CHAPTER 11 EXTRALATERAL RIGHTS IN THE 21ST CENTURY: CONSIDERATIONS FOR TITLE EXAMINATION
| Jurisdiction | United States |
(Jan 2014)
EXTRALATERAL RIGHTS IN THE 21ST CENTURY: CONSIDERATIONS FOR TITLE EXAMINATION
Stephen J. Hull
Parsons Behle & Latimer
Salt Lake City
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MICHAEL R. MCCARTHY concentrates his environmental and natural resources practice on litigation, public lands issues, and mining law. His mining practice includes mining transactions and land, water, and permitting diligence. Mr. McCarthy has represented natural resource clients in federal court as well as before the London Metal Exchange. His pre-law experience as a mining engineer working in the mining industry at surface coal and gold mines provides insight for his representation of clients in these areas. Along with Michael J. Malmquist and Patricia J. Winmill, Mr. McCarthy authored Public Lands Rights-of-Way and Access--an Update, Rocky Mtn. Min. L. Inst., Public Land Law, Regulation, and Management (2003).
STEVE HULL practices exclusively in the area of natural resources law at Parsons Behle & Latimer. His practice focuses on mining transactions, including the purchase and sale of mining properties through stock or asset sales, and organization of joint ventures or limited liability companies for exploring and developing mining properties. In connection with such transactions, his practice actively involves associated land, water, and permitting diligence, including examination of title to mining properties. He represents both small and large mining companies and has been involved in numerous domestic and international transactions. He has presented and published several papers at past Special and Annual Institutes of the Rocky Mountain Mineral Law Foundation.
I. INTRODUCTION.
Professor Curtis H. Lindley, considered by many in the mining business to be the "Godfather" of the General Mining Law,1 divided the world of rights associated with unpatented mining claims into two general categories.2 First, "intralimital" rights, which were the focus of the paper immediately preceding this paper, govern ownership and possession of all the locatable minerals within the claim and grant nearly complete rights of use and possession of the surface for mining purposes.3 More importantly, with respect to intralimital rights, the rights of possession affix to all types of mining claims and without regard to the nature of the deposit.4 Second, "extralateral" rights, which will be the focus of this paper, are much more limited. They do not apply to millsites or to placer claims but apply only to lode mining claims. And not all lode mining claims include, or are subject to, extralateral rights.
Despite the restricted scope and application of extralateral rights, the topic is a complicated one that involves intermingled questions of law, geology, and mining practices. Although extralateral rights do not appear, and cannot be found, as recordable instruments, extralateral rights can create a situation in which the record title holder actually owns more than set forth in the recorded documents because the record title holder owns the mineral rights under an adjacent claim holder's lands via extralateral rights ("positive extralateral rights"), or where the record title holder does not own the estate set forth in the recorded documents because an adjacent claim holder owns the mineral rights in the record title holder's claim via its extralateral rights ("negative extralateral rights"). Accordingly, where extralateral rights are found, they can be powerful; even trumping the long standing rules that every mining attorney understands about the importance of priority of location and record title.
Much of the law of extralateral rights has been created through the many legal decisions interpreting the mining laws. As a result, extralateral rights law is very fact specific, and contains numerous nuances and conflicting interpretations. The legal complexity of extralateral rights is evident from even a cursory review of two of the foremost written authorities on the general principles of the law of extralateral rights: American Law of Mining5 or Lindley's work, A Treatise on the American Law Relating to Mines and Mineral Lands.
Before extralateral rights can be evaluated from a legal standpoint, including for title purposes, the geology of the area, mining claim ownership, priority for mining claims in the area, and mining claim orientation for such claims must be ascertained. With regard to geology, only certain types of deposits qualify for extralateral rights. As a result, in evaluating whether extralateral rights exist, the examiner must have knowledge of the geology of the deposit as well as a general understanding of the geology of the area. With regard to claim ownership, the claim
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owners must be identified and, as a general proposition, extralateral rights apply irrespective of claim priority for unpatented mining claims. For patented lands, either mineral or non-mineral, priority must be ascertained. Lastly, with regard to claim orientation, the title examiner must ascertain how the claims are laid out on the applicable geology to determine if extralateral rights exist.
