Mining Committee Report

Judicial Developments

A. Claim Validity

The Ninth Circuit Court of Appeals upheld an Arizona District Court order rejecting Rosemont Copper’s (Rosemont) plan to place waste rock and tailings on national forest land, where Rosemont contended it had valid mining claims. The split panel held that, while the U.S. Forest Service (Forest Service) previously approved Rosemont’s plan, it did so by assuming that Rosemont had “valid mining claims on the 2,447 acres it proposed to occupy with its waste rock.” But “the claims are invalid because no valuable minerals have been found on the claims.” In the briefs, both the Government and Rosemont argued that Part 228A regulations provided support for Rosemont’s waste rock and tailings-placement plan; the Court found that it could not yet resolve this issue, stating that “[u]nless and until the [Forest] Service decides on remand that Part 228A regulations are applicable to Rosemont’s proposed occupancy of invalid mining claims with its waste rock, and unless and until the Service construes those regulations to permit such occupancy,” it could not rule on that question. The impact of the Rosemont decision on Bureau of Land Management (BLM) lands should be understood more fully in the coming year; the parties did not file a cert. petition with the U.S. Supreme Court.

Earlier in the year, in the long-running Grand Canyon Tr. v. Provencio matter, the Ninth Circuit decided another case related to claim validity. There, the primary question in the appeal was, in determining whether the project proponent had a claim to “valuable mineral deposits, 30 U.S.C. § 22, [and] whether it was arbitrary and capricious for the Forest Service to ignore sunk costs.” “The district court held that it was not and granted summary judgment to the defendants.” The Ninth Circuit affirmed the district court’s ruling. The court determined that the Department of Interior’s (DOI) rule excluding sunk costs was permissible, noting that the Court “would be required to give DOI deference under the Chevron doctrine,” so it was appropriate for the Forest Service to do so in its validity determination.

B. National Environmental Policy Act

In 350 Montana v. Haaland, a split Ninth Circuit panel found that DOI “violated the National Environmental Policy Act (NEPA), 42 U.S.C. § 4321 et seq., by failing to provide a ‘convincing statement or reasons’” to explain why the expansion of a coal mine in south-central Montana that was “expected to result in the emission of 190 million tons of greenhouse gases (GHGs)” had “insignificant” environmental impacts. The court noted that

comparing the emissions from this point source against total global emissions predestined that the emissions would appear relatively minor, even though, for each year of its operation, the coal from this project is expected to generate more GHG emissions than the single largest source of GHG emissions in the United States.

Additionally, the Court held that the Environmental Assessment’s (EA) domestic comparisons failed to satisfy NEPA “because [DOI] did not account for the emissions generated by coal combustion, obscuring and grossly understating the magnitude of the Mine Expansion's emissions relative to other domestic sources of GHGs.” While the presumptive remedy for NEPA violations is vacatur, the Court held that the record concerning the consequences of vacating the decision was not developed, so the matter was remanded to the district court for further evaluation.

C. Gold King Mine Settlement

On August 5, 2015, while at the Gold King Mine, contractors working for the U.S. Environmental Protection Agency caused the release of about three million gallons of contaminated water into a tributary of the Animas River. Litigation over the spill followed, with the United States, State of New Mexico, Navajo Nation, the State of Utah, and other plaintiffs filing various claims, cross-claims, and counter-claims, which were consolidated into an MDL proceeding for pretrial purposes. Many of those matters have been settled in past years. In November 2022, Chief U.S. District Judge Johnson of the District of Colorado found that Weston Solutions Inc. (Weston) may have “had control over the water management system” at the Gold King site but did not have “control over the water released from the Gold King Mine.” Likewise, the Court also found that Weston did not manage, direct or conduct operations at the site. Approximately one month later, New Mexico settled its lawsuit against two federal contractors who worked on the mine.

D. Native American Lands

In Oklahoma v. United States Dep't of the Interior, the U.S. District Court for the Western District of Oklahoma found that Oklahoma could not continue regulating surface coal mining and reclamation operations within certain reservations that had never been disestablished. This decision followed the U.S. Supreme Court’s 2020 ruling, in McGirt v. Oklahoma, where the Court held that a reservation in Oklahoma had never been disestablished. Consequently, the relevant legal authority over the reservation land was vested in the federal government and tribes. Subsequent decisions used the same logic to divest state authority over two other reservations. For mining, under the 1977 Surface Mining Control and Reclamation Act, while either the federal or state government may regulate mining, on reservation lands, only the federal government has authority to do so. “The consequences of this decision are significant – the land comprising the Creek, Choctaw, and Cherokee Reservations makes up a large portion of eastern Oklahoma and includes all the surface coal mining and reclamation activities in the state.”

