ORDER

WHEREFORE, pursuant to the authority delegated to the Board by the Secretary of the Interior (43) CFR 4.1(4)), IT IS HEREBY ORDERED that the decision appealed from IS AFFIRMED except that Notice No. 1 JG, July 2, 1970, IS VACATED and the associated assessment in the amount of $100 IS SET ASIDE.

IT IS FURTHER ORDERED that Armco Steel Corporation pay the penalties assessed in the total amount of $1,200 on or before thirty days from the date of this decision. DAVID DOANE, Member.

I CONCUR:
C. E. ROGERS, JR., Chairman.

UNITED STATES v. MINERAL VENTURES, LTD.

14 IBLA 82

Decided December 12, 1973

Appeal from decision of Administrative Law Judge Dean F. Ratzman (Contest No. OR-09999-E) holding appellant's mining claims subject to section 4 of the Surface Resources Act of July 23, 1955.

Affirmed as modified.

Mining Claims: Surface Uses-Surface Resources Act: Generally

In a proceeding under section 5 of the Surface Resources Act of July 23, 1955, to determine whether a mining claim is

subject to the limitations and restrictions of section 4 of the Act, the issue is whether or not there is now disclosed within the boundaries of each claim valuable minerals of sufficient quantity, quality, and worth to constitute a discovery, and whether the discovery was made prior to the effective date of the Act.

Mining Claims: Discovery: Generally

To verify whether a discovery of a valuable mineral deposit has been made, a government mineral engineer need not explore or sample beyond those areas which have been exposed by the claimant; he is not required to do the discovery work for the claimant.

Mining Claims: Discovery: Generally-Mining Claims: Surface Uses-Surface Resources Act: Generally

Testimony by a government mineral engineer that he examined the mining claims and the workings thereon and sampled the areas recommended by the claimant but found no evidence of a valuable mineral deposit which would have in the past or present justified a person of ordinary prudence in the further expenditure of his time and means in an effort to develop a valuable mine, is sufficient to establish a prima facie case of absence of a discovery so as to subject a mining claim to the limitations imposed by section 4 of the Act of July 23, 1955.

Mining Claims: Discovery: Generally

Under the mining laws one discovery anywhere on a claim is sufficient to constitute a discovery as to the whole claim.

Mining Claims: Discovery-Surface Resources Act: Hearings

A hearing under section 5 of the Surface Resources Act of July 23, 1955, directed only to a portion of a claim is insufficient to establish an absence of a discovery as to the whole claim as the locator may still

have a valuable mineral deposit on that portion of the claim not challenged by the Government.

Mining Claims: Surface Uses-Surface Resources Act: Verified Statement

Where a verified statement filed pursuant to the Surface Resources Act of July 23, 1955, fails to set forth, as required by section 5(a)(3) of the Act, all of the sections of public land which are embraced within each of the claimant's mining claims, the statement is defective as to an inadequately described claim and said claim is subject to the limitations and restrictions of the Act.

APPEARANCES: William B. Murray, Esq., Portland, Oregon, for appellant; Albert R. Wall, Esq., Office of the General Counsel, United States Department of Agriculture, for appellee.

OPINION BY MR. RITVO INTERIOR BOARD OF LAND

APPEALS

Mineral Ventures, Ltd., has appealed from an adverse decision of an Administrative Law Judge dated February 8, 1973. The Judge declared appellant's placer gold mining claims subject to the limitations and restrictions of section 4 of the Surface Resources Act of July 23, 1955, 30 U.S.C. § 612 (1970).

At the request of the Forest Service, United States Department of Agriculture, a proceeding pursuant to section 5 of the above Act was initiated. The purpose of the proceeding was to determine the right of the United States to control and use the surface resources on three 532-404-74-2

placer mining claims so long as the claims remained unpatented.

A hearing was held in Portland, Oregon, on October 24, 1972, to determine whether a discovery of a valuable mineral deposit had been made within the limits of any of the claims. The three claims in issue are the Enterprise, Swamp, and Extension of Swamp, located in sec. 13, T. 41 S., R. 7 W., Willamette Meridian, Althouse Mining District, Josephine County, Oregon. A portion of the Enterprise claim extends approximately 1,000 feet across the Oregon border into California. All the proceedings preliminary to the hearing were directed solely to the Oregon portion of the Enterprise. The problems arising from this restriction are discussed below.

