Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 1 of 36
`
`
`
`WO
`
`
`
`
`
`
`
`
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE DISTRICT OF ARIZONA
`
`No. CV-13-8045-PCT-DGC
`
`ORDER
`
`Grand Canyon Trust; Center for Biological
`Diversity; Sierra Club; and Havasupai Tribe,
`
`
`
`Plaintiffs,
`
`
`
`v.
`
`Heather Provencio, Forest Supervisor,
`Kaibab National Forest; and
`United States Forest Service,
`U.S. Department of Agriculture,
`
`
`
`
`
`Defendants,
`
`and
`
`Energy Fuels Resources (USA), Inc.; and
`EFR Arizona Strip LLC,
`
`
`
`
`
`Intervenor-Defendants.
`
`This case arises from the proposed reopening of the Canyon Mine, a 17-acre
`
`uranium mine located six miles south of the Grand Canyon in the Kaibab National Forest.
`
`The Havasupai Tribe and three environmental groups – Grand Canyon Trust, Center for
`
`Biological Diversity, and Sierra Club – brought this suit for declaratory and injunctive
`
`relief against the United States Forest Service and the Supervisor of the Kaibab National
`
`Forest (collectively, the “Forest Service”). Doc. 1. The Canyon Mine’s owners and
`
`operators, Energy Fuels Resources (USA), Inc. and EFR Arizona Strip, LLC (together,
`
`“Energy Fuels”), intervened as Defendants. Docs. 30, 31, 35.
`
`1
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 2 of 36
`
`
`
`The parties have filed motions for summary judgment on the only remaining claim
`
`in the case – claim four – which challenges the Forest Service’s determination that Energy
`
`Fuels had “valid existing rights” at the Canyon Mine when the Department of the Interior
`
`(“DOI”) withdrew public lands around the Grand Canyon from new mining claims.
`
`Docs. 226, 233, 234; see Doc. 115 ¶¶ 89-92. The Court heard oral argument by telephone
`
`conference on May 11, 2020. See Doc. 242. For reasons stated below, the Court will grant
`
`summary judgment in favor of Defendants.
`
`I.
`
`Background.
`
`The history of the Canyon Mine spans more than 30 years. In October 1984, Energy
`
`Fuels submitted to the Forest Service a proposed Plan of Operations for the mine. AR
`
`Doc. 2 at 193-221.1 The Forest Service completed a Final Environmental Impact Statement
`
`(“FEIS”) pursuant to the National Environmental Policy Act (“NEPA”). AR Doc. 3. In
`
`September 1986, the Forest Service issued a Record of Decision (“ROD”) approving
`
`construction and operation of the Canyon Mine under a modified version of the Plan (the
`
`“1986 Plan”). AR Doc. 6. Several administrative appeals followed, and the Forest Service
`
`affirmed the ROD. AR Doc. 188 at 3972. The Ninth Circuit rejected a challenge to the
`
`ROD in August 1991. See Havasupai Tribe v. United States, 943 F.2d 32 (9th Cir. 1991).
`
`Shortly thereafter, Energy Fuels began constructing the mine. It built surface
`
`structures and sank the first 50 feet of a 1,500-foot shaft, but placed the mine on standby
`
`status in 1992 because of low prices in the uranium market. AR Doc. 525 at 10487. For
`
`the next 20 years, the mine was inactive but maintained under the interim management
`
`portions of the 1986 Plan. AR Doc. 481 at 10314.
`
`In January 2012, the Secretary of the DOI, acting under authority of the Federal
`
`Land Policy and Management Act (“FLPMA”), withdrew for 20 years some one million
`
`acres of public land from mineral location and entry under the Mining Law of 1872, 30
`
`
`1 Citations to the administrative record are denoted “AR,” followed by the relevant
`document and page number. Citations to documents filed in the Court’s docket are denoted
`“Doc.,” and pin cites are to page numbers placed at the top of each page by the Court’s
`electronic filing system. For simplicity, the Court will refer to all entities that have owned
`the Canyon Mine during the last 30 years as “Energy Fuels.”
