CHAPTER 10 HARD MINERALS--A PRACTICAL APPROACH TO TITLE EXAMINATION
| Jurisdiction | United States |
(Apr 1982)
HARD MINERALS--A PRACTICAL APPROACH TO TITLE EXAMINATION
Pruitt & Gushee
Salt Lake City, Utah
This paper addresses the practical considerations of title examination of the so-called "Hard Minerals" which, for the special purposes of this institute, have been defined as including all minerals except oil, gas and coal. My intention is to educate the reader based upon my experiences during a career in mineral title examination, and the experiences of others which have come to my personal notice. I have a small placard above my desk which defines "education" and "experience" as follows:
Education is what you get from reading the small print;
Experience is what you get from not reading it.
I also intend to summarize briefly some of the information contained in earlier papers, to call your attention to practical considerations which might have escaped your notice.
I don't know of any mining attorney who would advise his client to make a general warranty of title with respect to the client's rights to a so-called "hard mineral" deposit (particularly unpatented mining claims), even if the client felt strongly that he was the present owner and had done all necessary things to maintain his rights in the particular mineral deposit. Yet the title examiner is often expected to render a title opinion which, in effect, warrants that a designated party has full title to the mineral deposit in question. In the case of most "hard mineral" deposits (particularly unpatented mining claims) this seldom can be done, and the prudent title
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examiner will hedge his opinion in the most awkward manner to avoid confronting this issue. Still, the client is entitled to an enlightened legal opinion upon which he can reasonably rely in his further dealings with the mining property he intends to purchase or improve at great cost. My paper is intended to give the reader some practical insights into how to approach that awesome goal.
COMMENTS UPON THE SOURCES OF TITLE
The practical considerations of title examination differ considerably according to the source and type of ownership involved. In the "public land" states of the Rocky Mountain region, ownership of land can be conveniently divided into four categories: federal, state, indian and private. The laws, rules and procedures for mineral ownership in each of the four categories are quite different. For instance, one seeking to acquire title to hard minerals on federal lands will normally locate mining claims (although mining leases and mineral contracts are necessary to acquire certain specified types of mineral deposits). On state lands the normal procedure will involve non-negotiable mining leases, either by over-the-counter applications or at scheduled competitive sales. On indian lands the normal procedure is a scheduled competitive lease sale, provided that the tribe wants to grant such a mining lease; negotiations of lease terms is seldom possible. On private lands (assuming there is private ownership of the underlying minerals) the normal procedure is a negotiated mining lease, generally without any competitive bidding, but involving lease terms which may differ greatly from other mining leases in the vicinity.
As you can readily see, some procedures for acquiring and transferring rights in hard mineral deposits are highly formalized, with careful agency review at every step; in the case of mining claims all steps are self-initiated and generally lacking in any
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review (until the axe falls); private lease negotiations are generally on an ad hoc basis, with the risk that the legal consequences are not always comprehended by the parties. The point to remember is that the practical title examiner must be fully cognizant of the "source" of a particular mineral title; and he must never confuse the different categories of ownership, or the very different procedures and record sources which must be consulted and understood in deciphering a mineral title and rights of the various parties.
Federal Lands
The federal government's title to land is seldom subject to question; it is the encumbrances and claims upon that title which generally concerns the title examiner. Since ownership on the basis of bare adverse possession is not possible on federal lands1 , you will ordinarily consult the official records of the BLM Land Office (as well as the local county records for subsequent transfers) to determine whether claims or encumbrances have been properly created under authority of some law or regulation. Many such encumbrances on federal lands are quite well documented: patents, mining leases, some rights-of-way, and withdrawals; some encumbrances (and claims) are poorly documented: mining claims, in-place state land grants, grazing permits and certain improvements; and a few encumbrances may not be documented at all: public roads and highways, ditches and canals.
Focusing our attention upon encumbrances and claims upon the hard mineral deposits in federal lands, we see that three separate and quite different classes exist:
1. Unpatented Mining Claims (four types, each with quite different considerations) cover all valuable mineral deposits, except those which must be acquired
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under special laws (the following two classes). Procedures for acquiring, holding and transferring mining claims are loose and poorly regulated, presenting some very difficult problems to the title examiner.
2. Mining Leases are issued only for deposits of oil, gas and coal (not covered by this paper), phosphate, sodium and potasium, gilsonite and sometimes sulphur2 . All mining leases are issued and transferred under tight agency controls. The laws and regulations are complex but, once understood by the title examiner, should pose few problems. In the special case of federal "reacquired lands" all mineral deposits are leased under special regulations3 , but this situation is rare in the public lands states and will not be discussed here.
3. Mineral Contracts are issued for certain so-called "common varieties" of stone, sand and gravel, pumice, cinders and clay4 . Such contracts are generally outright sales of the mineral deposit in-place to be removed within a specified time, similar to timber sales. Since issuance and review of such contracts eminates at a lower agency level, and there are frequent conflicts with the rights of mining claims, title problems can be great. Fortunately the title examiner is rarely asked to give an opinion on a mineral contract.
Peculiar title problems can arise when two or more of these classes of mineral deposits exist in the same federal lands (as they frequently do). Theoretically operations of the different classes of mineral deposits are expected to co-exist peacefully, without conflict; as a practical matter they seldom can, and the rights and priorities among such conflicting operators are not covered by the governing laws or regulations.
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State Owned Lands
Title to state owned lands and mineral deposits always derives from some type of federal grant, and may be adequately documented in BLM Land Office records (Selection Lists, In Lieu Selections and Confirmatory Patents) or may be virtually undocumented (in-place grants of School Sections and ownership of beds of navigable bodies of water). In many cases the state will have been sold its lands into private ownership, and may, or may not, have reserved the mineral rights and necessary rights of entry to prospect and mine. In Utah a 1919 statute5 required conveyances of state lands to reserve all minerals to the state, creating peculiar title problems in those rare cases where a patent issued after 1919 contains no express reservation of minerals, but the minerals are nevertheless deemed reserved to the state by implication under the statute.6
Each state has its own body of laws and regulations governing the acquisition and transfer of mining rights on state owned mineral deposits. Ordinarily the practice is to grant a uniform non-negotiable mining lease to the first applicant, or to sell such uniform mining leases at a scheduled competitive sales. Some states engage in a charade by requiring an unnecessary "field staking" (as though you were locating a mining claim) to qualify for a mining lease.7
All states issue mining leases only for a specified metal or mineral suite, and separate mining leases are issued for different mineral deposits in the same lands. Of course, state mining leases generally authorize the recovery of by-products and other minerals which are so intimately intermingled with the primary leased mineral deposit that they must be extracted in the course of mining.
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State procedures differ widely with respect to how leasehold rights can be assigned and whether overriding royalties or other burdens can be created. Some states require that all assignments of leaseholds and subinterests must be submitted to and approved by the appropriate state agency before they will be deemed effective8 .
Indian Lands
Indian ownership of lands and mineral deposits is the result of treaties, official proclamations and federal grants, which are generally well documented in the BLM Land Office records. In many instances former tribal lands have been conveyed to individual tribal members (allotments), or may have been opened to sale and entry by the general public. A few indian reservations have been reduced considerably in size or entirely eliminated; and recently some indian tribes have asserted ownership to lands which were never formally recognized as indian tribal lands.
All mineral deposits in indian lands are leased by the tribe (or by the individual allottee or his heirs) under careful review by a supervising agent of the Bureau of Indian Affairs (BIA). The BIA publishes formal rules9 and printed lease forms for all types of mineral deposits, but...
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