During the hearing the Government's sole witness, Clover F. Anderson, a Forest Service mining engineer, testified that he had taken samples from the subject claims and that the gold content in the samples was very low. (Tr. 23, 24.) He further testified that the cost of exploiting the gold from these claims would make a mining operation unprofitable. (Tr. 25, 49, 50.) In his view, a valuable mineral deposit had not been discovered on the claims prior to July 23, 1955, and a discovery did not presently exist, even given today's gold prices. (Tr. 26, 50.)

The mining claimant presented almost no probative evidence regarding a discover on the Swamp or Extension of Swamp claims. It did actively assert that a discovery

presently existed, and did exist prior to July 23, 1955, on the Enterprise claim. Its witnesses testified that gold, in a sufficient quantity, was present on the claims justifying further expenditure of time and moneys for development of the properties with a reasonable prospect of success. (Tr. 92, 98, 116.)

The Administrative Law Judge reached the conclusion that no discovery of a valuable mineral deposit within the limits of any of the claims in issue had been demonstrated. Consequently, he declared the three claims subject to the restrictions and limitations contained in section 4 of the Act of July 23, 1955, supra.

On appeal, the appellant presses three primary arguments:

1. Mr. Anderson, sole witness for the Government, anchored his opinion as to lack of discovery upon the erroneous assumption that the Claimant must prove that the mine was profitable on July 23, 1955.

2. One discovery on a claim is sufficient. Thus evidence of lack of discovery

on a portion of the claim is insufficient to establish a prima facie case as to that claim. The Enterprise is part in Oregon and part in California.

3. The Government alleged, but offered no evidence to prove, that the Office of Hearings and Appeals had jurisdiction to try this case under the Surface Resources Act, 30 U.S.C. § 613.

Appellant first argues that the Government's witness based his opinion regarding lack of a discovery on an erroneous profitability test: i.e., that the claimant must prove that the mine was, in fact, profitable. Appellant points out that proof of lack of a discovery

cannot be based solely upon a showing that a mine was or is not, in fact, operated profitably. He cites Converse v. Udall, 399 F.2d 616, 622 (9th Cir. 1968), cert. den., 393 U.S. 1025 (1969), wherein the Court stated:

But this does not mean that the locator must prove that he will in fact develop a profitable mine.

Having reviewed the complete record, we cannot agree with appellant's contention that Anderson relied exclusively on a past and present profitability test in determining whether a discovery existed. Anderson's references to profitability were simply comments respecting the potential economic viability of the claims. The witness' total evaluation of the quantity of gold on the claims and the cost of removing and processing the material indicated that a mining venture would not be profitable. He found no exposure of a mineral deposit on any of the claims which would have, in the past or present, justified a person of ordinary prudence in the further expenditure of his time and means in an effort to develop a valuable mine.

It was proper for Anderson to consider the economics of the situation when making his evaluation regarding discovery on the claims. In Chrisman v. Miller, 197 U.S. 313, 322 (1905), the Supreme Court stated that in order to satisfy the prudent man test of Castle v. Womble, 19 L.D. 455, 457 (1894):

"The mere indication or presence of gold or silver is not sufficient to establish the existence of a lode. The mineral

must exist in such quantities as to justify expenditure of money for the development of the mine and the extraction of the mineral." * * *

A similar test is presented in the lines immediately preceding appellant's quotation from Converse, supra, p. 622:

*** But the marketability test does permit the fact finder, even in the case of a showing of gold, to consider, somewhat more extensively then heretofore, the economics of the situation. Perhaps we could phrase the test this way: When the claimed discovery is of a lode or vein bearing one or more of the metals listed in 30 U.S.C. § 23, the fact finder, in applying the prudent man test, may consider evidence as to the cost of extraction and transportation as bearing on whether a person of ordinary prudence would be justified in the further expenditure of his labor and means. But this does not mean that the locator must prove that he will in fact develop a profitable mine.

Given the above tests in Chrisman and Converse, supra, Anderson's analysis of profitability and other economic criteria was a correct basis for a determination of lack of discovery. The Judge properly relied on this testimony in his decision on the issue of discovery. In any event, the crucial point is not what the witness' concept of "discovery" was, but whether the Judge understood and employed, the proper standard. It is clear that he did not require appellant to prove profitability in fact but only adduce sufficient evidence to demonstrate that a profitable venture might reasonably be expected to result. This is the proper test. United States v. Harper, 8 IBLA 357, 365-367 (1972).

