its natural beauty.

Unlike iron and taconite mining that has been the economic backbone of the region for a hundred years, copper-nickel mining carries much greater environmental risks to water. The ore is contained in sulfide-bearing rock, which can generate acid and heavy metals when exposed to air and water. While the mining industry says modern techniques allow such mines to operate safely in wet environments like Minnesota, similar mines have destroyed thousands of miles of streams and cost taxpayers hundreds of millions in cleanup costs nationally.

The Forest Service cited those concerns as the reasons behind its possible withholding of the leases.

"Potential impacts to water resources include changes in water quantity and quality, contamination from acid mine drainage, and seepage of tailings water, tailings basin failures and waste rock treatment locations," the Forest Service said.

Environmental groups praised the move. "The Forest Service is approaching this in a very responsible way," said Becky Rom, national chairwoman for the Campaign to Save the Boundary Waters. "They are looking at the science, looking at the Boundary Waters and the problems that would exist if this type of mining were allowed in the watershed."

U.S. Rep. Rick Nolan, D-Minn., said he found the Forest Service's statement "disturbing," and urged the agency to extend the leases immediately.

"Now is not the time to pre-emptively block new mining opportunities on the Range, or the environmental review process itself," he said. "Moreover, it seems apparent from the Forest Service's announcement today that they have all but decided to disapprove the leases even before the 30-day waiting period for public input and a listening session commences."

The affected leases are under the control of the U.S. Bureau of Land Management, but that agency recently asked the Forest Service to give its opinion, asking in effect whether the leases were in the best interest of the Superior National Forest. The Forest Service controls management of the surface land and is responsible for protecting and preserving it, as well as managing the natural resources it can provide.

The leases, which Twin Metals acquired from other mining companies that explored the area, have been in place since the mid-1960s, long before federal environmental review laws took effect. The BLM recently declined to automatically renew them, and earlier this month asked the Forest Service to weigh in.

The public can mail comments from June 20 to July 20 to Superior National Forest, 8901 Grand Av. Place, Duluth, MN 55808, or e-mail The public meeting will be held July 13 at the Duluth Entertainment Convention Center and will be streamed live on the internet.