Grand Canyon Tr. v. Provencio
| Decision Date | 22 February 2022 |
| Docket Number | 20-16401 |
| Court | U.S. Court of Appeals — Ninth Circuit |
| Parties | Grand Canyon Trust; Center for Biological Diversity; Sierra Club, Plaintiffs-Appellants, v. Heather Provencio, Forest Supervisor, Kaibab National Forest; United States Forest Service, an agency in the U.S. Department of Agriculture, Defendants-Appellees, and Havasupai Tribe, Plaintiff, and Energy Fuels Resources (USA), Inc.; EFR Arizona Strip LLC, Intervenor-Defendants-Appellees. |
Argued and Submitted August 30, 2021 San Francisco, California
Appeal from the United States District Court for the District of Arizona D.C. No. 3:13-cv-08045-DGC David G. Campbell District Judge, Presiding.
Aaron M. Paul (argued), Grand Canyon Trust, Denver, Colorado; Marc Fink, Center for Biological Diversity, Duluth, Minnesota Neil Levine, Public Justice, Denver, Colorado; Roger Flynn Western Mining Action Project, Lyons, Colorado; for Plaintiffs-Appellants.
Thekla Hansen-Young (argued), Andrew C. Mergen, Michael T. Gray, and Sean C. Duffy, Attorneys; Jean E. Williams, Acting Assistant Attorney General; Environment and Natural Resources Division United States Department of Justice, Washington, D.C.; Nicholas L. Pino, Attorney, Office of General Counsel, United States Department of Agriculture, Washington, D.C.; for Defendants-Appellees.
Bradley J. Glass (argued), Gallagher & Kennedy P.A., Phoenix, Arizona, for Intervenor-Defendants-Appellees.
Before: Mary M. Schroeder, Johnnie B. Rawlinson, and Jay S. Bybee, Circuit Judges.
SUMMARY[*]
The panel affirmed the district court's summary judgment in favor of the United States Forest Service and intervenors Energy Fuels Resources (USA), Inc. and EFR Arizona Strip LLC in an action by environmental groups (collectively, the Trust) challenging the Forest Service's determination that Energy Fuels held a valid existing right to operate Canyon Mine, a uranium mine in the Kaibab National Forest.
Canyon Mine is located within an area of public lands that have been withdrawn from new mining claims by the Secretary of the Interior, although the withdrawal did not extinguish "valid existing rights."
When this court last considered this case, the court held that the Trust had Article III standing with respect to its fourth claim - that the Forest Service violated federal law by failing to take various costs into account when determining whether Canyon Mine could be operated at a profit. The panel held that the district court did not err in finding that the law of the case doctrine applied to the issue of standing.
The Trust argued that sunk costs - costs that have already been incurred and that cannot be recovered - should be considered when evaluating whether the discovery of a "valuable mining deposit" was made under the Mining Act.
The panel held that it was not arbitrary and capricious for the Forest Service to ignore sunk costs in determining that Energy Fuels had a claim to "valuable mineral deposits," 30 U.S.C. § 22. Applying Chevron analysis, the panel held at step one that the critical term in the Mining Act - "valuable mineral deposits" - was ambiguous. Proceeding to step two, the panel held that the Department of the Interior ("DOI")'s interpretation of the Mining Act - in which sunk costs are not considered when determining whether a mine is profitable - was a permissible one. First, the fact that the DOI excludes sunk costs from its profitability analysis was not manifestly contrary to the Mining Act because this interpretation was consistent with the prudent person and marketability tests, which the Supreme Court has repeatedly upheld. Second, DOI's interpretation was not arbitrary and capricious in substance because it was consistent with established economic principles. It is a basic principle of economics that sunk costs should be ignored when making a rational decision about whether to make further expenditures. Since the panel would be required to give DOI deference under the Chevron doctrine, it was appropriate for the Forest Service to do so as well in its valid existing rights determination. Accordingly, it was not arbitrary and capricious for the Forest Service to rely on DOI's interpretation of the Mining Act.
This dispute concerns Canyon Mine, a uranium mine operated by Energy Fuels Resources (USA), Inc., and EFR Arizona Strip LLC (collectively, Energy Fuels) in the Kaibab National Forest. Canyon Mine is located within an area of public lands that have been withdrawn from new mining claims by the Secretary of the Interior, although the withdrawal did not extinguish "valid existing rights." The Havasupai Tribe and three environmental groups-Grand Canyon Trust, Center for Biological Diversity, and Sierra Club (collectively, the Trust)-challenge the United States Forest Service's determination that Energy Fuels holds a valid existing right to operate Canyon Mine. The primary question in this appeal is, in determining that Energy Fuels has a claim to "valuable mineral deposits," 30 U.S.C. § 22, 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. Grand Canyon Tr. v. Provencio, 467 F.Supp.3d 797, 804-05, 812-23 (D. Ariz. 2020). We affirm.