We have reviewed the record and we find ourselves in agreement with the Judge's determination of lack of discovery with respect to the Swamp and Extension of Swamp claims. For the reasons set out below, we do not consider the Enterprise claim along with the above two claims.

As to the Enterprise claim, we move on to appellant's second argument that the evidence of lack of discovery on a portion of the claim is insufficient to establish a prima facie case as to the whole claim.

In a case of this nature, the Government has by practice assumed the burden of establishing a prima facie case that there has not been a discovery of a valuable mineral deposit within the mining claim. Foster v. Seaton, 271 F.2d 836, 838 (D.C. Cir. 1959); United States v. Alarco, 9 IBLA 1, 3 (1973).

Anderson testified that he examined both the California and Oregon sections of the Enterprise claim. He noted that the southern portion of the claim extending into California had been thoroughly mined. (Tr. 25.) He took samples from areas within Oregon recommended by the applicant. (Tr. 45, 50.) He was not directed to any area in the California portion.

It is well established that a government mineral examiner need not explore or sample beyond those areas which have been exposed by the claimant. The examiner is simply verifying whether a discovery has been made; he is not required to perform the discovery work for the

claimant. United States v. Wells, 11 IBLA 253, 263 (1973); United States v. Kelty, 11 IBLA 38, 42 (1973); United States v. Grigg, 8 IBLA 331, 343, 79 I.D. 682 (1972). Anderson was not required to take samples from the unexposed areas on the California portion of the claim.

Anderson's testimony that he examined the mining claim and workings thereon and sampled the areas recommended by appellant but found no evidence of a valuable mineral deposit was sufficient to establish a prima facie case by the Government that there had not been a discovery as to the whole claim. United States v. Jones, 2 IBLA 140, 148 (1971). Thereupon, the contestee was required to prove by a preponderance of the evidence that a discovery did exist on the claim. United States v. Nichol, 9 IBLA 117, 122 (1973). The appellant failed to meet its burden of proving a discovery existed on the Enterprise claim. A mining claim is properly declared invalid where the Government establishes a prima facie case of lack of discovery and the claimant does not show by a preponderance of evidence that the claim is valid. United States v. Taylor, 11 IBLA 119, 123 (1973); United States v. Mellos, 10 IBLA 261, 267 (1973); United States v. Dotson, 10 IBLA 146, 147 (1973).

There is, however, another aspect to appellant's contention that goes beyond the issue of discovery. Although appellant couches its argument in terms of an inadequate prima facie case, the real issue is the

sufficiency of the proceedings leading to the hearing. The thrust of appellant's contention is that the preliminary proceedings were deficient as to the Enterprise claim, leaving the Department without jurisdiction to hold a hearing covering it.

As noted above, the Enterprise claim lies in both Oregon and California. The notice of publication and appellant's verified statement, both required by §5 of the Act,1 only described land situated within Oregon.

1 Section 5 of the Act reads in pertinent part:

"(a) The head of a Federal department or agency which has the responsibility for administering surface resources of any lands belonging to the United States may file as to such lands in the Office of the Secretary of the Interior, or in such office as the Secretary of the Interior may designate, a request for publication of notice to mining claimants, for determination of surface rights, which request shall contain a description of the lands covered thereby, showing the section or sections of the public land surveys which embrace the lands covered by such request, or if such lands are unsurveyed, either the section or sections which would probably embrace such lands when the public land surveys are extended to such lands or a tie by courses and distances to an approved United States mineral monument.

Such notice shall describe the lands covered by such request, as provided heretofore, and shall notify whomever it may concern that if any person claiming or asserting under, or by virtue of, any unpatented mining claim heretofore located, rights as to such lands or any part thereof, shall fail to file in the office where such request for publication was filed (which office shall be specified in such notice) and within one hundred and fifty days from the date of the first publication of such notice (which date shall be specified in such notice), a verified statement which shall set forth, as to such unpatented mining claim

(1) the date of location;

(2) the book and page of recordation of the notice or certificate of location;

(3) the section or sections of the public land surveys which embrace such mining