Mining Committee Report

I. Judicial Developments

A. Great Basin Resource Watch v. United States Department of the Interior

This case is the second district court review of the Bureau of Land Management’s (“BLM”) approval of a molybdenite ore mine in central Nevada, called the Mt. Hope Project. In 2013, environmental plaintiffs challenged BLM’s approval on various grounds. The U.S. District Court of Nevada found for defendants on all counts, but the Ninth Circuit reversed, holding BLM violated the National Environmental Policy Act (“NEPA”) (and declining to reach the other grounds). The original Record of Decision (“ROD”) was vacated, and the matter remanded to BLM. BLM then issued a second ROD in 2019, giving rise to this second lawsuit.

In this second iteration, the district court found BLM’s approval of the mine failed to protect waters and land under Public Water Reserves 107 (“PWR 107”). PWR is an executive order from 1926 that withdrew qualifying springs and their surrounding land, but held them open to occupation relating to metalliferous minerals “as the mining laws permitted.” The issue in Great Basin was whether BLM can “occupy” the land that qualifies for PWR 107 protection solely by dumping waste rock on it. The court answered in the negative. Under section 22 of the Mining Act of 1872 and the Ninth Circuit’s recent Rosemont decision interpreting the same, a “discovery of valuable minerals” in the PWR 107 lands “is essential to the right to any occupancy.” Because there was no evidence in the record that “the PWR 107 springs or surrounding lands contain molybdenite ore or any other metalliferous minerals”, the court remanded a second time so that BLM could conduct this analysis.

The district court went on to reject the plaintiffs’ NEPA challenges, finding that (1) BLM’s setting of baseline values for air quality conditions at zero was reasonable, (2) “BLM made a reasonable decision to not include potential oil and gas developments in its cumulative impacts analysis” because no oil and gas developments had occurred since 2012 and there were no pending permit applications, and (3) BLM’s failure to adequately analyze mitigation to water sources was harmless error because the amount of replacement water at issue was minor.

B. Center for Biological Diversity v. United States Fish and Wildlife Service

This suit is the latest litigation development surrounding the proposed Rosemont copper mine in Southern Arizona. Environmental plaintiffs challenged Fish and Wildlife Service’s (“FWS”) approval of the project after it determined that the mine would not destroy critical jaguar habitat as designated under the Endangered Species Act (“ESA”). In an in-depth opinion analyzing the ESA’s critical habitat provisions and their application, the Ninth Circuit found that “the district court correctly vacated the FWS’s occupied critical habitat designation but erred in upholding the unoccupied critical habitat designations.”

As to the relevant occupied critical-habitat designation, the Ninth Circuit agreed with the district court that FWS erred in considering a photograph of a jaguar from 2013 to determine the bounds of an occupied zone. The controlling question is whether the habitat was occupied at the time the jaguar was listed as an endangered species—in 1972—and thus recent photographs were not relevant. Because the only other evidence supporting the occupied designation was a single sighting in 1965 from a different mountain range, FWS’s occupied critical habitat designation was arbitrary and capricious.

As to the relevant unoccupied critical habitat designations, the Ninth Circuit preliminarily confirmed that in order to designate an unoccupied critical habitat, the FWS must first determine that the occupied critical habitat is inadequate to conserve a protected species. FWS failed to do so, rendering its designations arbitrary and capricious. Beyond that, the court found that the FWS considered irrelevant factors in designating the subject areas as unoccupied critical habitats. Specifically, FWS improperly considered recent sightings as well as the presence of primary constituent elements (“PCEs”), which are “those specific elements of the physical or biological features that provide for a species’ life history processes and are essential to the conservation of the species.” Permitting a designation based solely on the presence of PCEs would flip the standard by making it easier to designate an area as unoccupied than occupied.

C. Idaho Conservation League v. Poe

An environmental organization brought a Clean Water Act (“CWA”) citizen suit alleging that a miner committed ongoing CWA violations by operating a suction dredge in a navigable river without a National Pollutant Discharge Elimination System (“NPDES”) permit. The United States District Court for the District of Idaho entered summary judgment for the organization, and the Ninth Circuit affirmed. Specifically, the Ninth Circuit held that the miner’s activities—excavating dirt and gravel in the river using a high-pressure blaster nozzle, extracting any gold and other heavy metals, and then discharging the dirt and other non-heavy metal materials into the water—constituted a “discharge of pollutants” under Section 1311(a).

In reaching this conclusion, the court determined that the miner’s activities were like those in United States Supreme Court precedent, Rybacheck v. EPA, which upheld EPA regulations interpreting the CWA as prohibiting discharges from placer mining sluice boxes. The court also distinguished S. Fla. Water Mgmt. Dist. v. Miccosukee Tribe of Indians and L.A. Cnty. Flood Control Dist. v. Nat. Res. Def. Council, Inc., in which the Supreme Court held that “pumping polluted water from, and back into, the same body of water, without more, ‘cannot constitute an “addition” of pollutants.’” By contrast, here the miner excavated the materials from the riverbed, processed them, and then discharged them into the water, creating a plume of turbid wastewater. These materials were not already suspended in the water but deposited in the riverbed, so it was very different than the simple water transfers at issue in Miccosukee and LA Cnty. Flood Control.

