MAC/20: Mines and Communities

High court upholds cyanide ban

Published by MAC on 2005-06-09

High court upholds cyanide ban

By Bob Anez, Associated Press Writer, Great Falls Tribune

9th June 2005

Helena - Montana's 7-year-old ban on using cyanide in gold mining did not violate the constitutional property rights of a company hoping to develop an open-pit mine near Lincoln, a unanimous Montana Supreme Court ruled Wednesday.

The fact that Canyon Resources Corp.'s Seven-Up Pete Joint Venture just had the chance to develop state mineral leases for its mine did not give it a property right that could be taken away by passage of the ban, the justices said.

"We conclude, therefore, that the Venture's opportunity to seek a (state) permit, which required convincing the state that this cyanide leaching project was appropriate, did not constitute a property right," the court held. "The state had wide discretion to reject the Venture's permit application, even without enactment of I-137."

The ruling, which upheld a district judge's findings, did not resolve all the legal battles over voters' passage of Initiative 137 in the 1998 general election. Several federal court cases raising the same issue settled by the state's high court are pending.

But the Supreme Court's decision does lay to rest claims under the Montana Constitution, which prohibits the taking of personal property without compensation. Canyon Resources had argued that is what the cyanide ban did in halting plans for its gold mine.

A spokesman for the leading environmental group behind I-137 applauded the court's decision.

"It is quite clear that Montanans have a right to make laws to protect their water and air, and that doing so does not result in a loss of private property rights, especially when there is no private property right to begin with," said Jim Jensen, executive director of the Montana Environmental Information Center.

Jim Hesketh, president and chief executive officer of Canyon Resources, said he had not seen the ruling. But he did say the outcome was not surprising.

"It's been pretty tough to get a fair shake up there on any of this," he said.

Attorney General Mike McGrath agreed the ruling was no shocker, given Canyon Resources' legal stand.

"Their argument was fairly extreme, probably beyond the far edge of acceptable jurisprudence," he said. "So the opinion is not particularly surprising. It coincides with mainstream thinking across the country."

McGrath also said the ruling should prompt the company to abandon their federal claims. "My hope is that they will fold their tent. They will not have a stronger case in federal court than they had in state court."

Canyon Resources, a Colorado-based company, had argued that it acquired a property right to mine the land when it obtained mineral leases on state land and that its property - the value of the leases - was illegally taken away when the initiative rendered them worthless.

The company said it spent $70 million in developing the project since 1989 and tens of millions more were lost by being unable to mine the claim. It wanted to be paid for loss of the project. Although the lawsuit did not specify an amount, company officials said it could be $500 million.

The state contended the company had no operating permit to mine using cyanide when the ban was enacted so it had no property right that could be taken away by the initiative.

The Supreme Court agreed, saying someone cannot claim loss of a property right never possessed.

On another issue, the justices found I-137 did impair a "contractual relationship" between the state and mining company based on the assumption that cyanide would be used at the mine to separate gold from ore. But the result was not a violation of the constitution, because the ban was "based on the significant and legitimate public purpose of protecting the environment," Justice Jim Rice wrote for the court.

Given the concerns about risks involved in using cyanide in mining and the adequacy of existing laws, "we conclude that the state could legitimately determine that this method of mining required strict regulation, and that I-137 was reasonably related to that legitimate purpose," he said. Justice Brian Morris, who was state solicitor when he defended the law before the court in October 2003, did not participate in the decision.

Canyon Resources has had recent financial problems, losing $17.4 million last year as its stock price plummeted from $5.12 in January 2004 to 79 cents as of Wednesday.

The company spent about $3.5 million last year to promote a failed ballot measure repealing the cyanide ban.

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