CHAPTER 13 TITLE EXAMINATION OF ANCILLARY LANDS, RIGHTS, AND AGREEMENTS
| Jurisdiction | United States |
(Feb 2012)
TITLE EXAMINATION OF ANCILLARY LANDS, RIGHTS, AND AGREEMENTS
Parsons Behle & Latimer P.C.
Salt Lake City, Utah
Patricia J. Winmill
Parsons Behle & Latimer P.C.
Salt Lake City, Utah
ELIZABETH SCHULTE is an attorney with Parsons Behle & Latimer in Salt Lake City. She is a member of the Environmental, Energy and Natural Resources department and concentrates her practice on water law and environmental and natural resource litigation. She is currently serving as the chair for the Environmental Committee of the Utah State Bar's Energy, Natural Resources and Environmental Law Section. She graduated with a J.D. degree from the University of Utah, where she was a Dewsnup Fellow, received the Stegner Certificate in Environmental Law and was editor-in-chief of the Journal of Land Resources and Environmental Law. In 1997, she graduated with a master's degree in natural resources sociology from Utah State University and received an Environmental and Natural Resources Policy Certificate. She graduated from Hobart & William Smith Colleges with a bachelor's degree in sociology in 1990.
PATRICIA J. WINMILL is a shareholder in the Environmental, Energy and Natural Resources department at Parsons Behle & Latimer in Salt Lake City. Her practice includes public land, mining, title and access issues. The focus of Pat's practice is the acquisition, title review and maintenance of the mineral, surface and access rights necessary to support a mining, oil and gas, or industrial project. She has had substantial experience working with the Bureau of Land Management in obtaining and managing various property rights in federal land, including mineral leases, mining claims and rights of way. She is experienced in representing clients in the hardrock mining, coal, and oil and gas industries. Pat also has a considerable background in representing clients in large resource-related transactions, from both a diligence and a negotiating and drafting perspective. Pat is a graduate of Idaho State University (B.A., with highest honors, 1976) and the University of Utah (J.D., 1980), where she was a member of the Utah Law Review and Order of the Coif.
When mining in the western United States, two things are virtually inevitable: dealing with the federal government and finding water. Because much of the West is owned by the United States, mining in the region necessarily requires the use of federal land for access and the other ancillary rights necessary to support a mine. And because water is scarce in most parts of the West, the operator must also consider how it will obtain the water necessary to support its mining and processing facilities. This paper addresses how a mine operator can obtain these rights and the issues a title examiner must consider in examining title to those rights.
I. ACCESS AND ANCILLARY RIGHTS UNDER THE MINING LAW
A. Mill Sites
The owner of an unpatented or patented mining claim may obtain land necessary for a variety of mining related facilities and activities by staking a mill site on public land.1 Examining title to a mill site involves much the same process as is applied to a mining claim and extends to both a review of county and BLM records.
1. Examination of the Record
The first step in the process of examining title to a mill site is to determine that the land is open public domain. A review of the historical index and master title plat is necessary to determine whether the land is open to location. Care should be taken in evaluating any withdrawal or other segregation of land to ensure that it authorizes the staking of mill sites. As a general rule, withdrawals that authorize mining claim locations also allow mill site locations, but there are some exceptions.2 Although mining claims can often be located on lands in which the federal government owns only the mineral estate, e.g., Stockraising Homestead Act lands,3 mill sites cannot be located on such severed mineral estates.4 In addition, a review of the BLM's mining claim geographic index will identify any conflicting claims held by third parties.
As with mining claims, state statutes typically specify how the mill site must be marked on the ground and what must be contained in the location notice. State statutes also require that a mill site claimant record a notice or certificate of location of the site within a specific time frame, and FLPMA requires that these documents be filed with BLM within in the same 90-day time frame applicable to mining claims.5 The current maintenance statutes require that the FLPMA filing be accompanied by both the claim location fee and the initial annual maintenance fee.6 Failure to make these filings and payments results in a conclusive presumption of
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abandonment of the site.7 Like mining claim notices and certificates, the recorded mill site location notice or certificate must contain a description of the site sufficient to locate the claim.