In Apache Stronghold v. United States, the Ninth Circuit affirmed the Arizona’s district court’s denial of plaintiff Apache Stronghold’s motion for preliminary injunction seeking to enjoin an exchange of land between the United States and Resolution Copper. For the land exchange, Resolution would gain 2,422 acres of land and Resolution would give 5,344 acres of land to the United States for conservation purposes. Under federal law, the Forest Service was required to prepare an EIS. Several days before the Forest Service released the EIS, Apache Stronghold sued the United States, alleging that the land exchange violated the Religious Freedom Restoration Act (RFRA), the Free Exercise Clause, and certain trust duties owed to the Apache tribe. Initially, Apache Stronghold appealed the denial of its preliminary injunction request and moved for a stay pending appeal. In the meantime, the Forest Service rescinded its EIS. The Ninth Circuit issued an opinion in June 2022. The Court rejected Apache Stronghold’s argument that the land exchange substantially burdened its members’ worship at the proposed exchange site because the land exchange neither forces the members to choose between their religion and receiving a government benefit, nor coerces individuals to act contrary to their religion. Incidental effects that make it more difficult or even impossible to practice one’s religion do not constitute a substantial burden under RFRA. The Ninth Circuit also held the land exchange was neutral and generally applicable and therefore does not violate the Free Exercise Clause. Further, Apache Stronghold failed to prove the Treaty of Santa Fe imposed an enforceable trust obligation on the United States. Judge Berzon filed a dissenting opinion, asserting that the majority’s interpretation of “substantial burden” under RFRA was “overly restrictive.” In November 2022, the Ninth Circuit voted to rehear the case en banc the week of March 20, 2023.

E. Clean Water Act

In one of the first cases to apply the County of Maui factors, Stone v. High Mountain Mining Co., LLC, a Colorado Federal District Court found Defendant High Mountain Mining Company liable for violations of the Clean Water Act (CWA). The mine at issue, the Alma Placer Mine, utilized a series of settlement ponds that allowed water to infiltrate into the ground. The Court found the liner the company used was ineffective at protecting the groundwater from contamination. The Court also found that water discharged from the settling ponds flowed through groundwater and over approximately two days made its way to the Middle Fork River, a Water of the United States. In this case, the theoretical maximum penalty for the CWA violations was $165 million. However, the Court chose to impose a penalty of $500,000, which represented the Court’s “best estimate of the economic benefit High Mountain enjoyed by avoiding compliance with the CWA.”

In San Carlos Apache Tribe v. State of Arizona, the Arizona Court of Appeals vacated decisions by the lower court and the Water Quality Appeals Board and held that a new shaft sunk at an existing mine is a new source under the CWA’s new source regulations. There, Resolution Copper sought to renew an existing CWA discharge permit after drilling a new shaft that would eventually facilitate mining an untouched ore body at a mine site that had been an operation since 1912. The Arizona Department of Environmental Quality (ADEQ) approved the permit, but it was challenged by several entities for numerous reasons, one being that, because of the construction of the new shaft for the new ore body, the permitted mine was a new source.

In finding the new shaft is a new source, the Arizona Court of Appeals asked whether there is a new source performance standard that is independently applicable to the new shaft instead of whether the new shaft is a facility, building, or structure constructed prior to the promulgation of new source performance standards applicable to the facility, building, or structure under 40 C.F.R. § 122.2. After the first analysis, the Court considered whether the new shaft is substantially independent of an existing source at the same site. The Court held: (1) the new shaft is a “mine” under the relevant copper mining point source regulations and produces mine drainage, so it is subject to independently applicable standards; and (2) the new shaft meets the “new source” criteria under 40 C.F.R. § 122.29(b), because its processes are substantially independent of the existing mine operations at the same site. The court further held that, because a new source is involved, ADEQ cannot reissue the permit until “(1) ADEQ finalizes a [Total Maximum Daily Load] TMDL plan for the receiving water segment; (2) Resolution demonstrates the existence of sufficient copper load allocations to allow for the proposed discharge; and (3) Resolution demonstrates the existence of water quality compliance schedules for the segment.” According to the Court, ADEQ’s development of the TMDLs is vital because Queen Creek, the proposed receiving water, is impaired for copper.

A dissenting opinion called out the majority’s reading of the regulatory language, asserting that, under 40 C.F.R. § 122.29(b), a more proper reading of the applicable regulations would first ask whether the new shaft satisfies the definition of “new source” under 40 C.F.R. § 122.2, then ask whether it was substantially independent of an existing source (or meets the other two criteria under 40 C.F.R. § 122.29(b)(1)(i), (ii)), and, finally, only if it satisfies the first two steps, determine if there was a new performance standard independently applicable to it. Applying the regulatory language in this manner, the dissenting judge found the shaft is a “new source” under 40 C.F.R. § 122.2, but it is ultimately not a new source because it did not meet the criteria under 40 C.F.R. § 122.29(b)(1)(i)-(iii), as it is an extension of the existing mine operations, not substantially independent of an existing source.