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`2
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 3 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`U.S.C. § 22 (the “Withdrawal”). AR Doc. 481 at 10308-31; 77 Fed. Reg. 2563, 2012 WL
`
`122658 (Jan. 18, 2012); see 43 U.S.C. § 1714; Nat’l Mining Ass’n v. Zinke, 877 F.3d 845
`
`(9th Cir. 2017).2 The Withdrawal covered the location of the Canyon Mine, but did not
`
`disturb valid existing mining rights. 77 Fed. Reg. 2563. Before approving the Withdrawal,
`
`which had been proposed in 2009, the DOI prepared an Environmental Impact Statement.
`
`AR Docs. 446, 447; 74 Fed. Reg. 35,887-01, 2009 WL 2143370 (July 21, 2009). The
`
`statement noted the existence of the Canyon Mine and assumed it would resume operations
`
`at some point. AR Doc. 446 at 9090, 9093.
`
`In August 2011, Energy Fuels notified the Forest Service that it intended to resume
`
`mining under the 1986 Plan. AR Doc. 439. In response, the Forest Service decided to
`
`prepare a mineral report to determine whether the Canyon Mine had “valid existing rights,”
`
`and therefore was not affected by the Withdrawal (the “VER Determination”). See 43
`
`C.F.R. § 3809.100(a). Although Energy Fuels initially asserted that additional government
`
`approvals were not required before the mine reopened (AR Doc. 443), Energy Fuels agreed
`
`to withhold shaft sinking until the VER Determination was finished (Doc. 123-2 at 2-3).3
`
`The Mining Law of 1872 provides that citizens may acquire rights to “valuable
`
`mineral deposits” on federal lands. 30 U.S.C. § 22. To determine whether Energy Fuels
`
`had valid existing rights in the Canyon Mine at the time of the Withdrawal, the Forest
`
`Service therefore assessed whether the rights were “valuable.” The VER Determination,
`
`finished on April 18, 2012, found that a “valuable mineral deposit” existed at the Canyon
`
`Mine because, “under present economic conditions, the uranium deposit . . . could be
`
`mined, removed, transported, milled and marketed at a profit.” AR Doc. 525 at 10483,
`
`
`2 Mineral entry refers to “the right of entry on public land to mine valuable mineral
`deposits,” and mineral location is “the act or series of acts whereby the boundaries of a
`claim are marked.” Mount Royal Joint Venture v. Kempthorne, 477 F.3d 745, 750 n.3
`(D.C. Cir. 2007). The Withdrawal foreclosed the development of new mining claims.
`
`3 Energy Fuels resumed sinking the shaft after the VER Determination was
`completed in 2012, and finished the shaft in March 2018. See U.S. Dep’t of Agric., Forest
`Serv., Canyon Uranium Mine, https:/www.fs.usda.gov/detail/kaibab/home/?cid=fsm91
`050263 (last visited May 4, 2020). Energy Fuels advised the Forest Service that ore
`production would not occur immediately due to low uranium prices, and has provided no
`estimate for when ore production will begin. Id.
`
`3
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 4 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`10506. The Forest Service concluded that Energy Fuels had “valid existing rights that were
`
`established prior to the Withdrawal,” and that further operations at the mine were not barred
`
`by the Withdrawal. Id.
`
`In addition to the VER Determination, the Forest Service performed a “Mine
`
`Review” before the mine reopened. AR Doc. 533. The review was conducted by a
`
`13-person interdisciplinary team with expertise in minerals and geology, surface and
`
`groundwater, air quality, transportation, tribal consultation, heritage resources, vegetation,
`
`the NEPA, and socioeconomic issues. Id. at 10597. Among other matters, the team
`
`evaluated the sufficiency of the 1986 Plan and the original FEIS and ROD; historical and
`
`religious issues related to local tribes; the effect of resumed operations on the quality of
`
`air, surface water, and groundwater; and the effect of resumed operations on wildlife and
`
`any threatened, endangered, or sensitive species. Id. at 10592–637. The Mine Review was
`
`finished on June 25, 2012, and concluded that operations could resume at the Canyon Mine
`
`under the 1986 Plan. Id. at 10594.
