V. ANNOUNCED DEPARTMENTAL POSITION RE DISCOVERY AND APPLICATION OF PUBLIC LAW 167-1957

Unfortuantely, after enactment of Public Law 167, and after both the U.S. Forest Service and the Department of the Interior had begun to administer the law, Congress was deluged with complaints from disgruntled claim owners that departmental application or administration of the act actually subverted and adulterated the purposes for which it had been enacted, and in fact, the law was being used as a vehicle to erode the traditional law characterizing "valuable discovery."

To the purpose of investigating these allegations, the Subcommittee on Mines and Mining of the Committee of Interior and Insular Affairs, House of Representatives, 85th Congress, held a hearing January 31 and February 1, 1957, on the administration and operation of Public Law 167.

At the hearing Mr. Metcalf contended that the Department was requiring a discovery of commercial minerals eligible for patent to support a valid claim. Mr. Shafer on behalf of Department of Interior said: "No, sir; not necessarily eligible for patent."

"Mr. METCALF. How far do you?

"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 merely require a showing of minerals-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. 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."

As was further said by Mr. Bradshaw on behalf of the Department:

"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."

Again, Mr. Bradshaw.

"If we find that the man has 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 possibility-not a probability, but a reasonable possibility-that he can develop commercial ore, then that man is free to go ahead just on his original location without being affected by this act."

On the burden of proof, Mr. Bradshaw said:

"We order a hearing, and we have the burden of proof that the land is nonmineral or that no discovery has been made."

In response to a question by Mr. Engle as follows:

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

"Mr. BRADSHAW. 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 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."

VI. ACTUAL DEPARTMENTAL INTERPRETATION

LAW 167

AND ADMINISTRATION OF PUBLIC

From the above hearing, we know what the Department stated it intended to do in actually administering Public Law 167. Let us look at the record of cases and departmental decisions and find out whether they have actually adhered to what they said they would.

A. Department regulations

It is interesting to note the development of regulations relating to discovery and how additional requirements have been imposed with no apparent substantive change in the statute, pursuant to which the regulations were enacted.

Title 43, part 185, as amended, to and including February 1, 1951, had this to say about a discovery:

"No lode claim shall be located until after the discovery of a vein or lode within the limits of the claim, the object of which provision is evidently to prevent the appropriation of presumed mineral ground for speculative purposes, to the exclusion of bona fide prospectors, before sufficient work has been done to determine whether a vein or lode really exists." (Par. 185.12.)

After enactment of Public Law 167, the following regulation was enacted October 4, 1956, as to "common varieties":

"Common varieties' as defined by decision of the Department and of the courts include deposits which although they may have a value for use in trade, manufacture, the sciences, or in the mechanical or ornamental arts do not possess a distinct, special economic value for such use over and above the normal uses of the general run of such deposits. Section 3 of the law has no application where the mineral for which a mineral is made is carried in or borne by one of such 'common varieties'.'

Now it is important to compare this with the law as written by Congress which merely excludes "a deposit of 'common varieties' of sand, stone, gravel, pumice, pumicite, or cinders."

As used in the act it is apparent that "common varieties" refers to those varieties of stone, sand, etc., which are widespread in origin still do not come within the definition of "common varieties" if the deposit has some property giving it a distinct and special value, which according to the administrative hearings on the law includes limestone suitable for cement. In other words, those minerals valuable for their inherent mineral qualities.

Now it is apparent that the regulations enacted first in 1956 characterize "common varieties" by use rather than by frequency of distribution.

It is evident that characterizing a deposit of stone or sand as to use rather than to frequency of location and thus economic value, completely changes the law as it was enacted by Congress.

On September 14, 1962, departmental regulations defining "common varieties" were again amended to superimpose upon the law the following requirements: "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, 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 industry 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."

B. Departmental position on “bobtailing” claims

In 1957 the Department denied that Public Law 167 would be used as a vehicle to invalidate claims. U.S. v. Carlile, A-28012 (June 10, 1960), certainly contradicts this position. In that case the Department in effect overruled Eli Mining and Land Company (194 U.S. 220 (1904)) which had cited with approval from Clipper Mining Company (22 L.D. 527, 528) and said:

Undoubtedly when the Department rejected the application for a patent it could have gone further and set aside the placer location, and it can now by direct proceedings upon notice, set it aside and restore the land to the public domain. But it has not done so, and therefore, it is useless to consider what rights other parties might then have." (194 U.S. p. 223.)

Up to the Carlile case, the Department had on various occasions on patent applications refused to strike down the claim as invalid and void but rather as inadequate for patent purposes but permitted the claimant to retain his rights on the location.

However, the Department overruled the Clipper case and in effect Supreme Court approval of the case, and stated that a claim which was rejected for patent because of lack of discovery would be declared invalid and void.

