The $2.3-billion Thacker Pass lithium mine project in northern Nevada surmounted a key obstacle this week when the a San Francisco federal appellate court rejected a legal challenge by environmental groups and Native American tribes to its US Bureau of Land Management project approval inearly 2021 thay they said was improper and should be overturned.

The three judge appeals court panel upheld a lower court in early 2023 that dismissed the plaintiffs' claim that the agency permit was "an abuse of discretion, or otherwise not in accordance with” the National Environmental Policy Act (NEPA).

The court had previously denied a request for an emergency injunction pending appeal, so project owner Lithium Americas could proceed with “early works” construction. According to a company spokesman, the work has so far consisted of site preparation, geotechnical drilling. and water pipeline development, among other early site infrastructure work.

Lithium Americas has said Thacker Pass would be the largest lithium mine in North America, producing more than 80,000 tons of battery-quality lithium carbonate per year. 

In January, it announced awarded of the engineering, procurement, and construction management contract to Bechtel Corp. Construction is expected to take 30 months. The contract value was not disclosed.

Demand for the metal is expected to increase since it is a critical component for electric vehicle batteries. EV manufacturers can benefit from Inflation Reduction Act tax credits if they meet requirements on the percentage of components used that are produced and processed in the US.

The Thacker Pass project consists of an open-pit mine and lithium processing operations in an area north of Winnemucca, Nev., that is held sacred by three Native American tribes as the site of an 1865 massacre by the U.S. military.

Environmental groups sued the agency in May 2021, arguing it failed to properly address cumulative environmental impacts of the project in approving permits in the waning days of the Trump administration.

The courts concluded that the agency final environmental impact statement was satisfactory under the law. It also said the agency had adequately consulted with tribes, which “did “not raise[] any concerns about specific traditional areas, sacred sites or ceremonial areas or activities in the project area.”

John Hadder, director of Great Basin Resource Watch, one of the plaintiffs, said the latest decision affirmed “one of the worst environmental impact statements that I have seen in my near 20 years of mining accountability experience.  He said it would allow the mine to “destroy a significant indigenous cultural landscape [and] sage grouse habitats, and potentially drive a rare species of springsnail extinct.”

The plaintiffs could seek review from the full appeals court or seek U.S. Supreme Court review, but Hadder said the groups had not decided thei next step.

The tribes have another lawsuit pending against the project filed in February, but were also denied an earlier emergency halt of construction.