`
`Plaintiffs filed this lawsuit in March 2013, seeking declaratory and injunctive relief
`
`under the Administrative Procedure Act (“APA”), 5 U.S.C. § 706. Doc. 1. Plaintiffs’
`
`amended complaint asserted four claims: (1) the Forest Service violated the NEPA by not
`
`conducting a new environmental impact study in connection with the VER Determination
`
`(Doc. 115 ¶¶ 70-77); (2) the Forest Service violated the National Historic Preservation Act
`
`(“NHPA”) by failing to complete a full § 106 historic property review before approving
`
`resumed operations at the mine (id. ¶¶ 78-83); (3) the Forest Service alternatively violated
`
`the NHPA by not properly updating its original § 106 analysis (id. ¶¶ 79-88); and (4) the
`
`Forest Service violated the Mining Law, the FLPMA, and the 1897 Organic Act by failing
`
`to account for various costs in the VER Determination (id. ¶¶ 89-92).
`
`On April 7, 2015, the Court granted summary judgment to Defendants on all claims.
`
`Doc. 166. On claims one through three, the Court held that the VER Determination was
`
`not a “major federal action” requiring a new environmental impact study under the NEPA
`
`or an “undertaking” requiring a full § 106 consultation under the NHPA, and that the Forest
`
`4
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 5 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Service’s NHPA review under 36 C.F.R. § 800.13(b)(3) was appropriate and reasonable.
`
`Id. at 22-41. On claim four, the Court held that Plaintiffs had Article III standing and that
`
`the VER Determination was a “final agency action” subject to review under the APA, but
`
`that Plaintiffs lacked prudential standing because claim four fell outside the Mining Law’s
`
`“zone of interests.” Id. at 13-21; see Grand Canyon Trust v. Williams, 98 F. Supp. 3d 1044
`
`(D. Ariz. 2015).
`
`The Ninth Circuit initially affirmed on all grounds. See Havasupai Tribe v.
`
`Provencio, 876 F.3d 1242 (9th Cir. 2017). One year later, however, the Ninth Circuit
`
`withdrew its original decision and entered an amended order that affirmed the rulings on
`
`claims one through three, but held that claim four fell within the FLPMA’s zone of
`
`interests. The Ninth Circuit remanded claim four for consideration on the merits.
`
`Havasupai Tribe v. Provencio, 906 F.3d 1155, 1166-67 (9th Cir. 2018).
`
`The parties now move for summary judgment on claim four. Docs. 226, 233, 234.
`
`Plaintiffs argue that the VER Determination is invalid because the Forest Service failed to
`
`consider all relevant costs in its profitability analysis of the Canyon Mine. Doc. 228 at 13-
`
`22. Defendants contend that Plaintiffs lack Article III standing and otherwise are entitled
`
`to no relief because the VER Determination was not legally required. Docs. 233-1 at 8-11,
`
`234-1 at 12-20. Defendants further contend that claim four fails on the merits because the
`
`VER Determination included all relevant costs and must be upheld under the APA’s
`
`deferential standard of review. Docs. 233-1 at 11-20, 234-1.
`
`II.
`
`Article III Standing.
`
`
`
`The Court previously held that the Forest Service’s VER Determination was not
`
`required by law – that mining could have resumed at the Canyon Mine on the basis of the
`
`1986 Plan. Doc. 166 at 6-11. Based on this holding, the Forest Service now contends that
`
`Plaintiffs lack Article III standing to bring claim four. Doc. 234-1 at 12-20. It argues that
`
`because authorization to operate the mine derives solely from the 1986 Plan approval, and
`
`not from the VER Determination, Plaintiffs’ alleged injuries are traceable to the 1986 Plan
`
`approval alone. Id. at 19. As a result, claim four fails two requirements of Article III
`
`5
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 6 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`standing: Plaintiffs’ injuries are not fairly traceable to the VER Determination and will not
`
`be redressed by setting it aside. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61
`
`(1992).
