By Henry Zurn*
In December 2017 the US Department of the Interior’s legal advisor announced a reinterpretation of a December 2016 decision that had stalled hopes for a copper-nickel mine on Minnesota’s Iron Range.[i] As recently as November 2017, government lawyers were arguing to dismiss a Twin Metals lawsuit challenging the 2016 decision.[ii] The government’s new position may clear the way for the hotly debated mining project, but under what authority has such a change come about?
The Twin Metals mine would be located in the Superior National Forest, on public lands just outside of the pristine Boundary Waters Canoe Area (BWCA) Wilderness. Well-organized environmentalist groups have been fighting for years to block the project.[iii] Their worry is that even a small hiccup in an operation so close to the BWCA could irrevocably damage the local ecosystem, and their concerns have not been ameliorated by state requirements for a potentially years-long environmental impact study before mining could ever begin.[iv] Industrial mining and labor interests on the once-thriving Iron Range counter that the project would bring much-needed, high-paying jobs to an area where such work once made up a majority of economic activity.[v]
Under the Obama administration, the Department of the Interior, analyzing the underlying Twin Metals lease agreement dating all the way back to 1966, took the position that the Bureau of Land Management had discretion in deciding whether to grant a third renewal to Twin Metals for its long-awaited copper-nickel mine.[vi] The lease had already been renewed in 1989 and 2004, but the mine had crucially never actually begun production. The original interpretation of the lease would have granted renewal rights had production actually started, but recognized government discretion because it hadn’t.[vii] Exercising that discretion in the administration’s final weeks, the Bureau of Land Management rejected Twin Metals’ application for renewal.[viii]
Following the Obama decision, Twin Metals brought suit against the government in district court in Minnesota.[ix] The suit was ongoing until December, when the new administration issued a new interpretation of the same underlying documents.[x] Under different leadership, the Department of the Interior now states that the lease grants Twin Metals three renewals as a matter of right, which leaves no discretion for the federal government and makes the December 2016 denial essentially void.[xi]
The disagreement turns on two key points. First is a question about contractual ambiguity. The 2016 document regards a 2004 renewal agreement to be a fully integrated and unambiguous document, meaning that extrinsic evidence should generally not be allowed into the interpretation project.[xii] As such, it would grant the BLM discretion in any future applications for renewal. The 2017 decision takes the opposite tack, declaring the document ambiguous, and relying on extrinsic evidence to say that the 1966 renewal terms should govern.[xiii] But, even the terms of the original lease agreement aren’t quite clear. The second question is one of contract construction. The 2016 Obama document declares that the 1966 lease also gives the BLM discretion in its decision to grant or deny the renewal application.[xiv] On the other hand, the 2017 reinterpretation identifies no discretion and comes to the ultimate conclusion that Twin Metals has a right to its renewal.[xv]
Dealing with the second issue first, the disagreement focuses on a single key section detailing the renewal rights of Twin Metals as the leaseholder. Section 5 of the lease reads:
Renewal Terms. The Lessor shall have the right to reasonably readjust and fix royalties payable hereunder at the end of the primary term of this lease and thereafter at the end of each successive renewal thereof unless otherwise provided by the law at the time of the expiration of any such period, and to readjust other terms and conditions of the lease, including the revision of or imposition of stipulations for the protection of the surface of the land as may be required by the agency having jurisdiction there over; provided, however, that the Lessee shall have the right to three successive ten-year renewals of this lease with any readjustment in the royalties payable hereunder limited to that hereinafter provided and with no readjustment of any of the other terms and conditions of this lease unless at the end of the primary term of this lease the Lessee shall not have begun production, either hereunder or under the companion lease granted to the Lessee this day.[xvi]
Essentially, the 2016 interpretation, titled M-37036, states that the clause “unless at the end of the primary term of this lease, the Lessee shall not have begun production” qualifies the entirety of what comes before it.[xvii] Under this reading, Twin Metals does not have a non-discretionary right to renew its lease because it never began production on the site.[xviii] The 2017 interpretation, on the other hand, reads the “unless” limitation as qualifying only the immediately preceding clause, which itself puts forth that an extension of the lease would bar readjustment of most of the underlying terms and conditions.[xix]
While reasonable minds may clearly disagree, I tend to agree with the later interpretation here. As the 2017 document points out, M-37036 relies on a reader’s willingness to skip over an entire section of the clause to link the “unless…” limitation to the right to renewals.[xx] While any law student could tell you that such an approach violates the “last antecedent” rule of statutory interpretation,[xxi] it suffices to say that ignoring the words in the middle tends to do an injustice to the otherwise quite clear contract language.
