(Adds comment from Virginia Uranium)
By Andrew Chung
WASHINGTON, June 17 (Reuters) - The largest-known U.S. uranium deposit will remain firmly under ground after the Supreme Court on Monday upheld Virginia's ban on mining the radioactive metal, rebuffing a challenge backed by President Donald Trump's administration to the 1982 moratorium.
In a 6-3 decision that underscored states' rights, the justices affirmed a lower court's ruling that threw out a lawsuit by Virginia Uranium Inc and other owners of the massive deposit valued by the company at $6 billion on private land in southern Virginia.
The company, seeking to exploit the deposit, contested Virginia's power to enact the ban, saying the policy should have been preempted by federal law governing nuclear energy. Virginia Uranium is a subsidiary of Vancouver, British Columbia-based Virginia Energy Resources.
The dispute focused on whether the federal Atomic Energy Act of 1954, which regulates the development of nuclear energy, preempts Virginia's mining ban under the U.S. Constitution's so-called Supremacy Clause, which holds that federal law generally trumps state law.
The Trump administration had backed the company's challenge to Virginia's law. The ruling was written by Justice Neil Gorsuch, who Trump appointed to the court in 2017.
The case thrust Virginia into the center of a national debate over uranium mining. It pitted the rights of states - specifically to control their natural resources and protect the environment - against federal law and the need to maintain access to raw materials critical for nuclear weapons and power plants.
While uranium remains a vital resource for electricity and national defense, Virginia enacted its ban on uranium mining amid concerns about environmental and public safety hazards.
"This is a big win for the health and safety of Virginians and our environment," Virginia state Attorney General Mark Herring said in a statement, adding that "we are well within our rights as a state to decide that a risky, potentially dangerous activity like uranium mining is not for us."
Virginia Uranium expressed disappointment with the ruling.
"We continue to think that Virginia's uranium mining ban is both unlawful and unwise," the company said in a statement, adding that it is reviewing other options to challenge the state's "confiscation" of its mineral holdings.
The ruling could entice other states to restrict the availability of source materials or create financial barriers to nuclear energy development, potentially reducing uranium production.
At the center of the dispute is the uranium deposit located beneath a privately owned estate in Virginia's Pittsylvania County, near the North Carolina border.
The Atomic Energy Act (AEA) gives the federal Nuclear Regulatory Commission the sole power to regulate radiation safety standards for milling uranium ore and disposing of waste byproducts known as tailings, key steps in the production of nuclear fuel. But it does not cover conventional uranium mining on non-federal land.
Gorsuch, who announced Monday's ruling from the bench, said, "The federal government has no authority to regulate mining itself, and the AEA does nothing to withdraw that regulatory power from the states."
Chief Justice John Roberts, writing in dissent, said the ruling could enable states to target uranium development in various ways, such as preventing counties from providing garbage collection or fire protection to nuclear facilities.
So long as a state "is not boneheaded enough to express its real purpose in the statute," Roberts wrote, "the state will have free rein to subvert Congress's judgment on nuclear safety."
Virginia had the support of several other states concerned about protecting states' rights, including Indiana, Texas, Massachusetts and Oregon.
Virginia Uranium had touted the economic benefits for Virginia, saying it could create more than a thousand jobs annually and pump billions of dollars into the local economy.
The company emphasized uranium's critical importance in nuclear weapons and powering U.S. nuclear submarines and aircraft carriers, noting that most uranium used in the United States is imported, including from "geopolitical rivals" such as Russia.
The plaintiffs, also including Cole Hill LLC and Bowen Minerals LLC, sued Virginia in 2015. The Richmond, Virginia-based 4th U.S. Circuit Court of Appeals in 2017 upheld a trial judge's ruling to toss out the lawsuit.
Reporting by Andrew Chung; Editing by Will Dunham