Federal judge dismisses Twin Metals lawsuit

REGIONAL— A federal district judge in Washington, D.C. has dismissed a lawsuit filed by Twin Metals and Franconia Minerals that had sought to reverse the cancellation of mineral leases critical to the companies’ plans to build a copper-nickel mine near Ely. The decision is a major victory for several Ely area businesses, the Campaign to Save the Boundary Waters, and other organizations, which had intervened in the case on behalf of the federal government. Barring reversal on appeal, it could well signal the end of the road for the Twin Metals proposal.

In a 21-page ruling, Judge Christopher R. Cooper found that two of the four claims asserted by the Twin Metals and Franconia were outside the court’s jurisdiction, while the companies had failed to state a proper claim on the remaining two issues.

Twin Metals and Franconia had argued that a series of decisions made by the U.S. Interior Department and the Bureau of Land Management in 2021 and 2022 that had canceled mineral leases, rejected mineral lease applications and a mine plan of operation the companies had submitted were “arbitrary and capricious.” That’s the legal standard for reversal established in the 1940s-era Administrative Procedures Act and in subsequent case law. While the federal government generally enjoys what is known as “sovereign immunity” from lawsuits, the APA includes a partial waiver of that immunity in cases where federal agencies take actions affecting the statutory rights granted to the public that are deemed to be unsupported by law, science, or are unreasonable.

The government and intervenors in the case had argued that the APA did not apply to two of the issues raised by Twin Metals and Franconia because the APA waives the government’s sovereign immunity only in instances where the rights of plaintiffs are derived from federal statute. In the case of the two mining companies, however, the judge noted that the rights the companies were asserting, which included a right to a third lease renewal based on the terms of a lease originally issued to the International Nickel Co. in 1966, were based on contract language, rather than statute.

“Twin Metals asserts that its right to successive lease renewals and its procedural rights stem from two seemingly non-contractual sources: “mining laws and regulations” and “the Government’s obligation not to act arbitrarily and capriciously,” wrote Judge Cooper. “But neither law gives rise to these asserted rights. The rights flow instead from the underlying lease agreements.”

Federal law and previous case law has already established that the standards and procedures of the APA do not automatically apply to contract disputes involving the government.

The decision does not prohibit Twin Metals from seeking damages for breach of contract in the U.S. Court of Claims under the Tucker Act, but the prospects for that seem doubtful as well. Federal lawyers have consistently argued that the companies’ right to renewal of the leases was contingent on the commencement of mining operations within the initial 20-year term of the lease, which expired in the 1980s without any mining activity. Because of that failure and other regulations pertaining to federal hardrock mineral leasing, Interior Department lawyers have maintained since the Reagan administration that renewal of the 1966 leases was discretionary.

New lease applications and mine plan

The judge also dismissed the claim by Twin Metals that the Interior Department’s rejection of its applications for additional preference right leases as well as its submitted mine plan were arbitrary and capricious.

“Under the applicable regulations, Interior is required to reject ‘discretionary’ applications for use of land subject to segregation…” wrote the judge, noting that at the time the agency rejected the applications, the U.S. Forest Service had already submitted its request for a mineral withdrawal within the area that Twin Metals sought to lease. “Because BLM had no discretion in the decision to reject the [preference right lease applications], the decision could not be arbitrary and capricious.”

Twin Metals argued that the government was legally obligated to approve its lease applications because it had found valuable mineral deposits. Under federal law, that can give prospectors the right to a lease, but the judge noted that the law that pertains to national forests in Minnesota, U.S.C. 16: 508b, “has no provision granting the holders of prospecting permits a lease right upon the discovery of valuable deposits.” Rather, the judge noted that U.S.C. 16: 508b gives the Forest Service the right to approve or deny a mining application on the Superior National Forest.

Likewise, other federal law “provides that BLM will reject [preference right lease applications] if ‘the surface managing agency does not consent to the lease,” noted the judge in his ruling.

The judge found similarly in rejecting the companies’ complaint that the BLM’s rejection of its mine plan of operations was arbitrary and capricious. “Twin Metals advances three theories, but none state a claim to relief that is plausible on its face,” wrote the judge. 

Twin Metals had earlier appealed the rejection of the mine plan to the Interior Board of Land Appeals, but that body ruled in April 2022 that Twin Metals’ appeal was moot since the mine plan depended on leases that had already been canceled.

Reaction limited

Eighth District Rep. Pete Stauber expressed his disappointment with the ruling. “This decision is just more proof that we need substantive permitting reform in this country,” he said. “We simply cannot afford to have good mining projects caught up in endless litigation and extended delays. As we do nothing, adversarial nations like China are rapidly producing the critical minerals necessary for every aspect of our daily lives.”

Representatives of the Campaign to Save the Boundary Waters saw a different message in the ruling. “Twin Metals tried to force renewal of terminated federal mining leases next to the Boundary Waters Canoe Area Wilderness,” said Ingrid Lyons, executive director of the Campaign to Save the Boundary Waters. “The United States government followed the rule of law and moved to dismiss this unlawful lawsuit. We are one step closer to permanent protection for the Boundary Waters watershed.”