ject to location, they superimposed upon the prudent man theory, what is called the marketability or profitability test. The Department, in effect, held that to locate sand and gravel and to have the location stand up on application for patent, that, in addition to locating a valuable mineral and thus satisfying the prudent man theory, that the claimant should prove that he could produce the particular mineral on a profitable basis.

* **

common

Industry was not particularly aroused because of the 1933 split with regard to nonmetallic and metallic minerals, and particularly the application of the profitability test to sand and gravel. At any rate this was the state of the law in 1955. Now, I submit that in 1955, when Public Law 167 was enacted that when Congress withdrew from location "* * * minerals of common occurrence varieties of sand, gravel, stone, et cetera * * *" that, in effect, was tantamount to overruling Layman v. Ellis, because it rendered that problem moot-it was no longer a problem. If "common varieties" were no longer locatable, then there was no reason for this dichotomy that had arisen in the law of discovery. Therefore, in 1955, with the enactment of Public Law 167, there was only one rule of discovery and that was the prudent man theory and it was applicable to every single mineral location which was not withdrawn from location by Public Law 167; and I think that's the way Congress intended it to be.

However, after Public Law 167 was enacted, Congress was deluged with complaints that the administration of Public Law 167 was not as intended, that it was being used as a vehicle by the Department of Interior and the Department of Agriculture to cancel valid mining claims; it was eroding the law regarding a valuable discovery; it was eroding the traditional test with regard to what kind of proof a claimant had to submit in support of a claim; and, to the end of investigating these allegations, Congress in 1957 held an investigation and inquired of the Department of Interior and the Department of Agriculture just exactly what they were doing and what they thought the law was. Senator Metcalf, you inquired of the Department whether they were requiring the discovery of commercial minerals eligible for patent to support a claim and this is what Mr. Shafer of the Department of Interior responded to you at that time:

No, sir; not necessarily eligible for patent.

Mr. METCALF. How far do you go?

Mr. SHAFER. I think the requirement on the validity of the claim is explained in the letter to Mr. Engle. We do not require commercial ore- -we do not require commercial ore—we merely require a showing of minerals ***

Traditional law, nothing wrong with that.

*** I'm speaking of lode claims-and then the geologic and other evidence surrounding the claim, such as would justify the prudent man in the further expenditure of his time and money ***

Again, traditional law, nothing wrong with this answer.

*** But we do not require commercial ore at any time. That is not a requirement either for the location of the claim or for the patent.

Mr. BRADSHAW. (again, a Government witness). If he has made a discovery which is sufficient to justify a prudent man in the expenditure of his labor and means in an effort to develop a paying mine, he does not have anything to worry about, provided he comes in and registers his claim as was contemplated by

section 5.

Which is the quiet-title section of the act. Again:

Mr. BRADSHAW. If we find that the man has any show of mineral-any show of mineral in the vein at all, or if it is a placer, if he has a deposit of mineral, it does not have to be commercial *** and if the geological conditions or the experience of other miners in the same area is sufficient to indicate a reasonable possibilitya reasonable possibility-not a probability, but a reasonable possibility-that he can develop commercial ore, then that man if free to go ahead just on his original location without being affected by this act.

Again, traditional law. This is what we've been depending on for years, and, on the burden of proof, Mr. Bradshaw said:

We order a hearing and we have the burden of proof ***—

He told Congress:

* * * that the land is nonmineral or that no discovery has been made.

And then, in response to a question by Mr. Engle:

Now, do you bobtail the claim or strike it down completely?

Now, here's his response to this one, and I am going to highpoint this later on in the Carlile decision:

Answer. It is merely bobtailed.

On page 39 of the hearing booklet, Mr. Hoffman, on behalf of the Department, states again that it is not the policy of the Department of Interior to invalidate claims-this is 1957, under Public Law 167. Mr. Hoffman reiterates the Department policy as follows:

If there is a showing, he does not have to have a commercial discovery. If there is a showing of mineral, if he can show a showing of mineral which would warrant a prudent man to continue his mining operations, we would leave him alone. We would not call him for a hearing.

Certainly, if this was the administrative policy and the administration of Public Law 167, I doubt seriously whether we would have requested this task force meeting in Montana to examine into just precisely what departmental application of the law has been.