`
`
`
`The Court previously held that claim four satisfied these standing requirements.
`
`Doc. 166 at 13-16. On appeal, the Ninth Circuit also was “satisfied that plaintiffs have
`
`suffered injuries in fact that are fairly traceable to the Service’s actions and that could be
`
`redressed by a favorable judicial determination.” Havasupai Tribe, 906 F.3d at 1162 n.3.
`
`Plaintiffs argue that this Ninth Circuit conclusion is “both law of the case and binding
`
`precedent.” Doc. 238 at 7 (quoting Nordstrom v. Ryan, 856 F.3d 1265, 1270 (9th Cir.
`
`2017)). The Court agrees.
`
`
`
`The Ninth Circuit specifically found that Plaintiffs satisfy the elements of Article III
`
`standing on claim four. See Havasupai Tribe, 906 F.3d at 1162 n.3. This ruling was not
`
`dictum, as the Forest Service contends (Doc. 234-1 at 19), but a holding essential to the
`
`court’s judgment. “The federal courts are under an independent obligation to examine their
`
`own jurisdiction, and standing is perhaps the most important of the jurisdictional
`
`doctrines.” FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231 (1990) (quotation marks,
`
`brackets, and citations omitted).
`
`
`
`Nor would the Ninth Circuit have reached the issue it addressed on appeal – whether
`
`claim four satisfied the zone-of-interests test – without first confirming that Plaintiffs have
`
`Article III standing to bring the claim. See Nordstrom, 856 F.3d at 1270 (“In Nordstrom I,
`
`we necessarily decided that Nordstrom had standing to bring his Sixth Amendment
`
`claim”); see also Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 93-102 (1998)
`
`(Article III standing must be determined before addressing whether a cause of action
`
`exists); Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 127-28 (2014)
`
`(noting that “prudential standing” is a misnomer and holding that the zone-of-interests
`
`requirement is not jurisdictional, but concerns whether a cause of action exists). The Ninth
`
`Circuit’s decision “is both the law of the case and binding precedent that [the Court] must
`
`follow.” Nordstrom, 856 F.3d at 1270; see California v. U.S. Dep’t of Health & Human
`
`6
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 7 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`Servs., 941 F.3d 410, 421 (9th Cir. 2019). The Court will deny the Forest Service’s motion
`
`on the issue of standing.
`
`III. Defendants’ Arguments Based on Plaintiffs’ Requested Relief.
`
`
`
`Plaintiffs ask the Court to set aside the VER Determination and enjoin all activity
`
`at the Canyon Mine until a new VER Determination can be completed. Doc. 228 at 22;
`
`see Doc. 115 at 28-29. Energy Fuels argues that because the VER Determination was not
`
`legally required and has no effect on the 1986 Plan or continued operations at the mine,
`
`Plaintiffs are entitled to no relief. Doc. 233-1 at 8-11. The Court concludes that Plaintiffs,
`
`if successful, could have the VER Determination set aside, but could not obtain an
`
`injunction of activity at the Canyon Mine. The Court will address the injunction issue first.
`
`
`
`
`
`A.
`
`Enjoining Activity at the Canyon Mine.
`
`By its own terms, the Withdrawal did not extinguish mining rights that already
`
`existed. The Court previously held that the Withdrawal required a validity determination
`
`only for mines which required a new plan of operations. Doc. 166 at 8-9 (citing AR
`
`Doc. 481 at 10310; Fed. Reg. 2563, 2012 WL 122658 (Jan. 18, 2012)); see 43 C.F.R.
`
`§ 3809.100(a); Vane Minerals (US), LLC v. United States, 116 Fed. Cl. 48, 57-58 (2014);
`
`In re Goergen, 144 IBLA 293, 297-98 (1998). Because the 1986 Plan was already
`
`approved and the Canyon Mine did not require approval of a new plan, the VER
`
`Determination was not “legally required before operations at the Canyon Mine could
`
`resume.” Doc. 166 at 6, 10.
