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Ruling upholds Twin Metals mineral leases

Case now heads to D.C. Appellate Court

Marshall Helmberger
Posted 3/18/20

ELY— A federal district court judge has ruled in favor of the Trump administration’s decision to reinstate federal mineral leases that could eventually lead to a sulfide-based …

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Ruling upholds Twin Metals mineral leases

Case now heads to D.C. Appellate Court

Posted

ELY— A federal district court judge has ruled in favor of the Trump administration’s decision to reinstate federal mineral leases that could eventually lead to a sulfide-based copper-nickel mine near the Boundary Waters Canoe Area.
The decision, issued Monday, was not a surprise to opponents of the mine, who had expected that Judge Trevor McFadden, a recent Trump appointee, would rule against their legal claim.
McFadden is a longtime member of the conservative Federalist Society, which is dedicated to turning America’s courts toward a more libertarian and pro-business direction.
A coalition of nine Minnesota businesses and the Wilderness Society filed the lawsuit in 2018, arguing that the Trump administration had violated the law when it reinstated mineral leases that the Obama administration had canceled in the waning days of the former administration.
In his 32-page opinion, however, Judge McFadden concludes that the administration acted reasonably and that it had a right to “a mulligan” regarding the Obama administration’s prior decision. While acknowledging that the contract terms that applied to the original mineral leases were not expressed clearly, McFadden determined that the Interior Department’s decision was “reasonable,” based on the available evidence and notes that courts can only overturn an agency decision when it is deemed “arbitrary or capricious.”
While a number of relatively obscure legal principles were raised in the case, the case hinged in part on whether the current holders of the leases, Twin Metals and Franconia, had an absolute right to a third renewal. The Interior Department originally issued the two adjacent leases to the International Nickel Company in 1966 and appeared to make their rights to subsequent 10-year renewals contingent on the start of mineral production within the first 20-year lease period. That expectation was stated in both the original lease as well as a 1966 press release issued by the Department of the Interior announcing the issuance of the leases. It was further confirmed in a 2016 legal opinion issued by an Interior Department legal counsel, which determined that the lease renewal was discretionary based on the failure of the leaseholders to begin production in the initial term. When the U.S. Forest Service exercised its legal right to veto the lease renewal, out of concerns for the potential environmental impact to the BWCAW, Interior’s Bureau of Land Management announced in January 2017 that it would cancel the leases
But a new Trump-appointed Interior Department legal counsel reversed the earlier opinion and argued that the BLM had no choice but to renew the leases, denying the Forest Service its right to object. The Trump administration reissued the leases in May 2019, which prompted the lawsuit led by a number of Ely-area businesses.
Twin Metals, which is solely controlled by the Chilean copper giant Antofagasta, said in a statement that it was pleased with McFadden’s ruling. “We’re very gratified that this decision – a summary judgment – validates our contention that the decision to cancel leases held in good standing for more than 50 years was arbitrary and wrong,” said Kelly Osborne, Chief Executive Officer of Twin Metals. “Companies must be able to trust the regulatory process in order to risk the enormous capital required to extract metals such as copper, nickel, cobalt and platinum group metals that are vital to creation of the green economy our world so desperately needs.”
McFadden’s ruling will not be the last word on the matter. “We believe the decision is in error and we will be appealing to the D.C. Court of Appeals,” said Becky Rom, chair of the Campaign to Save the Boundary Waters.
Meanwhile, Twin Metals has taken steps to advance its proposed mining project, which would be located along the South Kawishiwi River, part of a major watershed that flows into the 1.1 million-acre BWCAW.
The company, in December, submitted its proposed mine plan to state and federal regulators, who are in the initial stages of evaluating the proposal ahead of planned environmental reviews.
Twin Metals, however, has yet to demonstrate that the mine proposal is financially feasible. Its mine proposal submitted to regulators did not include financial projections and the company did not respond to a request from the Timberjay for its latest technical report, which would include financial estimates.

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