Interior, dated May 8, 1964, to Uuno Sahinen, associate director of the Montana Bureau of Mines and Geology, it was stated:

*** although the amendment (Circular 2089) served to clarify the more ambiguous definition employed previously, it is not broad enough to eliminate all questions ***.

*** Accordingly, we can well understand that mining claimants sometimes find it difficult to ascertain in advance the status of their claims under this law with any degree of certainty. Our inability to arrive at a working definition of "common varieties" which is acceptable both to industry and administration suggests that clarifying legislation would be useful ***.

On March 23, 1965, at a meeting of the Arizona Small Mine Operators Association in Tucson, Ariz., with officials of the Forest Service and the Bureau of Land Management, Calvin Brice, of the Field Solicitors Office, Bureau of Land Management, made the following

statement:

Special and distinct value, as defined in section 3, "common varieties," is now a litigable part of the mining law, and a changing part, since we do not know ourselves, until the matter is litigated, what they are ***.

Brice pointed out that:

*** Departmental rulings ***.

on which his opinion is based—

* * * are subject to judicial review * * * admittedly at great inconvenience and expense to the claimant, but nevertheless, this is the Department's ruling. H. R. Hochmuth, Associate Director of the Bureau of Land Management, in a speech delivered in 1964, as quoted in the April 23, 1965, issue of Pay Dirt, stated the following:

*** many persons, including the writer, have come to the conclusion that the 1872 mining law is an anachronism and no longer serves the best interests of the Nation or the mining industry***

There can be no gainsaying that this mining law of 1872 is not administered as it was originally intended. There has been a definite trend in decisions toward more stringent requirements to establish the validity of a claim. Examples of these may be found in the narrowing application of the rule of discovery, the employment of the rule of marketability, the definition of "common varieties," and the concern for economic values.

Hochmuth, in a discussion of "discovery" as determining validity of the mining claim, continued:

***The fact that such a claimant is large, experienced and well motivated does not satisfy the law. It must physically expose ore of such quality as will assure that the development might reasonably be expected to result in a valuable mine. It may have reams of data produced by recognized scientific exploratory methods which infer the existence of good ore. It may have conducted exhaustive feasibility studies and done extensive research on metallurgy and new uses of the mineral. The decision to proceed may have been made by a highly competent board of directors. Nevertheless, it will be obliged to submit its claims to the tests imposed by law as it is known and applied today.

I might interpolate, as it is known and applied by the Bureau regulations.

In United States of America v. Irving Rand, Contest No. 05303-A (Apr. 26, 1962) the Department of Interior held:

The deposits are not now valuable and do not constitute a discovery under the mining laws.

In that case the mine still contained a substantial amount of ore worth $16.10 per ton, but since World War II the relative value of gold to labor had depreciated to the point that the vein was not profitably operated at the time of the contest.

Then, in the Denison case, No. A-29884, April 24, 1964, Secretary of Interior Udall ruled:

Although a mining claim may have been valid in the past because of the discovery on the claim of a valuable deposit of mineral, the mining claim will lose its validity if the mineral deposit ceases to be valuable because of a change in economic conditions.

Under this ruling, if it had been applied in the past, it is possible that there wouldn't be any large-scale mining operations as now exist in the Butte area, since it is generally acknowledged that the present and future operations of the Butte Hill are based on the Berkeley pit. Let us assume that the Berkeley claims here in Butte were unpatented in the 1920's. That was the time that the Berkeley closed down, the mine was shut down then because it was unprofitable. Under the present Department interpretations of the mining laws, the economic conditions of the 1920's would cause the Berkeley claims to be declared invalid.

Later, the Berkeley mine resumed operations as an open pit, which is now referred to as the Berkeley pit. It developed, and we have a mining operation directly responsible for the continued prosperity of a regional economy, from which numerous sidelines of business activity prosper. Thousands of men are employed, all as a result of the open pit operations. It is an integral part of the western operations of a nationwide corporation.

Proceeding logically, from local to regional to countrywide economic activity, the implications of continuing this policy would result in depressed economic conditions throughout the Nation, or throughout all that part of the Nation which depends upon the mining industry

to a certain extent.

Now, just to elaborate a little on the amount of work done at the Berkeley pit: Since the 1955 date, the overall excavation--that is not just ore but stripping and everything from the Berkeley pit was approximately 300 million tons. I think the official figure to around the first of the year is around 272 million tons.