Analytically, though, Section 5 of the 1966 lease is given no effect if the terms of the 2004 lease govern. Thus, the first and more central question is: which document governs? The core disagreement here is whether or not the 2004 lease is ambiguous; if it is, analysis may properly look to extrinsic sources of evidence to discern the intent of the contracting parties.[xxii]
Upon my own analysis, it seems the lease terms are pretty clear. M-37034, the Obama-era document, asserts that the renewal language of the 2004 lease is clear on its face.[xxiii] M-37049, the Trump-era document, goes the other way, asserting that the document is ambiguous in particular regard to how much of the 1966 contract is meant to carry over into the renewed agreement.[xxiv] M-37034 preempts this line of inquiry with direct contract quotation, and the later document fails to really grapple with the idea that to demonstrate ambiguity, in order to then turn to the parties’ intent, it relies on a circular analysis of the very intent it hopes to get to.[xxv] Thus, it’s not clear that the lease document should be open to such an analysis in the first place.
The fight over contract interpretation, the Twin Metals mine, and the fate of the Boundary Waters is far from over. The U.S. Forest Service is conducting an environmental impact study before mining can begin, though the study will be less rigorous than a study originally commissioned by the Obama administration.[xxvi] If the study turns up new information regarding the risk of permanent damage to the Boundary Waters, it is still possible the project would be blocked.[xxvii] This local battle is an early example of the Trump administration commitment to dismantle what it sees as Obama-era hyper-regulation,[xxviii] but it almost certainly won’t be the last.
*Henry Zurn is a Junior Editor on MJEAL. He can be reached at firstname.lastname@example.org.
The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.
[i] Juliet Elperin. Trump administration renews mining leases near Minnesota wilderness, reversing Obama, Wash. Post (Dec. 23, 2017), https://www.washingtonpost.com/news/energy-environment/wp/2017/12/23/trump-administration-renews-mining-leases-near-minnesota-wilderness-area/.
[ii] Steve Karnowski. Judge weighs motion to dismiss Twin Metals mining lawsuit, Star Tribune (Nov. 14, 2017) http://www.startribune.com/feds-head-to-court-to-seek-dismissal-of-twin-metals-lawsuit/457458473/.
[iii] Mining advocates dislike limits in copper-mining bill, Pioneer Press (Nov. 13, 2015) https://www.twincities.com/2017/02/24/200-businesses-form-group-to-oppose-copper-mining-near-boundary-waters/ AND http://friends-bwca.org/causes/mining/.
[iv] Reid Forgrave. In Northern Minnesota, Two Economies Square Off: Mining vs. Wilderness, New York Times Magazine (Oct. 12, 2017), https://www.nytimes.com/2017/10/12/magazine/in-northern-minnesota-two-economies-square-off-mining-vs-wilderness.html.
[vi] Memorandum from Office of the Solicitor, Dep’t of the Interior, to Director, Bureau of Land Management (Mar. 8 2016)
[vii] See id.
[viii] Richard Pérez-Peña. U.S. Blocks Mine Planned Near Boundary Waters in Minnesota, New York Times (Dec. 15, 2016), https://www.nytimes.com/2016/12/15/us/boundary-waters-minnesota-mining.html.
[ix] See Compl. 1, Franconia Minerals (US) LLC v. United States, No. 0:16-cv-03042 (D. Minn. 2016).
[x] Elperin, supra note 1.
[xi] Memorandum from Office of the Solicitor, Dep’t of the Interior, to Director, Bureau of Land Management (Dec. 22, 2017).
[xii] Supra note 6, at 6.
[xiii] Supra note 11, at 8.
[xiv] Supra note 6, at 6.
[xv] Supra note 11, at 8.
[xvi] Mineral Lease MNES-01352, Bureau of Land Management (June 14, 1966) at 8. Mineral Lease MNES-01353, Bureau of Land Management (June 14, 1966) at 8.
[xvii] Supra note 6, at 8.
[xviii] Id. at 9.
[xix] Supra note 11, at 15.
[xxi] See generally Evan Lee, Argument preview: “Series qualifier” and “last precedent” canons battle over statutory construction, SCOTUSblog (Oct. 30 2015), http://www.scotusblog.com/2015/10/argument-preview-series-qualifier-and-last-antecedent-canons-battle-over-statutory-interpretation/. See also Rule of the Last Antecedent, Black’s Law Dictionary (10th ed. 2014).
[xxii] See generally Four-Corners Rule, Black’s Law Dictionary (10th ed. 2014).
[xxiii] Supra note 17.
[xxiv] Supra note 19.
[xxvi] John Myers. Forest Service rolls back study of mining near Boundary Waters, Pioneer Press (Jan. 26, 2018), https://www.twincities.com/2018/01/26/forest-service-rolls-back-study-of-mining-near-boundary-waters/.
[xxviii] See President Donald J Trump is Delivering on Deregulation, The White House (Dec. 14, 2017), https://www.whitehouse.gov/briefings-statements/president-donald-j-trump-delivering-deregulation/.