This is the second time this case has come before us. Background concerning the history of Canyon Mine and this case is discussed in Havasupai Tribe v. Provencio, 906 F.3d 1155, 1159-61 (9th Cir. 2018). Additional background may be found in National Mining Ass'n v. Zinke, 877 F.3d 845, 854-60 (9th Cir. 2017), and Havasupai Tribe v. United States, 752 F.Supp. 1471, 1475-77 (D. Ariz. 1990), aff'd sub nom. Havasupai Tribe v. Robertson, 943 F.2d 32 (9th Cir. 1991) (per curiam). We will repeat the background here only as necessary for the context of the issues before us.
Uranium was first discovered near Grand Canyon National Park in 1947. Uranium is often found in breccia pipes-cylindrical deposits of broken sedimentary rock located thousands of feet underground. See Nat'l Mining Ass'n, 877 F.3d at 857. One such breccia pipe was located in the Kaibab National Forest in northern Arizona, a few miles south of Grand Canyon National Park and in the area around Red Butte, a site of religious and cultural significance to the Havasupai Tribe.
In 1984, Energy Fuels Nuclear, Inc. (EFN) submitted a plan of operations to mine uranium from the breccia pipe by building and operating what became known as Canyon Mine. The Forest Service approved the plan in 1986. The Havasupai Tribe challenged the approval, but the district court rejected the tribe's claims and we affirmed the judgment. See Havasupai Tribe v. Robertson, 943 F.2d at 34-35. Over the next years, EFN built the mine's surface facilities and sank the first fifty feet of a 1, 400-foot shaft. However, EFN suspended operations in 1992 due to a drop in uranium prices. Denison Mines Corp. (later acquired by Intervenor-Defendant Energy Fuels Resources (USA), Inc.) acquired the mine in 1997.
In 2007, a spike in the price of uranium generated renewed interest in mining operations near the Grand Canyon and with it, thousands of new mining claims. The large volume of new claims raised concerns about the potential environmental impact of increased uranium mining on the Grand Canyon area. Nat'l Mining Assoc., 877 F.3d at 857. In response, the Secretary of the Interior published a Notice of Intent to withdraw approximately one million acres of public and National Forest System lands from new uranium mining claims. Notice of Proposed Withdrawal and Opportunity for Public Meeting; Arizona, 74 Fed.Reg. 35, 887 (July 21, 2009). The withdrawn land would include the land occupied by Canyon Mine. Grand Canyon Trust, 467 F.Supp.3d at 802. However, consistent with the Federal Land Policy and Management Act of 1976 (FLPMA), the Secretary noted that the withdrawal was "subject to valid existing rights." 74 Fed.Reg. 35, 887. After two years of study, the Department of the Interior (DOI) issued the order withdrawing the lands. Public Land Order No. 7787; Withdrawal of Public and National Forest System Lands in the Grand Canyon Watershed; Arizona, 77 Fed.Reg. 2563 (Jan. 18, 2012). We upheld the withdrawal decision in National Mining Ass'n, 877 F.3d at 878. Before the decision became final, Energy Fuels notified the Forest Service, which is within the Department of Agriculture, that it intended to return Canyon Mine to active operations. Although Forest Service approval was not required for Energy Fuels to restart its operations at Canyon Mine, at the Forest Service's request, Energy Fuels agreed not to resume sinking the mineshaft pending review, known as a Valid Existing Rights Determination (VER Determination), of its claim of existing rights.[1]
The Forest Service issued its VER Determination in April 2012. The Forest Service concluded that "a discovery of a valuable mineral deposit existed" on July 21, 2009 (the date of the Secretary's segregated withdrawal). It also concluded that, under the economic conditions as of January 11, 2012 (the date of the mineral exam), "the uranium deposit on the claims could be mined, removed, transported milled and marketed at a profit."
Two Forest Service certified mineral examiners conducted the analysis for the VER Determination and their findings were approved by a Forest Service locatable minerals specialist. The mineral examiners conducted their examination over several months, making multiple trips to Canyon Mine as well as Energy Fuels's offices, its Arizona One Mine, and its White Mesa...
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