First of all, let's examine into departmental regulation. Now, we realize that when Congress enacts a law that it gives the particular department under whose jurisdiction the particular law comes the power to enact regulations, so that the department can interpret it for the people and set up administrative procedures for its enforcement. Without going through all of the history which appears in my printed statement: In 1962, this is how the Department characterized, in its regulations "common varieties," and let's see if it squares with the law which Congress actually enacted:

Mineral materials which occur commonly shall not be deemed to be "common varieties" if a particular deposit has distinct and special properties making it commercially valuable for use in a manufacturing, industrial or processing operation. In the determination of commercial value * * *

Now, let's look at this:

*** such factors may be considered as quality and quantity of the deposit, geographical location, proximity to market or point of utilization, accessibility to transportation, requirements for reasonable reserves consistent with industrial practices to serve existing or proposed manufacturing, industrial, or processing facilities, and reasonable methods for mining and removal of the material. Limestone suitable for use in the production of cement, metallurgical or chemical grade limestone, gypsum, and the like are not "common varieties." This subsection does not relieve the claimant from any requirements of the mining laws.

Now, certainly, the requirements or the characterization of "commercial value" by these various criteria set out in the regulations do not appear in the act. They do not appear in Congress' discussion of the act before it was enacted, and do not, certainly, square with what the Department said in 1957.

Let's go back to "bobtailing" claims. If you will recall, Mr. Engle asked if Public Law 167 would be used to "bobtail" claims or to invalidate them completely, and the departmental answer was just to "bobtail" them, not to invalidate them completely.

In 1960, the case of United States v. Carlile, A-28012, was decided. In that decision the Department of Interior overruled Eli Mining and Land Company (194 U.S. 220 (1904)), a U.S. Supreme Court case, which had cited with approval the Clipper Mining Company decision in 22 Land Decisions 527, 528. In effect, the holding in the Clipper case was this: The claimant proceeded to apply for a patent on his location; his claim didn't quite measure up; however, he was still working it in the hopes of bringing it up to the level where it would qualify for patent. Now, instead of invalidating the claim and declaring the claimant or locator a trespasser on the public domain and bringing some sort of action against him for damages for removing material from the public domain, what did the Department of Interior do, and what did the U.S. Supreme Court approve?

In effect, they said: "We will not invalidate the claim; go ahead, stay on it, work on it, retain your rights, called 'pedes possesseo', and continue to work this claim, and if you do bring it up to the requirements for patent, then come back to us and we will grant you a patent." Carlile reversed this and took away the claimant's rights under the doctrine of pedes possessio.

Now, why is the Carlile case such a landmark decision and why is it so dangerous for a small mine operator? Why does that decision, as it appears-it appears innocuous-pose a threat to the small mine operator?

Now, in Tucson, March 23, 1965, a Government panel pointed out the hazards facing a prospector under the Carlile decision: What if a claimant goes on land and he locates what he thinks is an uncommon variety of mineral, or let us assume that he thinks he has a possible mine going, and he proceeds to produce material from this claim? In that case what happens under Public Law 167 if the Government comes in to contest? Government people at this panel said:

If it was found that that locator was a willful trespasser, the damages would be in the amount of the value of the material removed on the marketplace, the claimant would thus suffer the loss of all he had invested to get the material to the marketplace.

This is a quote from Pay Dirt, April 23, 1965:

If, on the other hand, it were found that the claim had been staked in good faith in the honest belief that a special and distinct value existed, the claimant would be an innocent trespasser, would be liable for damages only for material sold, assessed at the value of the material in the ground.

Now, the dilemma presented by the Carlile decision and the Government position as expressed March 23, 1965, is patent; it is this:

1. Pursuant to regulation and administrative decisions, the claimant must, to perfect his location, show a profit in the production of the mineral. He has to do that.

53-117-65--2

2. However, if he produces the material under the mistaken belief that it is not a "common variety" by use or uniqueness, and sells the product, he subjects himself to the sanctions which can be imposed for trespass, innocent or willful.

3. And he can be subject to a contest, under Carlile, and have his claim invalidated before a profitable mine is ever developed and thus lose whatever rights he acquired up to that time; so, in effect, he is "darned if he does and darned if he doesn't." He doesn't know what his rights in the property are, and certainly his location is subject to the whims and the caprices of a Department contest.