Currently, mill sites are held by payment of the same claim location and maintenance fees that apply to mining claims, and failure to timely make such a payment results in an automatic invalidation of the site.8 Historically, holding an unpatented mining claim required performance of annual assessment work, but no such requirement was imposed on mill sites. Although post-FLPMA regulations required the claimant to file annual notices of intention to hold a mill site, FLPMA itself did not require such filings.9 IBLA construed these varying requirements to mean that a failure to make an annual filing did not result in the automatic invalidation of a mill site, but that BLM could give notice of the deficiency and that failure to respond timely to such a notice could result in invalidation of a mill site.10
2. Non-Record Considerations
There are two types of mill site claims - the "dependent" mill site, which is located in connection with a patented or unpatented lode or placer mining claim and the "independent" mill site, which need not be located in connection with a mining claim, but which can only be used for a quartz mill or reduction works.11 A dependent mill site is invalid if the unpatented lode or placer claim with which it is associated is invalid.12 Independent mill sites are rare, and the title examiner will likely never have cause to consider the title to such a parcel.
A mill site can be as large as five acres but is limited to only such acreage as is reasonably necessary and used for mining or milling purposes.13 BLM's regulations specify that each two and a half acre portion of a mill site must be used or occupied for mining or milling purposes.14 While this regulation does not technically limit the size of a mill site, it does restrict a miner from claiming the full statutory size, if its operations can be accommodated on a smaller parcel. On the other hand, a mining claimant can stake any number of mill sites, so long as the land is necessary or used in connection with mining or milling.15
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A mill site must be located on land that is non-mineral in character;16 however, lands known to be valuable for leasing act minerals are available for mill site location.17 Land may be unavailable for location of mill sites, even though no discovery of a valuable mineral has been made on the claim. This is because while a discovery must be supported by exposure of the mineral, the mineral character of land can be established by geological inference.18 The geological inference standard often leads to the anomalous result of land on which neither a valid mining claim nor a valid mill site can be established.
A dependent mill site located in connection with a lode claim cannot be contiguous to the vein or lode.19 The contiguity restriction does not preclude a mill site abutting a lode claim, so long as it does not abut the lode or vein.20 A mill site associated with a placer claim may abut the placer deposit. Independent mill sites are not subject to the contiguity rule.
The locator's rights to a mill site do not begin until the land is used in good faith for mining and milling purposes. Courts have extended the concept of pedis possessio to mill sites, giving a mill site locator a reasonable period of time within which to commence its mining or milling use;21 however, what is a reasonable period of time is not clearly articulated in the case law.
The title examiner should also consider whether the type of use of a mill site is sufficient to support it. The primary limitation is that the use be reasonably needed and related to mining, but there are a few seemingly mining related uses that will not support a mill site. For example, if water is essential for the working of the mine or mill, a mill site claimed for a water dam may be valid.22 On the other hand, a ditch to carry water necessary to support the same operation will not independently support a mill site.
B. Ancillary Use of Unpatented Mining Claim
A mining operator is entitled to use the surface of unpatented mining claims for ancillary facilities related to mining, and many modern mining operations are constructed on that basis, i.e., the operator has located all or a significant portion of its mining related facilities on unpatented mining claims. Yet there are risks associated with this practice that mining operators must consider.
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The first, and perhaps obvious, risk is that the mining claim is invalid because it is not supported by a discovery. Modern, large-scale operations are often located on large blocks of claims that contain dispersed mineralization surrounded by other lands that either have not been explored or are not sufficiently mineralized to support a mining claim. At the same time, the lands may be mineralized enough to preclude locating a mill site. A common practice is to hold these lands by locating mining claims. In doing so, the operator is taking a risk...
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