Court greenlights uranium mine in national forest

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The sun sets at Grand Canyon National Park in northern Arizona, April 14, 2015. Picture taken April 14. REUTERS/Jim Urquhart

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  • 9th Circuit says the grandfathered mine's value could be based on projected profits and not sunk costs
  • The project is located near the Grand Canyon and many indigenous cultural sites
  • Mine's owner says it will be a clean energy asset and reduce reliance on Russian uranium

(Reuters) - Energy Fuels Resources can operate a uranium mine near the Grand Canyon on public land that was closed to new mining claims nearly a decade ago, a federal appeals court held in a challenge by three environmental groups and the Havasupai Tribe.

The 9th U.S. Circuit Court of Appeals – which had revived the lawsuit in 2018 – on Tuesday affirmed that Energy Fuels’ right to mine in the Kaibab National Forest had vested by 2012, even though development of the mine was suspended after uranium prices dropped in 1992.

The Grand Canyon Trust, Center for Biological Diversity, and Sierra Club argued that the U.S. Forest Service should have deducted the non-recoverable “sunk costs” of the suspended development when it calculated whether the uranium was a “valuable mineral deposit” in 2012, as required to establish Energy Fuels’ claim under the federal Mining Act.

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Instead, the Forest Service relied on a rule that the U.S. Interior Department has used in administering the Mining Act for more than 40 years, which is based solely on estimates of net cash-flow sums – in essence, projected profits.

The 9th Circuit said the Interior Department’s approach was a reasonable interpretation of “valuable,” and that the Forest Service had not acted arbitrarily in relying on it.

“It is a basic principle of economics that sunk costs should be ignored when making a rational decision about whether to make further expenditures,” Circuit Judge Jay Bybee wrote, quoting a host of economic treatises and opinions from other circuits in non-mining contexts. He was joined by Circuit Judges Mary Schroeder and Johnnie Rawlinson.

Located about 10 miles from the Grand Canyon, the Pinyon Plain Mine - formerly known as the Canyon Mine – includes areas of religious and cultural significance to the Havasupai, which joined the 2013 lawsuit in federal court in Arizona but did not participate in the current appeal.

Aaron Paul of Grand Canyon Trust said the environmental groups are “examining the panel opinion and evaluating whether to seek further review.”

Energy Fuels’ spokesman Curtis Moore said the company is pleased that the opinion allows it to “advance this clean energy resource under the watchful eye of our state and federal regulators,” and to decrease U.S. nuclear power plants’ reliance on uranium from “Russia and its allies.”

Pinyon Plain Mine is “currently on standby status” while “awaiting further increases in the price of uranium,” Moore added.

The case is Grand Canyon Trust et al. v. Heather Provencio, Forest Supervisor, Kaibab National Forest, et al., 9th U.S. Circuit Court of Appeals, No. 20-16401

For Grand Canyon Trust et al.: Aaron Paul of Grand Canyon Trust; Marc Fink, Center for Biological Diversity; Neil Levine of Public Justice; and Roger Flynn of Western Mining Action Project

For Provencio and USFS: Thekla Hansen-Young and Sean Duffy, U.S. Justice Department

For Energy Fuels Resources (USA) Inc.: D. Lee Decker of Gallagher & Kennedy

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