As noted by Robert G. Pruitt, Jr., another well-known practitioner of the mining law, over thirty years ago, "[t]he question of extralateral rights is especially difficult for the title examiner, and often goes unresolved because of the inherent difficulties."6 As a result, the title examiner frequently "punts" when it comes to addressing extralateral rights in a title examination project.7 But by providing the client with information regarding the priority, location, orientation, and shape of the subject claims and adjoining claims, as well as by informing the client of the types geologic information necessary to evaluate extralateral rights, the mining lawyer drafting a title report or opinion can provide guidance that will allow informed analysis by the client of the potential rewards and risks posed by extralateral rights.
II. THE MINING LAW AND EXTRALATERAL RIGHTS.
The General Mining Law adopted and expanded the provisions of the Lode Law of 1866 relating to the right of the miner to follow the vein downward. The applicable provision of the General Mining Law states:
The locators of all mining locations made on any mineral vein, lode, or ledge, situated on the public domain ... shall have the exclusive right of possession and enjoyment... of all veins, lodes, and ledges throughout their entire depth, the top or apex of which lies inside of such surface lines extended downward vertically, although such veins, lodes, or ledges may so far depart from a perpendicular in their course downward as to extend outside the vertical side lines of such surface locations. But their right of possession to such outside parts of such veins or ledges shall be confined to such portions thereof as lie between vertical planes drawn downward as above described, through the end lines of their locations, so continued in their own direction that such planes will intersect such exterior parts of such veins or ledges.8
From this statutory language, courts have established a number of requirements that must be met in order to obtain extralateral rights. Briefly, these requirements are as follows: (1) the deposit involved must be a lode or vein; (2) the vein must apex within the claim boundaries; (3)
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the vein must dip, and not be horizontal; (4) the vein must be continuous; and (5) the vein can only be pursued downward within planes parallel to the end lines of the mining claim.
Each of these requirements is analyzed below, and as explained, the requirements may not be as strict as they seem at first glance. The requirements have been altered through judicial interpretations, which in some cases results in a broader rule. For example, some courts have recognized extralateral rights where end lines converge, treated end lines as side lines (and side lines as end lines) where the vein crossed the short axis of a claim, and created the concept of a judicial or theoretical apex where the true apex was on land not available for location. Other examples of judicial latitude can also be found and will be mentioned, where appropriate, below.
III. THE REQUIREMENTS TO ESTABLISH EXTRALATERAL RIGHTS.
A. The Deposit Must Be a Vein or Lode.
In order to establish extralateral rights, a mining claim must be located on a vein or lode, which are legally interchangeable terms.9 Generally, this means that there must be a zone of rock held in place by adjoining rock and that the zone must be impregnated with, or consist of, valuable mineral.10 The existence of a footwall and a hanging wall is important in defining that the scope and continuity of a vein or lode, but the presence of mineralized material rather than the mere existence of the contact is the key factor.
It is important to note that a deposit need not be the traditional thin-vein type of deposit to qualify for extralateral rights. In fact, a porphyry-type deposit can come within the meaning of a "vein" or "lode" as those terms are used in the General Mining Law. In Book v. Justice Mining Co.,11 the court had before it the question of the whether the lode was the Peerless fissure, a crevice from one to three feet in width having a regular course, or the surrounding "yellow porphyry," which encompassed the Peerless fissure.12 In holding that the entire yellow porphyry was the lode, the court stated:
[Y]et in many places the yellow porphyry is broken, crushed, and decomposed, with seams and fissures found in all directions, showing more or less continuity of ore, quartz rock, and mineralized vein matter throughout the entire width of the yellow porphyry belt, giving to it a specific, individual character, and by which it can be distinctly identified, and is separated from the blue or purple porphyry by which it is bounded. Within this belt of yellow...
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