`
`
`
`Given this holding, which was not disturbed on appeal, the Court concludes that
`
`Plaintiffs would have no legal basis to enjoin mine operations if the VER Determination
`
`was set aside. Cf. In re Ctr. for Biological Diversity, 162 IBLA 268, 281 (2004) (“[U]ntil
`
`the [DOI] undertakes a mining or mill site claim contest . . . and renders a final
`
`determination of invalidity, it is well established that the claimant will be permitted to
`
`engage in mining and processing operations.”) (citations omitted); In re Sw. Res. Council,
`
`96 IBLA 105, 118-24 (1987) (explaining that “[t]he holder of a valid mining claim has the
`
`right, from the time of location, to extract, process and market the locatable mineral
`
`7
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 8 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`resources thereon”). The Court will grant Energy Fuels’ motion for summary judgment on
`
`claim four to the extent Plaintiffs seek to enjoin operations at the Canyon Mine.
`
`
`
`
`
`B.
`
`Setting Aside the VER Determination.
`
`Energy Fuels argues that the Court need not reach the merits of claim four because
`
`the VER Determination was not legally required and setting it aside would have no effect
`
`on the mining project. Doc. 233-1 at 10-11. But federal agencies often have discretion on
`
`whether to take a particular action. Fed. Election Comm’n v. Akins, 524 U.S. 11, 25 (1998).
`
`When they do, those adversely affected by the action generally may sue to have it set aside.
`
`Id.; see Abbott Labs. v. Gardner, 387 U.S. 136, 140 (1967) (discussing presumption of
`
`reviewability of agency action); Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S.
`
`402, 410 (1971) (same). If a reviewing court finds that the agency abused its discretion or
`
`committed legal error, the court “will set aside the agency’s action and remand the case –
`
`even though the agency . . . might later, in the exercise of its lawful discretion, reach the
`
`same result for a different reason.” Fed. Election Comm’n, 524 U.S. at 25 (citing SEC v.
`
`Chenery Corp., 318 U.S. 80 (1943)).4
`
`
`
`VER determinations also enable the Forest Service and the DOI to make “a decision
`
`on whether or not to contest the [mining] claim.” Forest Service Manual § 2819.1
`
`(AR 7312); see Grand Canyon Tr., 98 F. Supp. 3d at 1052; 43 C.F.R. § 4.451-1. Plaintiffs
`
`note, correctly, that the Forest Service’s VER Determination serves as a certification of
`
`claim validity that protects Energy Fuels from a claims contest. Doc. 228 at 12; see
`
`Freeman v. U.S. Dep’t of the Interior, 37 F. Supp. 3d 313, 325 (D.D.C. 2014).
`
`
`
`The VER Determination is subject to judicial review.5
`
`
`4 The Forest Service claims that even if the Court were to set aside the VER
`Determination, Plaintiffs’ injuries would not be redressed because there is no indication
`the Forest Service would undertake another review. Doc. 234-1 at 16. But the Forest
`Service presents no evidence that it would decline to make another VER Determination,
`and its “speculation do[es] not amount to evidence sufficient to warrant granting summary
`judgment.” Carling v. Veneman, No. 3:04-CV-00211-JKS, 2006 WL 8438430, at *7 (D.
`Alaska July 6, 2006).
`
`5 This ruling is consistent with the Court’s earlier ruling on the reviewability of the
`VER Determination, which was affirmed on appeal. The Forest Service argued in its
`motion to dismiss that the VER Determination was not a final agency action subject to
`
`8
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 9 of 36
`
`
`
`IV. APA Standard of Review.
`
`
`
`“The APA’s standard of review is ‘highly deferential, presuming the agency action
`
`to be valid and affirming the agency action if a reasonable basis exists for its decision.”
