467 F.Supp.3d 797
D. Ariz.2020Background
- Canyon Mine is a 17-acre breccia-pipe uranium mine six miles south of the Grand Canyon; Energy Fuels began development in the 1980s under a Forest Service-approved 1986 Plan but put the mine on standby in 1992.
- In 2012 the Secretary of the Interior withdrew ~1 million acres near the Grand Canyon from new mining claims but excepted any "valid existing rights." Energy Fuels sought to resume operations and the Forest Service performed a Valid Existing Rights (VER) determination in April 2012 concluding the deposit was "valuable" and mineable at a profit.
- Plaintiffs (Havasupai Tribe, Grand Canyon Trust, Center for Biological Diversity, Sierra Club) sued under the APA challenging four claims; only claim four (challenge to VER Determination profitability analysis) remained for merits review after prior rulings and appeals.
- The Ninth Circuit previously remanded claim four for merits review, concluding the claim falls within FLPMA's zone of interests and that plaintiffs have Article III standing.
- The Forest Service and Energy Fuels moved for summary judgment arguing the VER analysis permissibly applied the Coleman prudent-man/marketability tests, properly used BLM guidance and industry data, and that omitted costs either were not required or would be harmless; plaintiffs argued the VER omitted environmental monitoring, wildlife mitigation, future remediation costs, and wrongly excluded sunk costs.
- The district court denied plaintiffs' summary judgment, granted defendants' motions on the merits (but denied the Forest Service's standing challenge), held plaintiffs could not obtain an injunction halting mine operations even if VER were set aside, and sealed confidential cost information.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing to challenge VER | VER caused traceable injuries and is redressable | VER not legally required; injuries traceable to 1986 Plan, not VER | Ninth Circuit already held plaintiffs have standing; district court follows that ruling and denies FS standing challenge |
| Effect of setting aside VER (injunction) | If VER invalid, enjoin mine operations | VER not required to resume operations; enjoining operations unavailable relief | Even if VER set aside, plaintiffs cannot enjoin operations because 1986 Plan authorizes mining; request for injunction denied |
| Reviewability / ability to set aside VER | VER is reviewable final agency action and may be set aside | VER discretionary and not outcome-determinative; but review still available | VER is reviewable; court may set it aside under APA though setting aside will not halt operations |
| Omission of environmental monitoring & wildlife mitigation costs in profitability analysis | VER failed to include monitoring, elk habitat restoration, condor protections, and future remediation costs | Examiners used BLM Handbook methods, conservative inputs, verified costs; some items likely included or speculative and properly omitted | Court assumes some costs omitted but finds omissions, if any, were not prejudicial: profitability remained strongly positive and any error was harmless |
| Exclusion of sunk (past) development costs | Past capital/development costs should be included in profitability | Sunk costs are excluded per BLM Handbook and IBLA precedent; agency reasonably relied on that guidance | Excluding sunk costs conforms to DOI/IBLA practice; Forest Service reasonably relied on that approach and any error would be non-prejudicial |
| APA arbitrary-and-capricious review standard | Agency failed to consider all relevant costs | Agency applied Coleman prudent-man & marketability tests, used industry-standard APEX modeling, conservative price/tonnage inputs, contingency funds | Under deferential APA review, VER was not arbitrary or capricious; summary judgment for defendants on the merits |
Key Cases Cited
- Havasupai Tribe v. Provencio, 906 F.3d 1155 (9th Cir. 2018) (Ninth Circuit held claim four lies within FLPMA zone of interests and affirmed reviewability/standing conclusions)
- Bennett v. Spear, 520 U.S. 154 (1997) (tests for when agency action is final and reviewable)
- United States v. Coleman, 390 U.S. 599 (1968) (adopts prudent-man and marketability tests for mining claim value)
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (Article III standing requirements)
- Motor Vehicle Mfrs. Ass'n v. State Farm, 463 U.S. 29 (1983) (arbitrary-and-capricious standard requires rational connection between facts and agency action)
- Shinseki v. Sanders, 556 U.S. 396 (2009) (harmful-error standard in administrative review)
- Cameron v. United States, 252 U.S. 450 (1920) (early articulation of "reasonable prospect" for developing a paying mine)
- Nordstrom v. Ryan, 856 F.3d 1265 (9th Cir. 2017) (law-of-the-case and binding-precedent principles regarding standing determination)
- Pyramid Lake Paiute Tribe v. United States Dep't of Navy, 898 F.2d 1410 (9th Cir. 1990) (reviewing party's reliance on another agency's expertise is assessed for arbitrary-and-capriciousness)
- Kamakana v. City & County of Honolulu, 447 F.3d 1172 (9th Cir. 2006) (standards for sealing court records)