Further, the court held that the excavated material was not “dredged” or “fill material” for which the Army Corp had exclusive jurisdiction, because the relevant regulations do not speak clearly to whether “dredged” material remains “dredged” after it is processed, and the EPA has required section 402 permits for sluice dredging since 2013.

D. Twin Metals Minn. LLC v. United States

A Washington D.C. District Court dismissed a complaint filed by Twin Metals Minnesota, LLC (“Twin Metals”) alleging that the Bureau of Land Management (“BLM”) cancelled Twin Metals’ mineral leases and rejected Twin Metals’ preferential lease application (“PRLA”) and mine plan of operations (“MPO”) in a manner that was arbitrary and capricious and violated the Administrative Procedures Act (“APA”). Since 1986, Twin Metals held two mineral leases in the Superior National Forest. After going through a political roller coaster, renewal of the leases was ultimately denied and the leases cancelled in 2022. In addition to its leases, Twin Metals also filed a PRLA to investigate deposits it discovered on nearby land, which BLM denied because the Forest Service applied to withdraw from mining much of the land identified in the PRLA. Moreover, Twin Metals filed a MPO that BLM denied, because it included those lands in the rejected PRLA. BLM also rejected a subsequent MPO filed by Twin Metals that excised the PRLA land.

Relying on the plain language of the mineral leases, the court dismissed Twin Metals’ complaint because Twin Metals’ rights stemmed from its contracts with BLM and not a separate statutory authority. Further, the court found that the procedural obligation identified by Twin Metals—the right to be free of an arbitrary and capricious contract interpretation—does not exist prior to and apart from the rights created by Twin Metals’ contracts. As a result, Twin Metals could only bring these claims as Tucker Act claims, and the court therefore, had to dismiss the APA claims for lack of jurisdiction.

The court also dismissed for failure to state a claim Twin Metals’ claim that BLM arbitrarily dismissed its PRLA, because Twin Metals failed to show that it was entitled to approval of its PRLA based on its discovery of a mineral deposit on the subject land. Since approval of the PRLA was discretionary, BLM had to deny it when the Forest Service requested to withdraw the relevant land from mining. On this basis, BLM’s rejection of Twin Metals’ first MPO was also proper. Finally, the court found Twin Metals failed to state a claim that BLM improperly rejected its second MPO, finding instead that BLM was not required to consider it as an amendment to the first MPO and BLM otherwise properly considered and rejected it.

E. Bartell Ranch LLC v. McCullough

On February 6, 2023, a Nevada District Court issued an order applying Rosemont to a lithium mining project on BLM lands, remanding BLM’s authorization to the agency for evaluation of the proposed use of mining claims for waste rock storage facilities under Rosemont. In Bartell Ranch LLC v. McCullough, the Court considered numerous challenges to the BLM’s approval of the Thacker Pass Lithium Mine in Nevada, including a challenge that the company did not have rights under the mining law to use mining claims for waste rock storage. The District Court applied Rosemont, remanded the agency’s decision, but did not vacate the record of decision, concluding that based on evidence in the record, this case was distinguishable from Rosemont: The record before this Court included evidence of widespread mineralization across the project area, and there was a reasonable possibility the BLM could “fix” its Rosemont issue and reach the same decision on remand. In completing its review on remand, BLM evaluated the proponent’s rights under the Rosemont decision under 30 U.S.C. § 22 based on a “discovery of a valuable mineral deposit for a mining project proponent . . . before that proponent may permanently occupy any land.” BLM noted that the Nevada District Court supplied several guidelines for BLM’s evaluation on remand including that BLM need only conduct an “analysis” of the record to determine whether, on the record before the agency, the proponent had discovered valuable minerals.

In undertaking its analysis, BLM was mindful that Rosemont does not require that BLM conduct a “validity determination,” meaning an independent determination of the validity of the mining claims in question based on an on-the-ground field examination by licensed agency mineral examiners. Importantly, BLM recognized that Rosemont itself had noted that such a determination was “irrelevant” for the analysis at issue in the Rosemont case. Instead, BLM analyzed whether, on the evidence before it, the agency could reasonably conclude that the proponent had discovered valuable minerals – an inquiry that is not tantamount to a formal mining claim validity determination.

BLM completed the remand and, after reviewing the evidence of mineralization on the mining claims in question, determined that all but eight of the claims had adequate evidence of mineralization to support use of the mining claims to site waste rock storage and tailings facilities under Rosemont. BLM affirmed its prior authorization for the Thacker Pass Mine.