`
`Cal. Pac. Bank v. Fed. Deposit Ins. Corp., 885 F.3d 560, 570 (9th Cir. 2018) (quoting
`
`Indep. Acceptance Co. v. California, 204 F.3d 1247, 1251 (9th Cir. 2000)). A court may
`
`set aside a final agency action only where the plaintiffs show that the action is “arbitrary,
`
`capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C.
`
`§ 706(2)(A). This scope of review “is narrow and a court is not to substitute its judgment
`
`for that of the agency. Nevertheless, the agency must examine the relevant data and
`
`articulate a satisfactory explanation for its action including a ‘rational connection between
`
`the facts found and the choice made.’” Motor Vehicle Mfrs. Ass’n of U.S., Inc. v. State
`
`Farm Mut. Auto. Ins., 463 U.S. 29, 43 (1983) (citation omitted); see also Kleppe v. Sierra
`
`Club, 427 U.S. 390, 412 (1976) (“Absent a showing of arbitrary action, we must assume
`
`that the agencies have exercised this discretion appropriately.”).
`
`V.
`
`The Profitability Test and the VER Determination.
`
`
`
`In determining that valuable mineral rights existed at the Canyon Mine, and that
`
`Energy Fuels therefore had valid existing rights under the 1872 Mining Law, the Forest
`
`service applied the “prudent man” and “marketability” tests recognized in United States v.
`
`Coleman, 390 U.S. 599, 602 (1968). It concluded that uranium at the mine could, under
`
`present economic conditions, “be mined, removed, transported, milled and marketed at a
`
`profit.” AR Doc. 525 at 10483, 10486, 10506.
`
`
`
`Plaintiffs contend that this determination is invalid because the Forest Service failed
`
`to consider costs of environmental monitoring, wildlife conservation, future environmental
`
`judicial review. Doc. 71 at 21-23. The Court disagreed, finding that the determination
`“marked the consummation of the Forest Service’s validity determination” and was “a
`practical requirement before the Canyon Mine resumed operations” under Bennett v. Spear,
`520 U.S. 154 (1997). Doc. 131 at 7. The Court then concluded that such a practical
`requirement could satisfy the second prong of the Bennett test, which requires that agency
`action be “one by which rights or obligations have been determined, or from which legal
`consequences will flow.” Id. at 9-10 (quoting Bennett, 520 U.S. at 178); see also Doc. 166
`at 21. The Ninth Circuit agreed. See Havasupai Tribe, 906 F.3d at 1162-63 (“[T]he
`Mineral Report determined that such rights existed with respect to Canyon Mine, and that
`is all Bennett requires.”) (emphasis in original).
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`9
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 10 of 36
`
`
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`mitigation measures, as well as sunk costs. Docs. 228 at 14-22, 238 at 12. Defendants
`
`argue that all relevant costs were considered and that the VER Determination must be
`
`upheld under the APA’s deferential standard of review. Docs. 233-1 at 11-21, 234-1
`
`at 21-23.
`
`
`
`
`
`A.
`
`The Prudent Man and Marketability Tests.
`
`Congress has delegated to the Secretary of the Interior “the responsibility of
`
`determining the validity of mining claims.” Rawls v. Sec’y of Interior, 460 F.2d 1200,
`
`1200-01 (9th Cir. 1972). For more than 100 years, the Secretary has applied a “prudent
`
`man” test to assess claim validity. See Castle v. Womble, 19 L.D. 455, 457 (1894). Under
`
`this test, a mineral deposit is “valuable” as required by the Mining Law if it is “of such a
`
`character that ‘a person of ordinary prudence would be justified in the further expenditure
`
`of his labor and means, with a reasonable prospect of success, in developing a valuable
`
`mine.’” Coleman, 390 U.S. at 602 (quoting Castle, 19 L.D. at 457). The Supreme Court
`
`“has approved the prudent-man formulation and interpretation on numerous occasions.”
`
`Id. (citing Chrisman v. Miller, 197 U.S. 313, 322 (1905); Cameron v. United States, 252
`
`U.S. 450, 459 (1920); Best v. Humboldt Placer Mining Co., 371 U.S. 334, 335-36 (1963));
`
`see also Watt v. W. Nuclear, Inc., 462 U.S. 36, 58 n.18 (1983).