What are the hazards imposed by this decision? A hypothetical situation will illustrate this: Claimant stakes a location and commences to produce material from the location. The claim is subject to contest and claimant fails to prove that he can mine the product at a profit. Under Carlile the claim is declared invalid.

In Tucson, March 23, 1965, a Government panel declared that in that situation the claimant would be liable for damages in trespass.

"If it was found that he 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." (Pay Dirt, Apr. 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. Brice said he knew of no instance in which willful trespass charges had been sustained." (Id., Apr. 23, 1965.)

The dilemma presented by the Carlile decision and the Panel's position is apparent:

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

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. He can be subject to a contest before a profitable mine is ever developed and thus lose whatever rights he acquired up to that time.

C. Changes in the definition of "valuable mineral deposits"

It was clear at the hearing in 1957 that commercial ore was not the criterion by which the validity of a claim was to be measured. Rather the Department would adhere to pre-1955 law as represented by Castle v. Womble, supra, and the prudent man theory. However, actual departmental practice certainly contradicts this assumption.

The marketability and profitability tests in the field of nonmetallic minerals have been applied to pumice U.S. v. Pumice Sales Corp. and U.S. v. Crystallite Aggregates (A-27578, July 28, 1959); gypsum-U.S. v. Tom Mulkern (A-27746, Jan. 19, 1959); limestone-U.S. v. Charles L. Seeley (A-28127, Jan. 28, 1960); clay-U.S. v. John B. Kathe, Jr. (A-27744, Nov. 19, 1958); building stoneU.S. v. Phillip Jungert (A-28199, Apr. 14, 1960); tuff-U.Ś. v. D. G. Ligier (A-29011, Oct. 8, 1962); distinctive sand and gravel-U.S. v. Henderson (A–28496, Jan. 13, 1961); pink quartz-U.S. v. Frank Melluzzo (A-29074, May 20, 1963). Nor has the marketability and profitability test been confined to nonmetallic minerals. Thus, in U.S. v. Amco Mining and Milling Company (A-28405, June 27, 1960), it was said:

"The finding of mineralization in place between walls of country rock which may induce a prudent person to undertake further exploration in hope of uncovering greater values is not sufficient to constitute a discovery unless the mineralization exposed is sufficient to justify a person of ordinary prudence in the further expenditure of his labor and means with the reasonable prospect of success in developing a valuable mine."

(See also: U.S. v. Ahlstrom A-28490, Dec. 16. 1960.)

U.S. v. Altman Department of Interior decision, BLM contest-24 (N. Mex., March 18, 1960), went even further where a large body of low grade copper ore was involved. The Director held there was no discovery and he said: "A showing must reveal the probability of a mineral deposit of commercial value, in other words one that can be mined at a profit ** *.'

Compare this statement with the statement of Mr. Bradshaw, page 36 of the hearing:

"If we find what we consider to be a valid discovery-which does not have to be commercial. It may be a mere show of mineral."

In U.S. v. Irving Rand, Contest No. 05303-A (Apr. 26, 1962)-mines were successfully operated prior to World War II, but cost of producing gold since then has depreciated the value of the claims to the point that neither the vein nor the mine could be successfully operated. However, at the time of the contest, the Board held:

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

U.S. v. Robert E. Anderson, Jr., Case No. J-28260, involving perlite where the Board said:

“The value which sustains a discovery must be such that with actual mining operations under proper management a profitable venture may reasonably expect to result." (Cf. U.S.A. v. Kenneth O. Watkins, Oregon Contest No. 05987, Nov. 2, 1962.)

Contradistinguish departmental 1957 announcements with the following which in one or more of the Department's regulations and/or decisions have superimposed on congressional enactments:

1. Is the mineral accessible and how close is it to the market?

2. Can it be marketed at a profit?

3. Is the market parochial-it must extend beyond the local area.

4. Is the claimant making bona fide efforts to produce and market the min

5. Is the mineral sufficient in quantity and quality to constitute a discov 6. Is there a present demand?

7. Is the land more valuable for the mineral resources than for the vegeta or nonmineral surface resources?

8. What other factors are there which would mitigate against a discovery All of the above tests have, in one or another of the cases cited in this st ment, been utilized to declare invalid a claim.

D. Changing evidentiary rules

While in 1957 the Department announced to Congress that it had the "bur of proof" to prove the claimant's land was nonmetallic in character and t the only proof required by the claimant was showing of mineral which wo induce a prudent man to develop further, let us again look at the record. U.S.A. v. Kenneth O. Watkins, supra, the BLM in that decision enunciated t rules which are particularly distressing:

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

2. The Board held "that evidence of timber values on the surface of a mini claim is admissible as a proper element for consideration in determining t weight and credibility to be given the claimant's testimony.'