On the same day that BLM issued its letter affirming its prior decision on Thacker Pass, the Solicitor for the United States Department of the Interior issued an opinion on the Use of Mining Claims for Mine Waste Deposition, and Rescission of M-37012 and M-37057. The Solicitor’s Opinion interpreted Rosemont to mean that plans to place significant waste rock or tailings facilities on mining claims create a rebuttable presumption against the discovery of valuable minerals. Importantly, the Solicitor recognized that in most cases, neither the Mining Law nor the Departmental regulations require a proactive or independent gathering and determination of evidence of discovery before development, including when a proponent submits a proposed plan of operations for authorization. However, the Solicitor goes on to explain that the agency may not “look the other way” when a proponent’s plan suggests a lack of any discovery of valuable minerals – citing the Rosemont court’s discussion that placement of a 700-foot layer of waste rock on mining claims seemed to that court and on that record to strongly imply such inconsistency with future extraction of valuable minerals from the mining claims at issue.

The Solicitor’s Opinion noted that Rosemont did not “categorically determine the types and quanta of evidence sufficient to demonstrate a discovery of valuable minerals or lack thereof.” Indeed, there was no reason for the Rosemont Court to opine on this issue given the record before it was undisputed that the lands at issue lacked any evidence of mineralization. The Solicitor’s opinion explains that to obtain approval to site this type of “permanent” waste rock storage on mining claims, the record must include evidence of discovery, such as that found in a mineral potential report, “to support a reasonable conclusion that there are valuable mineral deposits underlying each mining claim on which the waste rock and tailings facilities will be located.”

II. Policy Updates

A. Interagency Working Group on Mining Laws, Regulations and Permitting

In September 2023, the Interagency Working Group on Mining Laws, Regulations, and Permitting (“IWG”) released its final report containing recommendations on the reformation of mining on public lands (the “Final Report”). The Department of the Interior announced the formation of the IWG in March of 2022, noting that it was created to assess the adequacy of the existing regulatory framework governing domestic hardrock mining, and to determine whether changes were necessary in order to satisfy the goals identified in the Executive Order 14017 100-Day reviews.

The Final Report identified a number of recommendations, including those that would necessitate legislative action by Congress, would require Federal agencies to promulgate new or amend existing regulations, and others that may be achieved by updating Federal or agency policies. Some of the central recommendations that substantially differ from the current regulatory framework include the following.

1. Leasing System

The Final Report includes a recommendation to amend the General Mining Law of 1872 to permanently end the patenting of Federal lands, and replace the current mining claim location system with a leasing system. The Final Report notes that Congress should develop a “fair process” for converting existing claims into leases or other legal instruments. Once a leasing system has been established, the Final Report also recommends that a programmatic Environmental Impact Statement incorporating mining into land use planning processes be prepared and adopted for the eleven contiguous Western states and Alaska.

2. Permitting Reform

The IWG has also recommended that the project management process adopted by the Bureau of Land Management (“BLM”) Nevada state office be updated to reflect the recommendations of the Final Report and be made standard procedure nationwide for BLM and the United States Forest Service (“USFS”), with modifications necessary to ensure consistency with individual State laws and regulations. The current management process is designed to provide consistency and coordination between the project proponent and applicable federal and state agencies and Tribes and was developed based on a number of Memorandums of Understanding between BLM and the Environmental Protection Agency (“EPA”), and BLM and USFS to coordinate the development of documentation pursuant to the National Environmental Policy Act (“NEPA”). The Final Report also recommends the adoption of a requirement that BLM and USFS share baseline reports with the EPA, other applicable Federal cooperating agencies, and Tribal governments in order to support a coordinated NEPA effort. To promote accountability and enhance transparency, the Final Report also recommends developing procedures to establish coordinated and transparent environmental review and permitting schedules, to be shared publicly. Of note, the Final Report does not explicitly address the additional directives for permitting reform identified in the Infrastructure Investment and Jobs Act or the Fiscal Responsibility Act.

3. Dirt Tax

Recognizing the need for additional resources in order to address hardrock abandoned mine lands, particularly those impacting Tribes and environmental justice communities, the Final Report includes a recommendation for Congress to adopt a fee on “material displaced from hardrock mining” to fund abandoned mine land reclamation. While the Final Report does not explicitly include a recommended tax amount, the report does note the Obama administration’s proposal of 7 cents per ton of material displaced from hardrock mining, which was estimated to have raised $200 million per year for such reclamation activities.

4. Royalties

The IWG has also included a recommendation that “Congress enact a royalty for hardrock mineral production from federal lands.” “The IWG is not taking a position on whether such a royalty should be placed only on new mines, on expansions to existing mines, or on all new and existing mining operations.” Instead, the Final Report includes a recommendation to adopt a “royalty on net proceeds with a floor of 4 percent and a ceiling of 8 percent.” The recommendation is that royalties not be fixed at a single value for all minerals, but rather, be specific to a particular commodity, and possibly also the ore grade.

Among other things, the Final Report also includes recommendations to require adherence to the Global Industry Standard on Tailings Management, and the reformation of bankruptcy laws to prevent creditors from receiving reclamation assurances during bankruptcy proceedings. Notably, the Final Report does not recommend any specific legislative or regulatory changes regarding ancillary use or mill sites, and instead defers to Congress “to consider legislation . . . to resolve longstanding controversies on these issues.”