Canyon loses out in Montana court case (June 20, 2005)

A “takings” lawsuit against the state of Montana by Canyon Resources (CAU-X) has been dismissed by the Montana Supreme Court, validating a trial court decision that upheld the state’s law prohibiting new precious metal mines from using cyanidation plants.

Canyon, which along with its Montana-based subsidiary owned the Seven-Up Pete property, near Lincoln, Mont., had launched the suit against the state on the grounds that the cyanide statute was effectively an expropriation of its mineral rights without compensation, something outlawed under the state’s constitution. The court found that in the absence of a mining permit, the company had not lost any rights as a consequence of the statute. “Clearly the right to mine,” said the judgment, “is conditioned upon the acquisition of an operating permit.” The court held that a favourable decision on a permit would have to be “virtually assured” if the loss of an opportunity for a permit was to be seen as a taking.

It also ruled that the cyanide statute, whatever its scientific merit, was a legitimate exercise of the state’s legislative power.

The Supreme Court also ruled that the company’s leases on state land had lapsed because the company had not mined on them. State authorities had cancelled the leases after an extension period expired and Canyon had not started production. Canyon had argued that the cancellation should have been held in abeyance while it challenged the cyanide statute.

In addition to the state, three affiliated activist groups (the Montana Environmental Information Centre, Montanans for Common Sense Mining Laws, and the Mineral Policy Centre), and conservation group Montana Trout Unlimited, were named in the suit. Several local landowners were joint plaintiffs along with Canyon.

Judge Brian Morris of the Supreme Court was the state’s primary advocate, which required him to recuse himself from the decision. In a particularly polemical dissent from part of the decision, Judge James Nelson said Canyon ought to have known the cyanide statute might be passed, because regulation had become steadily stricter “due in no small measure to environmental disasters resulting from poor mining practices, failed technologies, failed economics, and taxpayers becoming increasingly fed up with having to pick up the pieces in the form of millions upon millions of dollars in clean up costs.”

Supreme Court judges are elected in Montana, and Nelson and Morris were both endorsed in the 2004 state election by preservationist group Montana Conservation Voters.

A suit against the state filed in U.S. Federal Court is still pending, having been stayed awaiting the decision in the state court. In the U.S., federal courts are prevented by statute from hearing claims against a state until a state court has ruled against the plaintiff.