CHAPTER 11 FUNDAMENTALS OF MINING LAW AND MINING TITLE OPINIONS

• Jurisdiction: United States

Mineral Title Examination
(Feb 2012)
CHAPTER 11
FUNDAMENTALS OF MINING LAW AND MINING TITLE OPINIONS
John C. Lacy
Deconcini McDonald Yetwin & Lacy
Tucson, Arizona
Joseph J. Perkins, Jr.
Stoel Rives LLP
Anchorage, Alaska

JOHN C. LACY has practiced mineral law for 45 years and has taught mining and public land law at The University of Arizona since 1972. His practice began by performing stand-up title searches and his current work frequently includes title and land status due diligence examination. John's early title work stimulated an interest in history and he has written numerous articles and given speeches on topics of mining and mineral law history as well as serving as president of the Society of Mining Law Antiquarians. His is a past president of the Rocky Mountain Mineral Law Foundation and is on the faculty and steering committee of the Foundation's Mining Law Short Course.

JOE PERKINS is a partner in the law firm of Stoel Rives LLP in Anchorage, Alaska, where he focuses his practice on the representation of mining companies, oil and gas companies, Native corporations, and financial institutions in connection with their natural resource transactions, properties, and projects. From January 2007 through May 2007, Joe was the E. George Rudolph Distinguished Visiting Professor of Law at the University of Wyoming College of Law, where he taught Oil and Gas Law. From June 1979 to October 2008 Joe practiced with Guess & Rudd P.C. Throughout his career Joe has been active in the Rocky Mountain Mineral Law Foundation. Most recently he served on the Program Committees for this special institute and for the 2010 special institute on Due Diligence in Mining and Oil and Gas Transactions, and he co-chaired the Foundation's 2007 special institute on Mineral Title Examination: Fundamentals for Practice in the 21st Century. He has authored several annual and special institute papers and he is the co-author of "Alaska Lands and Mineral Interests," Title VI (ch. 70-73), American Law of Mining (2d ed.). He also has served as the Foundation's Secretary (2001-2002), a Trustee At-Large and Member of the Executive Committee (1998-2000), an organizational Trustee (1988-1997), and the chair of the Foundation's Scholarship Committee (1991-present). Joe received his law degree from the University of Denver College of Law in 1979 and his undergraduate degree (B.S.E., Geological Engineering, with high honors) from Princeton University in 1976.

Table of Contents

I. Introduction

A. Purpose of this paper

B. Note about sources

II. Key federal statutes respecting or directly affecting federal mining locations

A. 1866, 1870, and 1872 (General Mining Law)

B. 1897, 1960, and 1976 (General Reserve Act, Multiple Use Sustained Yield Act, and National Forest Management Act)

C. 1910 (Pickett Act)

D. 1914 (Agricultural Entry Act) and 1916 (Stockraising Homestead Act)

E. 1920 (Mineral Leasing Act)

F. 1934 (Taylor Grazing Act)

G. 1947 (Material Sales Act)

H. 1947 (Acquired Lands Leasing Act)

I. 1953 and 1954 (Multiple Mineral Development Acts)

J. 1955 (Surface Resources Act)

K. 1964 (Wilderness Preservation Act)

L. 1970 (National Environment Policy Act of 1969) (NEPA)

M. 1976 (Federal Land Policy and Management Act) (FLPMA)

N. 1980 (Alaska National Interest Lands Conservation Act)

O. 1992-1993 (Omnibus Budget Reconciliation Act of 1993)

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III. Federal mining law through the lens of a status report or title opinion on unpatented federal mining locations--what authors and readers need to know

A. The organization and contents of a hypothetical (but typical) status report or title opinion on unpatented federal mining locations

1. Records and Documents Examined

2. Underlying Assumptions

a. Underlying Assumptions--Claims

b. Underlying Assumptions--Millsites

c. Underlying Assumptions--Mergers, Name Changes, Etc.

d. Underlying Assumptions--Generally

3. Ownership

a. Ownership of Unpatented Locations

b. FLPMA Compliance--Notices of Transfer

4. Analysis of Claims and Millsites

a. Land Status

b. Location Documents as Recorded in the County/Recording District

c. Maintenance Documents as Recorded in the County/Recording District (including compliance with § 314(a)(1) of FLPMA)

d. FLPMA Compliance at BLM

(1) Compliance with FLPMA § 314(b)--and 30 U.S.C. § 28g (if applicable) (as adjusted pursuant to 30 U.S.C. § 28j(c))--for the Unpatented Locations

(2) FLPMA Compliance--§ 314(a)(2)