Speakers who follow me will point up this confusion by their own special problems and describe controversies that are now pending with the Bureau of Land Management. These speakers I am referring to here are mostly small mine operators, with one or two exceptions. Some are from the Southwestern Montana Mining Association, where some of these small problems are coming from. They have representatives here who will speak later and go into them in detail.

It has been arranged for Mr. Roth, if it is satisfactory, to follow me and go into the various details of the general allusions I have made to the confusion to go into it in specific detail.

Mr. Sahinen, who will follow him, has had many years' experience as associate director for the Montana State Bureau of Mines. He has been one of the greatest helps that we have had in Montana for the small miners. He and his staff make field trips all summer long. They go out and look these small claims over; they assist them if asked for this kind of advice and they get the help they need. He is a recognized authority on geological conditions and I am sure you will consider him a recognized authority on "common varieties." He will be the third speaker, and each one of those gentlemen will answer any and all questions propounded to them.

Senator Gruening, I would like to say to you that I have followed your writeups for the past several years, especially your exchange of

correspondence with the Arizona small mine operators and with the State director in Arizona of the State bureau there, and I certainly agree with the exchange of correspondence you had with Frank Knight, and, again, I wish to thank you for your interest in the mining industry over the years. I know that you come from another great mining State and one that is rapidly developing.

From your experience and knowledge of the mining game, I know that the various committees and subcommittees of the Congress will derive much-needed help on this problem, and we are very happy that you are here. Of course, our own junior Senator has followed our problems here very closely. In fact, he has had much correspondence and has been called upon as often for help and advice as I have been in representing the association.

I, again, thank you.

Senator GRUENING. Thank you very much, Mr. Maloney. I appreciate your expert statement and also you kind words. I think those of us who are in public life realize, regretfully, that mining is a sort of a stepchild of the national family and that certain branches of our economy seem to get more favored treatment. In the field of agriculture, farmers are sometimes paid for not growing crops but I have never heard of any miner being paid for not extracting ore. Maybe we should introduce that kind of reform.

In any event, we are happy to have this hearing here and we are going to do everything we can to help the mining industry. This isn't the only field; there are many other fields, as you know. Gold is in a very tragic situation because for 30 years now, or 31 years, we have been obligated-a unique example of discrimination in our free enterprise economy-to keep gold at the price established way back in 1934. It is true that President Roosevelt wisely raised the price of gold from $20.70 an ounce to $35, and that gave gold mining a big shot in the arm. We were very grateful for that, but since that time, of course, the cost of everything has gone up-the cost of labor, the cost of materials and we are obliged to keep that price and to sell only to the Federal Government. That is an act of great injustice, and for some years we have tried to present alternatives and they have fallen afoul of the opposition of both the Republican and Democratic administrations, with the result that gold mining is almost extinct in the United States, whereas, in other gold-mining countries gold mining is cherished, aided, promoted, and frequently subsidized. But we are going to keep on trying.

Now, Mr. Maloney, I wish you would present your first witness, and we will be very glad to hear him.

Mr. MALONEY. Mr. Roth.

STATEMENT OF URBAN L. ROTH, BUTTE, MONT.

Mr. ROTH. Senator Gruening, Senator Metcalf, Mr. French, Mr. Maloney, president of the Mining Association of Montana, and other distinguished witnesses and visitors.

Let me express my sincere thanks to you Senators and to Mr. Maloney for this opportunity to speak on behalf of the small mine operator in Montana, specifically the Mining Association of Montana and also the Southwestern organization of small mine operators. I am Urban L. Roth. I am a lawyer in Butte, Mont.

Senator Gruening, you have outlined for this hearing some of the purposes for which Public Law 167 was enacted. However, I believe, to put Public Law 167 in its proper perspective, we must examine into the state of the law as it existed prior to its enactment so that we can place it in its proper perspective.

Why was Public Law 167 enacted? What was it intended to do insofar as changing existing mining law, and how is that law being administered and does the administration of that law square, first of all, with what we consider established law with regard to mining, and does the administration of that law square with what the Department of Interior and the Department of Agriculture told a congressional hearing in 1957 as to what was going to be the administration of the law?