`
`
`
`In Coleman, the Supreme Court addressed another test developed by the Secretary
`
`known as “the marketability test.” 390 U.S. at 600. That test requires a mine claimant to
`
`show “that the mineral can be ‘extracted, removed and marketed at a profit.’” Id. The
`
`Court upheld “the marketability test [as] an admirable effort to identify with greater
`
`precision and objectivity the factors relevant to a determination that a mineral deposit is
`
`‘valuable.’” Id. at 602. The Supreme Court found that “the prudent-man test and the
`
`marketability test are not distinct standards, but are complementary in that the latter is a
`
`refinement of the former.” Id. at 603.
`
`
`
`
`
`B.
`
`The VER Determination.
`
`Consistent with this law, the VER Determination considered whether, “under
`
`present economic conditions, the uranium deposit [at the Canyon Mine] could be mined,
`
`10
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 11 of 36
`
`
`
`removed, transported, milled and marketed at a profit.” AR Doc. 525 at 10486. The
`
`analysis was done by two Forest Service certified mineral examiners: Michael Linden, a
`
`Salable Mineral Specialist, and Mike Doran, a Locatable Minerals Lead. Id. at 10482-83.
`
`Linden and Doran followed the valuation approach set forth in the Bureau of Land
`
`Management Surface Management Handbook, H-3809-1 (“BLM Handbook”), and
`
`prepared a 45-page report setting forth their methods of investigation, work performed,
`
`information relied on, and analysis. AR Doc. 525. Their findings were approved by
`
`Locatable Minerals Specialist Greg Visconty. Id. at 10482.
`
`
`
`The relevant dates for determining the validity of the mining claims were July 21,
`
`2009, the date when the Withdrawal was first proposed by the Secretary, and April 18,
`
`2012, the date of the VER Determination. AR Doc. 525 at 10487; see 65 Fed. Reg. 41,724,
`
`41,725-26 (July 6, 2000) (DOI policy explaining applicable “marketability dates”). The
`
`actual mineral examination was conducted over several months in late 2011 and early 2012.
`
`AR Doc. 525 at 10483, 10486.
`
`
`
`The Forest Service examiners made multiple trips to the Canyon Mine and also
`
`visited Energy Fuels’ offices in Fredonia, Arizona, its Arizona One Mine north of the
`
`Grand Canyon, and its White Mesa Mill in Blanding, Utah. Id. at 10486. Their field work
`
`included verifying the mine boundaries, documenting development activities, and
`
`examining and testing drill core samples. Id. at 10487, 10495-97. The examiners analyzed
`
`geological reports and maps to obtain information about mineralization of the area,
`
`including the many uranium-bearing breccia pipes on the Colorado Plateau. Id. at
`
`10487-95. They reviewed Forest Service case files and Energy Fuels’ records and data for
`
`the Canyon Mine and the Arizona One Mine. Id. at 10487-89. They evaluated the methods
`
`and results of Energy Fuels’ mining and milling operations. Id. at 10498-99. They also
`
`performed an economic analysis based, among other things, on the tonnage and grade of
`
`the uranium ore to be mined, Energy Fuels’ capital and operating costs, commodity pricing,
`
`and a cash flow feasibility analysis. Id. at 10499-10505.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`11
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 12 of 36
`
`
`
`
`
`Their economic analysis relied in part on cost information provided by Energy
`
`Fuels. Id. at 10500 (citing Appendix C for specific costs). Plaintiffs criticize the Forest
`
`Service for looking to Energy Fuels for such information, but the BLM Handbook
`
`specifically approves such a procedure. AR Doc. 374 at 7435-36. In addition, Energy
`
`Fuels is uniquely qualified to provide relevant information about uranium mining near the
`
`Grand Canyon. It is the only company that has mined breccia pipe uranium mines on
`
`federal lands subject to the Withdrawal, including the Arizona One, Pinenut, and Kanab
`
`North Mines. AR Doc. 669 at 12396. Its Arizona One Mine, like the Canyon Mine, is
`
`located about 6 miles from the rim of the Grand Canyon and was deemed to have valid
`
`existing rights at the time of the Withdrawal. It too was subject to environmental evaluation
`
`and approval by the Forest Service – approvals challenged unsuccessfully by some of the
`
`Plaintiffs in this Court. See Ctr. for Biological Diversity v. Salazar, 791 F. Supp. 2d 687,
`
`704 (D. Ariz. 2011), aff’d, 706 F.3d 1085 (9th Cir. 2013). The examiners found that
`
`“[c]osts for the Canyon Mine are expected to be similar to the currently operating Arizona
`
`One Mine.” AR Doc. 525 at 10500.6 But the examiners did not simply accept Energy
`
`Fuels’ cost information. They looked to independent sources to verify such items as the
`
`costs of labor and transportation and the projected sale price for uranium. Id. at 10502,
`
`10504.
