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Rosemont Project FEIS, ROD and Unpatented Mining Claims Dealt Blow by Arizona District Court

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by James P. Allen and Michael C. Ford

The Rosemont Copper Project suffered a shocking setback with a July 31, 2019 order issued by the U.S. District Court for the District of Arizona in Center for Biological Diversity, et al., v. United States Fish & Wildlife Service, et al. (4:17-cv-00475-JAS).  In a nutshell, the Court ruled that the Final Environmental Impact Statement (“FEIS”) and Record of Decision (“ROD”) issued by the U.S. Forest Service (“USFS”) authorizing the Project were fatally flawed because the USFS failed to verify the validity of some 949 unpatented mining claims to be used by the Project for the disposal of waste rock and tailings.

The Rosemont Project involves privately owned property including 132 patented mining claims, as well as 949 unpatented claims located on USFS land.  The unpatented claims at issue in the Order are slated to be the disposal site for the waste rock and tailings that will result from Rosemont’s construction of an open pit on its patented claims.  The environmental groups challenged the scope of the USFS’ analysis under NEPA arguing that it should have been conducted under the broader standards applicable under its special use permit regulations at 36 C.F.R. Part 251, rather than the regulations applicable to mining operations in Part 228.  The argument hinges on the assertion that the unpatented mining claims had not been determined by USFS to contain valuable mineral deposits, rendering them invalid.  The USFS, on the other hand, argued that its regulations specifically contemplate ancillary uses associated with mining operations, and that its regulations allow mining operations, whether on valid mining claims or not, to be analyzed under the NEPA standards applicable under its mining regulations. Siding with the environmental groups, the decision found the Forest Service’s Environmental Impact Statement to be fatally flawed because the Service failed to consider whether Rosemont’s unpatented mining claims were valid—a decision usually left to the Bureau of Land Management.  And because Rosemont intended to do nothing more than dump waste rock on the claims, the court determined the claims could not be validated by discovery of a valuable mineral deposit, as required by general Mining Law of 1872.  Therefore, the court decided, the Service was wrong to constrain its analysis to Part 228, and should have inquired more searchingly into the mine’s effects under the authority of Part 251.

The district court’s order is likely the most significant federal court decision on federal mining law in several decades and touches on issues that have simmered since the Clinton Administration.  Since Congress in 1995 began denying funding to evaluate mine patent applications, undertaking any formal process for verifying discovery of a valuable mineral is rarely a priority for either claimants or the government.  At about the same time, the Interior Department attempted to limit the number of “mill site” claims, specifically available for ancillary mining uses.  While a subsequent administration reversed the mill site limit, many companies assembling their land package for a mining project chose to rely on mining claims rather than mill sites hoping to avoid uncertainty.  And since no provision of law requires a validity determination except when a patent is sought or a contest is initiated, approval of mining plans usually went forward without inquiry into whether any specific mining claim contained the requisite discovery of a valuable mineral.  This decision calls that practice into serious question.

The decision will likely be received with shock and dismay throughout the U.S. hard-rock mining industry.  (It has no applicability to coal, phosphate, sodium, or aggregate mining, however).  Rosemont has vowed to appeal the decision to the Ninth Circuit Court of Appeals.  The ruling on summary judgment in favor of the environmental groups on this issue left unresolved various other arguments challenging the Project which remain pending.