F. Water Rights

A split en banc panel ruling of the Nevada Court of Appeals, issued to settle a water dispute in Diamond Valley (Eureka County, Nevada), held that groundwater management plans in areas that are over appropriated can deviate from the longstanding prior appropriations doctrine, which gives priority to senior water users. Diamond Valley is the only basin that has been listed as a Critical Management Area (CMA). However, other areas are expected to be designated as CMAs in the future and the opinion is expected to significantly affect water management in Nevada. Given the water needs and water scarcity of mines in Nevada, project proponents should consider how this decision might affect their water rights.

G. Ambler Road

The United States District Court for the District of Alaska granted the DOI’s request to remand the federal permits previously issued for the construction of the proposed Ambler Access Project, ruling that the permits would not be terminated altogether. Earlier in 2022, DOI had requested a voluntary remand of the joint record of decision which had authorized a right-of-way across federal lands for the building of a road connecting the Ambler Mining District to the Dalton Highway, arguing that the remand was necessary due to deficiencies in the legal analysis of impacts to subsistence uses under Section 810 of the Alaska National Interest Lands Conservation Act. In granting the remand, the Court noted that it would retain jurisdiction over the remand, and that DOI was required to file a status report within sixty days from the date of the order and every sixty days thereafter.

Policy Updates

A. $156 Million for Critical Minerals Refinery

In September 2022, the Biden Administration announced up to $156 million would be dedicated from the Bipartisan Infrastructure Law for a “first-of-a-kind facility to extract and separate rare earth elements and critical minerals from unconventional sources like mining waste.” Currently, the funding opportunity is seeking applications from U.S. academic institutions to design, construct, and operate a demonstration facility that would “extract, separate, produce, and refine rare earth elements and other critical minerals from [] vast quantities of waste streams from mining and energy production.”

B. DOI Leads Working Group on Reforming 1872 Mining Law

In May 2022, “the White House convened over twenty representatives from states, Tribes, the mining industry, environmental groups, labor unions, automakers, legal experts, and other stakeholders” to discuss potential reforms to the 1872 Mining Law and other recommendations for improving Federal hard rock mining regulations, laws and permitting processes. This was “the first external engagement of the Department of Interior-led Interagency Working Group on Mining Regulations, Laws, and Permitting,” which has been charged with providing such recommendations to Congress “to ensure new production meet strong environmental standards throughout the lifecycle of the project, ensure meaningful community consultation and consultation with Tribal nations, and reduce the time, cost, and risk of mine permitting.” The group hosted listening sessions and collected public comments on potential reforms through Fall of 2022. As of the end of the year, the Working Group had not published any of its findings, nor a report on improving the mine permitting process, which was due on November 15, 2022, according to the Bipartisan Infrastructure law. Reports are expected in early 2023.

C. Sustainable Critical Minerals Alliance

At the UN Biodiversity conference COP15 in Montréal, Canada, in December 2022, most members of the G7 (Canada, France, Germany, Japan, the United Kingdom, the United States and Australia) launched the Sustainable Critical Minerals Alliance to compel mining companies to adopt more environmentally sustainable and socially responsible standards as they ramp up critical mineral supply chains. The term ‘critical minerals’ refers to the approximately three dozen metals and minerals needed for most modern technology, including laptops, cellphones, rechargeable batteries used in electric vehicles, energy storage, and renewable energy production in solar panels and wind turbines.

D. The American Battery Initiative

On October 2022, the Biden Administration announced the American Battery Materials Initiative (the Initiative), a comprehensive effort to mobilize the federal government in securing a reliable and sustainable supply of critical minerals used for both electricity and electric vehicles (EVs). The Initiative is tasked with working through the Partnership for Global Infrastructure and Investment in order to assist in strengthening critical mineral supply chains globally, and will maximize efforts nationally to meet resource requirements and bolster energy security. The initiative will be led by a White House steering committee, with coordination by the Department of Energy and support from DOI.

At the same time, President Biden announced that the Department of Energy is awarding $2.8 billion in grants from the Bipartisan Infrastructure Law to twenty manufacturing and processing companies for projects related to the manufacture of batteries for EVs and the electrical grid. The funding for the selected projects will support, among other things:

• The development of enough battery-grade lithium to supply approximately 2 million EVs annually.
• Development of enough battery-grade graphite to supply approximately 1.2 million EVs annually.
• Production of enough battery-grade nickel to supply approximately 400,000 EVs annually.
• Creation of the first commercial scale domestic silicon oxide production facilities to supply anode materials for an estimated 600,000 EV batteries annually.
• Installing the first lithium iron phosphate cathode facility in the United States.

Combined, all projects will develop sufficient lithium to supply over 2 million EVs annually, while also establishing a significant domestic production of graphite and nickel.