Ninth Circuit Clarifies NEPA Supplementation Requirements And Rules That Mining Plans Of Operations Do Not Expire After Temporary Closures

by Perkins Coie

On February 4, 2013, a Ninth Circuit panel held that the Bureau of Land Management (BLM) did not violate the National Environmental Policy Act (NEPA), Federal Land Policy and Management Act (FLPMA), or its own mining regulations (43 C.F.R. §§ 3809 et seq.) by allowing a mine operator to resume mining on federal lands under a 20-year old mining plan of operations after a 17-year hiatus.  The decision marks notable, favorable precedent for the mining industry and project proponents whose initial commencement of operations was previously subject to NEPA review and federal agency approval. 

The case, Center for Biological Diversity v. Salazar, involves the operation of a uranium mine known as Arizona 1 located on BLM-managed public land within 10 miles of the Grand Canyon in Mohave County, Arizona.  No. 3:09-cv-08207-DGC (9th Cir. Feb 4, 2013).  The mine is operated by Denison Mines Corp. and Denison Arizona Strip, LLC ( Denison) pursuant to a mining plan of operations that BLM approved in 1988 after conducting an Environmental Assessment under NEPA.  Following a drop in uranium prices, the mine’s former owner ceased mining in 1992.  Fifteen years later, after uranium prices recovered and after the mine changed hands several times, Denison notified BLM of its intention to resume mining.  In preparing to reopen, and as directed by BLM, Denison secured new air and water permits from state agencies, updated its financial guarantee covering mine reclamation, and obtained approval from Mohave County to use and maintain an existing right-of-way to access the mine.

Before mining resumed in full in November 2009, a coalition of environmental groups and tribes filed suit, arguing that Denison could not recommence under the 1988 mining plan of operations because, among other reasons, the 17-year period of inactivity rendered the plan obsolete and NEPA requires BLM to supplement its prior Environmental Assessment. 

The plaintiffs’ first argument relied on 43 C.F.R. § 3809.423, which provides that an operator’s “plan of operations remains in effect as long as [the operator is] conducting operations, unless BLM suspends or revokes [the] plan of operations.”  Reading the language in the context of the overall regulatory scheme, the Ninth Circuit found “that section 3809.423 does not mean that a temporary closure of a mine immediately results in an ineffective plan of operations.”  Instead, “a plan of operations remains effective for periods of operation before and after temporary closures, with such closures being governed by the interim management portion of the plan unless BLM elects to terminate the plan early.”  The court therefore reaffirmed, as BLM stated in promulgating the regulations, that “an approved plan of operations has financial value to the owner/operator and can be transferred to another owner,” and that temporary closures due to changes of ownership and price fluctuations are part of the life of a mining project.   

For mine owners and operators, the decision helps settle expectations with respect to mining plans of operations.  As long as active mining operations continue in compliance with an existing plan, mine owners can be confident that their plan will remain in effect.  BLM may—but is not required to—terminate a plan and direct reclamation after five years of inactivity or immediately upon abandonment.  Before terminating a plan after five years of inactivity, BLM must meet numerous requirements, including providing notice to the operator, adopting a written decision, and providing opportunities for an informal hearing, administrative appeal and judicial review.  See 43 C.F.R. §§ 3809.601, 3809.602, 3809.800, 3809.801, 3809.803.  Any work outside of the scope of a plan, however, cannot proceed without BLM’s approval of a modified plan, which, depending on the significance of the proposed change, may require additional NEPA review. 

The significance of the court’s decision extends well beyond the mining industry.  Under existing Supreme Court precedent, NEPA supplementation is generally required if two conditions are present: (1) a major federal action has yet to occur, and (2) new information bearing on the ongoing major federal action raises significant questions that have not been previously addressed about the ongoing action’s impact on the human environment.  Marsh v. Or. Natural Res. Council, 490 U.S. 360, 374 (1989).  Some tension may exist, however, between two Supreme Court cases that address the first prong of this analysis: whether major federal action remains after an initial project approval.  In Marsh, the Court found that a major federal action remained when the Army Corps of Engineers constructed one of three dams that the agency had decided to build.  Id.  But more recently, in Norton v. Southern Utah Wilderness Alliance, 542 U.S. 55 (2004) (SUWA), the Court held that major federal action did not remain to occur after BLM approved a land use plan for federal lands.  This tension has created uncertainty regarding requirement for supplemental NEPA review, which has been reflected in lower court decisions.  Compare Sierra Club v. Bosworth, 465 F. Supp. 2d 931, 940 (N.D. Cal. 2006) (distinguishing SUWA and holding that the Forest Service’s approvals of timber contracts were ongoing major federal actions), with Envtl. Prot. Info. Ctr. v. U.S. Fish & Wildlife Serv., No. C 04-4647 CRB, 2005 WL 3877605, at *2 (N.D. Cal. Apr. 22, 2005) (rejecting plaintiffs’ attempt to distinguish SUWA and holding that there was no ongoing major federal action after the government issued a logging company an incidental take permit).   

The February 4, 2013 Ninth Circuit decision may help settle this uncertainty.  The court held that although approval of the 1988 plan of operations was a “major Federal action” triggering NEPA, that action was completed when the plan was approved.  Accordingly, no ongoing “major Federal action” that could require supplementation remained.  Contrary to plaintiffs’ arguments, BLM’s subsequent actions related to the mine—including monitoring, requiring Denison to update its financial guarantee, requiring Denison to obtain an air quality permit from other agencies and granting it a permit to extract gravel to use for maintaining a county road that led to the mine—did not convert the 1988 approval into an ongoing major federal action.  The case thus confirms that—at least where the federal government is not the primary project proponent—an agency cannot be required to perform supplemental NEPA review with respect to project approval decisions that already have been finalized, even where significant new information bearing on the project’s environmental impacts later surfaces.  Arguably left unanswered by the case is whether, notwithstanding the fact that a major federal action is complete, a federal agency has discretion to supplement its NEPA analysis to reexamine its approval.  See 40 C.F.R. § 1502.9(c)(2) (stating that agencies “[m]ay also prepare supplements when the agency determines that the purposes of the Act will be furthered by doing so”) (emphasis added).

Also notable is the court’s rejection of two additional claims.  First, the court held that updating a financial guarantee is a ministerial rather than a major federal action triggering NEPA review.  Accordingly, project proponents need not be concerned that seeking agency approval of updated reclamation bonds could trigger plenary reconsideration under NEPA of an agency’s project approval.  Second, the court held that NEPA’s requirements for Environmental Impact Statements and Environmental Assessments—including obligations to analyze indirect and cumulative impacts—do not apply where a proposed action fits within a Categorical Exclusion (CE).  Instead, an agency need only determine that the proposed actions falls within a CE and then determine whether “extraordinary circumstances” exist that would prevent the use of the CE.  The case thus furthers the efficiency-enhancing value of using NEPA Categorical Exclusions where they are available.

Tyler Welti, now an attorney in Perkins Coie’s Washington, D.C. office, was lead counsel representing federal defendants in the district court litigation in this case.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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