Seven-Up Pete Venture bought the McDonald gold project near Lincoln, but was barred from developing it by a 1998 ballot initiative that prohibited new cyanide heap-leach gold mines.
The company then filed state and federal takings lawsuits, seeking compensation for the value of its mineral rights.
Seven-Up Pete last week asked the nation's high court to reverse that ruling.
“When America's founding fathers adopted the Bill of Rights and its bar against the state seizure of private property for public use without just compensation, they intended it to apply, obviously, against governmental entities, including states,” said William Perry Pendley of Mountain States Legal Foundation, the conservative, Colorado-based legal group representing Seven-Up Pete. “The ruling by the 9th Circuit turns the takings clause into a nullity as far as states are concerned. This absurd ruling should be reversed.”
According to the foundation, Seven-Up Pete acquired mineral rights to the land near Lincoln in 1991. The mining venture estimates the property contains 4 million ounces of gold and 10 million ounces of silver that could be recovered using open-pit and cyanide heap-leach mining.
Seven-Up Pete and its mining partner, Colorado-based Canyon Resources Corp., have argued that the 1998 law effectively robbed them of the opportunity to develop the mine. The partners have said they invested more than
$70 million in the McDonald project and lost tens of millions more by being unable to mine the claim.
In April 2000, Seven-Up Pete filed a federal lawsuit against Montana claiming the voter-approved initiative amounted to an unconstitutional taking of its property.
Following procedure, the federal case was put on hold while the company sought to exhaust its state remedies, filing a lawsuit in state court seeking “just compensation,” the foundation said.
In June 2005, the Montana Supreme Court rejected Seven-Up Pete's claims. It determined the company had no operating permit ensuring it could mine using cyanide at the time the ban was enacted, so it had no property right that could be taken away by the initiative.
The following year, the U.S. Supreme Court declined a request from the company to review that decision.
Seven-Up Pete then returned to federal court, where U.S. District Judge Charles C. Lovell held in April 2006 that states cannot be sued in federal court. He also said the U.S. Supreme Court has said federal courts will not reopen issues already decided in state court.
In April of this year, the 9th Circuit affirmed Lovell's ruling, holding that Montana is immune from federal takings claims.
“We think that's wrong, and that's why we're asking the U.S. Supreme Court to hear the case,” Pendley said.
The Montana Environmental Information Center, which led the campaign for Initiative 137, has said the mining partners are just trying to string out the case as long as possible to keep their investors happy.
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