It was clear in the hearings of 1957 that commercial ore was not the criterion by which the validity of a claim was to be measured. However, actual departmental practice certainly contradicts this position. The marketability and profitability tests in the field of nonmetallic minerals have been applied to pumice, gypsum, limestone, and limestone suitable for cement, contrary to the regulation, clay, building stone, tuft, distinctive sand and gravel, pink quartz, and a variety of other nonmetallic minerals, and we could fill pages with citations if we wished to point out just precisely what has been departmental application of the profitability test in the nonmetallic field.

But they haven't stopped there. They have taken that bootstraps decision and applied it to metallic minerals, too; they have applied it to manganese, they've applied it to gold, they've applied it to low-grade copper deposits and let us pause for a minute to consider open pit operations right here in the Butte area-and what do they

say:

A showing must reveal the probability of a mineral deposit of commercial value***

Compare that with statement after statement at the 1957 hearing, where commercial value was not going to be the criterion. Now, who is misleading whom?

Even gold, in the Rand decision-Mr. Maloney cited it to this task force even gold, what most people consider the most inherently or intrinsically valuable mineral-that if you have gold, why, you certainly have a location-and just because it couldn't be mined at a profit in 1962, although it was mined at a profit prior to World War II, it was invalidated-not "bobtailed"-invalidated.

Where does the burden of proof lie? In 1957 the Department told Congress that it had the burden of proof to prove that the claimant's land was nonmetallic in character and that the only proof required of the claimant was a showing of mineral which would induce a prudent man to develop further. Now, we are not making up these statements. This is the printed word that the Department told Congress; but in the case of United States of America v. Kenneth 0. Watkins, a Bureau of Land Management decision, there were enunciated two evidentiary rules which I think are disastrous to any appeal to the judiciary from an administrative decision. It held that:

1. The evidence in support of a claimant's case must be "clear and unequivocal."

That's the burden of proof of a State, practically, in a criminal conviction.

*

2. The Board held "* *that evidence of timber values on the surface of a mining claim is admissible as a proper element

for consideration in determining the weight and credibility to be given the claimant's testimony ***"

Now, the reason these evidentiary rules are so disastrous is because that, under the Administrative Procedure Act, which governs, in effect, the in-department litigation, of course while recourse to the courts can be had, nevertheless, the claimant must exhaust all administrative procedures before any appeal to the Federal judiciary can be made after the matter has been decided at a departmental level, it goes into a Federal court clothed with the presumption that, at least, as to the facts, the Department's decision is correct; it is presumed that factually the Department had made a correct decision. Now, if under the Watkins rule, the decision characterizes the locator's case by saying that the proof is not "clear and unequivocal," or because there are some "timber resources," they don't believe the claimant's case, what chance does he have of overturning that decision? He does not have any under these evidentiary rules; he's hog-tied and bound before he ever gets into the judiciary, and there isn't a Federal court that can do anything about that.

With regard to "common varieties," I think, again, it is apparent on the face of the act on "common varieties" that it excluded rare minerals; just because the act says: "common varieties" of sandstone, gravel, clay, et cetera-it didn't include all stone, all sand, or all gravel, it excluded from location only the "common varieties." If the stone is rare, even though it is a stone, I submit to this task force that it is still open to location. But in Montana, in the case of a mineral called travertine, which is a pure carbonate of lime much like marble, and which occurs in commercial quantities in probably only two or three places in the United States, a contest has been initiated to declare the travertine deposit invalid.

Travertine is being profitably mined, and it has been, and it certainly is rare. An example of travertine being created is Old Faithful Geyser in Yellowstone National Park. This is the process of the hot spring water carrying up pure carbonate of lime. I am sure Mr. Uuno Sahinen will probably correct, perhaps, my characterization of this mining activity, but nevertheless, as I understand it, that is the creation of travertine. It is a rare rock; it doesn't proliferate like granite or other materials; but they are going to invalidate that claim if they can.

Gentlemen, thank you very much for giving me the opportunity to express my views with regard to the state of the law. I realize that I have taken more of the committee's time than, perhaps, I am justified to do, but I felt that we should really examine into what the departmental position has been in this regard. What did they say they were going to do and what have they actually done? Does it square with what Congress intended? Does it square with what they told Congress they would do? Does it square with the intent of the law as written?

It is evident that the disheartening trend evidenced in regulations and departmental decisions must be reversed by specific congressional action, either redefining "common variety" and "discovery" along traditional lines or imposing their own evidentiary rules as to what kind of proof is needed in support of the claim. Some clarification must be given so that the small mine operator can continue in business in order that the vast mineral resources-and paraphrasing what the