(a) Compliance with § 314(a)(2) for the Claims

(b) Compliance with § 314(a)(2) for the Millsites

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(3) BLM Rentals (1993) and Maintenance Fees (1994-2011) ( 30 U.S.C. § 28f, as adjusted pursuant to 30 U.S.C. § 28j(c))

B. Typical Comments; Recommendations and Requirements

1. Comments--Extralateral Rights, Conflicting Locations, and Apparent Unclaimed Lands

a. Extralateral Rights

b. Conflicting Locations

c. Apparent Unclaimed Lands of Potential Concern

2. Comment--Nature of Possessory Interest

3. Comment--Management Authority of the United States

4. Comment--Surface Interests in the Lands

5. Comment--Access

6. Comment--Water Rights

7. Additional comments to include in a status report or title opinion on unpatented federal mining locations

8. Summary of Potential Defects; Recommendations and Requirements

IV. Title opinions on patented federal mining locations, other fee lands, and severed estates--what authors and readers need to know

A. Generally

B. Use of Title Insurance

V. Negotiating the scope of a title project and tips for performing title due diligence in a cost-effective manner

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SCHEDULES AND APPENDICES

SCHEDULE A-1: Claims [form]

SCHEDULE A-2: Mill Sites [form]

SCHEDULE B: BLM Maintenance Fees [form]

APPENDIX 1: Discovery

APPENDIX 2: Locatable Minerals

APPENDIX 3: Types of Locations

APPENDIX 4: Traditional Assessment Work

APPENDIX 5: Small Miner Exemption and some of its Associated Hazards

APPENDIX 6: Moratorium on Patenting

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I. Introduction

A. Purpose of this paper

The purpose of this paper is to provide simultaneously both an introduction to federal mining law and an introduction to mining title opinions. The authors believe that there are synergistic benefits of doing this, as it is often in the context of preparing or reading one's first status report or title opinion on unpatented federal mining claims that one is forced to think clearly and precisely about (1) the conditions precedent to the establishment of a valid unpatented federal mining claim or mill site, (2) the nature and scope of the possessory interest acquired by the location of an unpatented federal mining claim or mill site, and (3) the numerous limitations and conditions subsequent that effectively burden said possessory interest and make it precariously subject to defeasance.

B. Note about sources

This institute is the fifth special institute sponsored by the Rocky Mountain Mineral Law Foundation (RMMLF) that is devoted entirely to mineral title examination,¹ and it follows close on the heels of a 2010 special institute on the subject of conducting "due diligence" in connection with natural resources transactions.² The proceedings from all of these special institutes, as well as the 57 prior annual institutes of the Foundation, are available on RMMLF Digital Library.³ Any preparer of status reports or title opinions on unpatented federal mining locations should become familiar with these publications.

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Of course, no preparer of a status report or title opinion on unpatented federal mining locations can carry out that work productively without ready access to the American Law of Mining (2d ed. 1984) (updated annually by volunteer RMMLF authors) (6-volume treatise edited by the RMMLF and published by Matthew Bender).⁴

Another book that remains useful as an introduction to federal mining law and its history is Terry S. Maley, Mineral Law (6th ed. 1996). This edition is out of print, but copies occasionally can be found for sale from Mineral Land Publications, P.O. Box 1186, Boise, Idaho 83701, or from other sources of used books.

Finally, four other sources which are often useful when preparing mineral title opinions, depending on the nature of the issue that must be addressed, are as follows:

• Howard R. Williams & Charles J. Meyers, Oil and Gas Law (2011) (updated annually) (8-volume treatise) (updated and revised by Patrick H. Martin and Bruce M. Kramer);

• John S. Lowe, Oil and Gas Law in a Nutshell (5th ed. 2009);

• George J. Morgenthaler, Oil and Gas Title Examination (1982);

• Curtis H. Lindley, A Treatise on the American Law Relating To Mines and Mineral Lands Within the Public Land States and Territories (3d ed. 1914) (3-volume treatise) (commonly referred to as Lindley on Mines).

The first two are readily available. The last two have become collectors' items.

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II. Key federal statutes respecting or directly affecting federal mining locations ⁵

A. 1866, 1870, and 1872 (General Mining Law)

The General Mining Law⁶ is derived in large part from the Lode Law of 1866,⁷ the Placer Act of 1870,⁸ and the Mining Law of 1872.⁹ The fundamental offer made under the General Mining Law remains in effect today:

Except as otherwise provided, all valuable mineral deposits in lands belonging to the United States, both surveyed and unsurveyed, shall be free and open to exploration and purchase, and the lands in which they are found to occupation and purchase, by citizens of the United States and those who have declared their intention to become such, under regulations prescribed by law, and according to the local customs or rules of miners in the several mining districts, so far as the same are applicable and not inconsistent with the laws of the United States.¹⁰

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How one initially accepts this 19th Century offer in the...