In the congressional hearings, preparatory to the enacting of Public Law 167, a review of existing mining law was made and it was observed that Federal mining law was designed to encourage:

*** individual prospecting, exploration, and development of the public domain. The incentive for such activity has been the assurance of ultimate private ownership of the minerals and lands so developed. Under these laws prospectors may go out on the public domain, not otherwise withdrawn, locate a mining claim, search out its mineral wealth, and if a discovery of a mineral is. made, can then obtain a patent.

The congressional report observed that:

Mineral resource utilization comes about only after:

1. Prospecting;

2. Exploration; and,

3. Development.

In 1872, to effectuate that purpose, Congress enacted what has been mining law since that time, when it opened up: “** ** all valuable mineral deposits and lands belonging to the United States * * to discovery.

Now, because the law of 1872 had been used as a vehicle to locate spurious claims, and since "all minerals" were subject to location under the law of 1872, including minerals such as sand and gravel and building stone, which proliferate all over the United States and thus subjected most of the public domain ultimately to location, Congress felt that it was necessary to cure, first, this problem which arose out of the location of minerals of widespread and common occurrence in nature, and to give the Department of Interior a vehicle by which they could invalidate claims or quiet title to land belonging to the United States and the people of the United States-claims which were being used as summer homes or utilized for their surface resources or locations which were used mainly for commercial purposes, where they had a high recreational value-and thus Public Law 167 was enacted.

Section 3 of that act solves the problem of locating minerals which had a widespread occurrence by withdrawing from location:

*** a deposit of common varieties of sand, stone, gravel, pumice, pumicite, or cinders ***

The act pointed out that:

***"Common varieties" do not include deposits of such materials which are valuable because the deposit has some property giving it distinct and special value and does not include so-called block pumice which occurs in nature in pieces having one dimension of 2 inches or more * * *.

In the hearing preparatory to enacting Public Law 167 the Congress of the United States pointed out those minerals might have widespread occurrence, but could nevertheless be located, and pointed out that examples of these were:

*** limestone, gypsum, et cetera, commercially valuable because of a distinct and special property * * *.

such as limestone, of course, suitable for cement.

Moreover, the law did not affect:

*** The validity of any mining location based upon discovery of some other mineral occurring in or in association with such a deposit * * *.

Again, to put Public Law 167 and its administration into its proper perspective, I think it is important to review the law with regard to what characterized a valuable mineral discovery prior to 1955; and it is universally conceded that the first test and the one which was adhered to until most recent administrative decisions was Castle v. Womble, an Interior Department decision, which was approved by the U.S. Supreme Court in Chrisman v. Miller; and this was the standard that Castle v. Womble and Chrisman v. Miller imposed:

*** where minerals have been found in the evidences of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine, the requirements of this statute

that is, the law of 1872

*** have been met. To hold otherwise would tend to make of little avail, if not entirely nugatory, that provision of the law whereby "all valuable mineral deposits and lands belonging to the United States *** are *** declared to be free and open to exploration and purchase ***" For, if as soon as minerals are shown to exist, and become remunerative, the lands are to be subject to other disposition, few would be found willing to risk time and capital in the attempt to bring to light and make available the mineral wealth which lies concealed in the bowels of the earth, as Congress obviously must have intended the explorers should have proper opportunity to do ***.

It is important to note that the U.S. Supreme Court, in adopting this standard on "valuable mineral discoveries," indicated that the standard was, "Would an ordinarily prudent man be justified in proceeding further to develop?"-and I underline and underscore the word "develop"-a valuable mine.

Now, of importance, then, is how is the word "develop" or how was the word "develop" characterized, and how does it assist us in setting the background for later developments in the field of mining law?

Well, as the decisions pointed out, "development" was really tantamount to "more exploratory work"; it did not mean the establishment of a commercially profitable mining venture; it was tantamount to whether or not the discovery was such that this man would be justified in expending and investing more money and time in exploration activities on the claim in the hopes of developing a paying mine.

Now, this standard was adhered to both as to nonmetallic minerals and metallic minerals until approximately 1933. In 1933 in the case of Layman v. Ellis, which was interpreted in a solicitor's opinion, in 54 Land Decisions 294, a 1933 decision, the Department of Interior split off from the prudent man theory, nonmetallic minerals such as sand and gravel, which occur so frequently in nature; and, because sand and gravel are so frequent and because they proliferate throughout the public domain and made most of the public domain thus sub