`
`
`
`After completing their mineral review, the examiners made the following findings:
`
`• The Colorado Plateau hosts many uranium-bearing breccia pipes, and
`numerous studies have documented their importance as a source of uranium
`resources for the country. More than 17 million pounds of uranium have
`been produced from breccia pipe deposits on the Colorado Plateau over the
`last 50 years. Id. at 10491.
`
`• Drilling [at the Canyon Mine] over the years has confirmed the presence of
`a breccia pipe containing more than 84,000 tons of uranium ore grading at
`
`
`
`6 This was an appropriate consideration for the examiners. As the BLM Handbook
`notes in its discussion of how to estimate mining costs: “Neighboring mining operations
`within a particular mining district often use similar mining methods. The removal cost per
`ton of rock or cubic yard of gravel will usually vary by only a few percent between
`properties.” AR Doc. 374 at 7437.
`
`1
`
`2
`
`3
`
`4
`
`5
`
`6
`
`7
`
`8
`
`9
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`26
`
`27
`
`28
`
`12
`
`

`

`Case 3:13-cv-08045-DGC Document 248 Filed 05/22/20 Page 13 of 36
`
`
`
`
`
`
`
`
`
`0.97% “U3O8,” which equates to more than 1.6 million pounds of uranium.
`Id. at 10486.7
`
`• Chemical examinations of core samples confirm the presence of uranium and
`certain other associated metals at the Canyon Mine. Energy Fuels’
`exploration drilling blocked out three different ore bodies which confirmed
`that the Canyon Mine uranium deposit can be classified as a proven reserve.
`Id. at 10496-97 (citing Appendix E).
`
`• The proposed mining method at that Canyon Mine is a combination of
`modified block-caving and shrink-stopping. The underground workings are
`to include the main shaft, an escape shaft and air-flow path, cross-cut levels,
`and a series of “corkscrew” workings to follow the ore. The underground
`workings would be very similar to those used at the Arizona One Mine. Id.
`at 10498.
`
`• Energy Fuels’ White Mesa Mill is the sole conventional uranium mill
`operating in North America. Uranium ore extracted from the Canyon Mine
`is transported to the mill in trucks. Each truck contains about 25 tons of
`material. Haulage distance to the mill is about 330 miles, one-way. The mill
`uses conventional uranium processing methods (ore screening and grinding,
`leaching, solvent extraction, and drying). The resulting “yellowcake” is
`stored in 55-gallon drums as a final product for sale that ultimately will be
`used as fuel for nuclear power plants. The milling process recovers 95% of
`available uranium. Id. at 10498-99, 10501.
`
`• Energy Fuels developed ore tonnage and grade estimates from the results of
`45 surface holes totaling 61,400 feet with an average depth of about 1,364
`feet. Two different resource calculations were made for the Canyon Mine
`deposit. Energy Fuels’ numbers were reasonable and acceptable for the
`examiners to evaluate the Canyon Mine claims. Based on experience gained
`from mining olde