Cemex appeals BLM’s decision ordering company to pay $25M

The Cemex mining site in Canyon Country. Dan Watson/The Signal

The decades-long battle over a proposed Cemex mega-mine on Santa Clarita’s eastern border in Soledad Canyon appears headed for the courts, as the international mining company recently filed a petition in an effort to have its contractual mining challenge settled with litigation.

The mining company received a partial win in a decision levied last month by the Interior Bureau of Land Appeals in response to the mega-mine’s Jan. 10 request that the appeals board overturn about $25 million in fees the company was previously assessed.

The mining company’s argument appears to seek court arbitration, challenging the Bureau of Land Management’s decision and ability to assess the mining conglomerate what’s called “payment-in-lieu” fees, or money Cemex should have been paying, once the contracts were valid. The BLM ordered Cemex to pay the money in missed annual payments in 2015. 

In December 2019, the Bureau of Land Management issued decisions to Cemex giving it 30 days to choose one of three options: pay the $25 million bill for non-production on their two mineral material contracts; ask for more time to pay; or demonstrate why the federal government shouldn’t cancel the contracts. 

Cemex went with none of the three. 

Instead, the multinational company, which proposed the construction of a 56-million-net-ton sand and gravel mine in Soledad Canyon, near the junction of Agua Dulce Canyon Road and Soledad Canyon Road, appealed BLM’s decision to the IBLA, a route Cemex also chose in September 2015 following BLM’s decision to cancel the mining contracts that both parties signed nearly 30 years ago on March 9, 1990.  

Cemex’s petition for stay — or, if granted, a temporary stop on a judicial proceeding or order — was partially granted and partially denied, according to IBLA’s order, which was issued Feb. 19. 

The order, which was signed by Amy Sosin, acting deputy chief administrative judge with the IBLA, reads that the Interior Board found that Cemex showed “sufficient justification to stay BLM’s decision demanding past in-lieu-of-production payments” but that the company “has not satisfied its burden to stay BLM’s decision demanding the full contract value.” 

IBLA said it partially granted Cemex’s stay because it sufficiently justified that the company “is likely to succeed on the merits of its claim” that BLM lacked authority to demand nearly $19 million in missed annual payments and that “even if it pays BLM and ultimately prevails, either here or in federal court, the impact to the company’s business operations ‘while BLM holds those funds for an indeterminate time’ constitutes irreparable harm,” the order reads. 

The partial denial stems from IBLA’s conclusion that Cemex did not show that BLM’s decisions lack a rational basis, as well as rejecting Cemex’s claim that it is not required to make payments in lieu of production “when it is not authorized to produce, and never produced, mineral materials under the contracts.”  

While IBLA granted Cemex’s petition to stay the decision requiring payment of nearly $19 million, it denied its petition against BLM’s decision demanding payment of $7 million under one contract and forfeiture of Cemex’s $1.4 million performance bond. 

“The parties will be briefing the merits of the case over the next few months,” BLM spokeswoman Martha Maciel said on Wednesday. 

A recent estimate on the average price of aggregate put the value at approximately $9.25 per ton, according to Statista.com, meaning the contract’s potential value is in the half-billion-dollar range. The value of aggregate varies depending on the type of aggregate, as well as the supply and demand.  

For the city of Santa Clarita, which has been fighting to halt the mega-mine, it’s currently a waiting game until a decision is reached. 

“It’s not a surprise that an appeal would be filed and I think while we continue to get closer to a final resolution this appeal reaffirms that the issue is not completely over and we have to remain vigilant until we have the final word,” said Mayor Cameron Smyth. “The city will monitor and stay on top of any legislation and policy and change that could open the door for this project to get revived.”

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