The reason these evidentiary rules enunciated in Watkins should be criticized s sharply are the ramifications which develop from enforcing these rules upon a administrative ruling level. Under the Administrative Procedures Act, whil recourse to the courts can be had, nevertheless, the claimant must exhaust al administrative procedures before any appeal to the Federal judiciary can be made After the matter has been decided at a departmental level, it goes to a Federa court clothed with presumptions that at least as to the facts, the Department's decision is correct. It is presumed that factually the Department has made a correct decision. If the Department rests its decision on the weight of the evidence under the "clear and unequivocal proof rule," it is obvious that the claimant is put at a distinct disadvantage because the Department can characterize the claimant's proof in almost any given case as not measuring up.

Moreover, the decision may rest on the "credibility" of the witnesses and should the surface resources of the claim-as is often the case, have some value for some other distinct commercial use, e.g., grazing, timber, water, or recreational purposes, the Department can rest its decision on these facts and state that it did not believe the claimant or his witnesses. Again, this type of ratiocination would almost be immune to attack at a district court level.

E. Rarity Inherent mineral qualities as criteria

While it was patent that Congress characterized "common varieties" by their characteristics of widespread occurrence in nature and thus left rare minerals of the same general nature still open to discovery. Again this has not been put into application. Travertine is an almost pure carbonate of lime much like marble. It occurs in only two or three places in the United States in sufficient quantities to be commercially valuable. However, a contest was instituted in Montana to declare void a location based upon a discovery of this specific mineral. Marble was specifically excluded from "common variety" by Edward A. Woolsey, Director of the Bureau of Land Management, in appendix 1 to the 1957 hearing when he said:

"Materials like marble, monazite, sands, and gypsum which are essentially mineral in character, because of special properties or because they contain or are composed of mineral elements not ordinarily in the common forms of such materials, would remain subject to the general mining laws."

Regarding use, it is again apparent that Congress intended to leave open to discovery limestone suitable for cement. At a meeting between small mine operators, the BLM and the U.S. Forest Service, in Tucson, March 23, 1965, a Mr. Ashby on behalf of the Department stated:

"A mineral of widespread occurrence, as I have read the definition, includes limestone suitable for the manufacture of cement, and many others in the northern part of the State like vast deposits of pumice and cinders and things like that which we consider to be common variety."

VII. CONCLUSION

In conclusion, it is respectfully submitted to this task force that Public Law 167 was not designed to change existing mining law represented in the statutes enacted in 1872. It was evident that Public Law 167 did not purport to change existing law as to what constituted a valuable discovery and that Congress intended to adhere to the prudent man test of discovery as enunciated in Castle v. Womble and approved in Chrisman v. Miller. Congress, in enacting Public Law 167, defined "common variety" as to occurrence, not as to use. Departmental decisions equating use with "common variety" are clearly violating the intent of the law. Departmental regulations and cases superimposing requirements of marketability and profitability to characterize a "valuable discovery" are in clear conflict with established case and departmental law upon which miners for generations have depended as precedent.

Proof requirements to support a valid location have been radically changed by recent departmental decisions. Departmental positions place any and every claimant in the dilemma of producing a mineral in the jeopardy of criminal or civil sanctions for trespass.

The policy of the Department, if permitted to continue, will completely deter small or large miners from continued exploration and exploitation of the public lands. The policy of locations evidenced in the law of 1872, has given rise to tremendous economic development of the West. Any policy which deters further exploitation and exploration is inimitable to the interests of the Rocky Mountain region where mineral wealth still represents the second largest area of economic interest..

It is evident that the Department of the Interior and the U.S. Forest Service have done an about-face in their position declared at the 1957 hearing and in effect are guilty of taking the precise action of which they were accused at that time: jeopardizing small mine operators and prospectors throughout the United States.

ཟླ

It is evident that the disheartening trend evidenced in regulations and departmental decisions must be reversed by specific congressional action redefining "common variety" and "discovery" along traditional lines.

Senator GRUENING. Mr. Sahinen, we will be very happy to hear you, and we know that you are a very knowledgeable witness and that whatever you say will be helpful.

STATEMENT OF UUNO M. SAHINEN, ASSOCIATE DIRECTOR, MONTANA BUREAU OF MINES AND GEOLOGY

Mr. SAHINEN. Senator Gruening, Senator Metcalf and Mr. French, I am Uuno M. Sahinen, associate director of the Montana Bureau of Mines and Geology, and a member of the Mining Association of Montana.

The Montana Bureau of Mines and Geology is a public service agency for the State of Montana. Its purpose is to assist in developing the State's mineral resources. It is vitally concerned with anything that concerns that development. Of particular interest to us at this time is the threat to the incentive to develop certain mineral resources by removing them from the category of mineral resources locatable under the mining laws of the United States. This has been done by misinterpretation of certain terms used in Public Law 167, more commonly known as the Multiple-Use Act. Whether this misinterpretation is deliberate, with the aim of nullifying the mining laws of 1872 and eventually placing all minerals in the leasing program, or whether it is due to ignorance of technical terms of the English language, I will leave to others to discuss. I, myself, will attempt to give clear, concise definitions of the terms in question.