CHAPTER 5 FEDERAL AGENCY PROCEDURES IN LEASING NON-PETROLEUM MINERALS

• Jurisdiction: United States

Federal Mineral Leasing
(Nov 1971)
CHAPTER 5
FEDERAL AGENCY PROCEDURES IN LEASING NON-PETROLEUM MINERALS
Jerry L. Haggard, Esq.
Evans, Kitchel & Jenckes
Phoenix, Arizona

CONTENTS

SYNOPSIS Page

I. Introduction.	1
II. General Mineral Leasing Authorities.	2
A. Pre-Application.	3
B. Application.	6
C. Processing.	8
D. Operations Under a Prospecting Permit.	14
E. Procedures for a Preference Right Lease.	16
F. Issuance of Competitive Leases. 20	20
G. Operations under Lease.	25
1. Payments.	25
2. Operating Procedures.	27
3. Assignments, Subleases & Operating Agreements.	30
4. Relinquishments and Cancellations.	30
H. Readjustment of Terms and Renewal of Leases.	33
I. Anti-Trust Aspects.	36
J. Multiple Mineral Development Act of 1954.	38
III. Materials Act.	41
A. Bureau of Land Management.	42
B. Forest Service.	45
[Page ii]
IV. Leasing by the Atomic Energy Commission.	47
V. Geothermal Steam.	51
VI. Procedures Required by Environmental Statutes and Regulations.	54
VII. APPENDICES
Geological Survey MAP
B.L.M. Forms
F. Section 7 Proceedings—Multiple Mineral Development Act. F-1
G. Preparing and Processing Environmental Impact Statements. G-1

———————

[Page 5-1]

I. INTRODUCTION

A determination of the particular procedures which will apply to mineral activities on lands owned by the United States, requires that two preliminary determinations be made: the type of mineral in which the operator is interested, and the nature of the lands on which his activities will take place. These will determine the law, regulations, and leasing procedures which will apply. Therefore, in a discussion of leasing procedures, it is necessary to distinguish between some of those different categories. On the other hand, some of the procedures for different minerals and lands are sufficiently similar that they can be discussed together. Accordingly, the Mineral Leasing Act of 1920, the Mineral Leasing Act for Acquired Lands, the leasing authorities covered by section 402 of Reorganization Plan No. 3 of 1946, and the procedures under the various other leasing authorities listed in 43 C.F.R. § 3100.0-3 (1971), will be discussed together in this paper. The procedures under the Materials Act of 1947, uranium leasing by the Atomic Energy Commission, and the procedures under the Geotherma Steam Act of 1970 will each be discussed separately.

The three federal agencies which have the greatest, although not the exclusive, influence on mineral leasing procedures are the Bureau of Land Management (B.L.M.), the Geological Survey,

[Page 5-2]

and the Forest Service. The B.L.M., an agency of the Department of the Interior, controls eleven State Offices, each of which supervises two or more District Offices. Each State Office contains a Land Office which handles most of the mineral leasing matters. The address and states of jurisdiction for each Land Office are listed in 43 C.F.R. § 1821.2-1 (1971).

The unit of the Geological Survey primarily concerned with the supervision of mineral leasing activities is the Conservation Division which has two branches administering the leasing of minerals other than oil and gas: the Branch of Mining Operations and the Branch of Mineral Classification, each of which is divided into six regions covering the United States.¹

The Forest Service has nine Regional Offices, each being responsible for several national forests and grasslands. Each national forest and grassland is directed by a Supervisor and is separated into districts controlled by District Rangers. The location and jurisdiction of each Regional Forest and Forest Supervisor office are shown in 36 C.F.R. § 200.2 (1971).

II. GENERAL MINERAL LEASING AUTHORITIES

The regulations for the mineral leasing statutes which provide for similar leasing procedures are now combined in a single group in the Code² and, unless a difference is noted, the procedure

[Page 5-3]

described there apply to coal, potassium, sodium, phosphate, sulphur, and asphalt under the Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands. They also apply to other minor mineral leasing authorities listed in 43 C.F.R. § 3500.0-3 (1971) including those to lease hardrock minerals on certain acquired lands which the Secretary of the Interior administers pursuant to Section 402 of Reorganization Plan No. 3 of 1946.⁵³¹

A. Pre-Application.

There are numerous actions which are taken by the Bureau of Land Management, the Geological Survey and by the Forest Service which have a profound effect on the availability of and procedures for leasing federal lands, even before a mineral operator may commence any proceedings for a prospecting permit or lease. The most important of these actions are the withdrawals of public lands under the authorities assumed by and delegated to the Secretary of the Interior and to the Director of the Bureau of Land Management.

The Classification and Multiple Use Act⁵³² is now history, having expired in December, 1970. But, the withdrawal authorities still in effect, which are broad enough to make any other authority unnecessary, are the withdrawal power under the Pickett Act⁵³³ and the asserted nonstatutory withdrawal power of the President.⁵³⁴ The

[Page 5-4]

practical aspect of existing and proposed withdrawals about which the mineral operator should be concerned is what he can do about them.

With respect to existing withdrawals, if mineral leasing on the lands would be inconsistent with the purpose of the withdrawal or if the withdrawal order specifically prohibits such leasing, the lands are unavoidable for leasing.⁵⁴¹ The B.L.M. Manual, but not the regulations, makes provision for members of the public to file petitions for revocation of withdrawals. Any request for revocation will be treated as a petition— no particular form is required.⁵⁴² The advice of other federal agencies concerned with the land is obtained and, if it is determined the withdrawal should be revoked, a notice must be published in the Federal Registe Although the B.L.M. Manual says that this publication of the revocation has the same legal significance as the publication of the original withdrawal order, in view of the Notation Rule, the land will not become open for mineral lease or prospecting permit applications until the revocation notice is noted in the land office records.⁵⁴⁴

[Page 5-5]

Between the Pickett Act and the asserted nonstatutory withdrawal authority, the Secretary of the Interior, having been delegated all of the President's withdrawal authority,⁵⁵¹ can and does withdraw any area of federal lands from mineral leasing. A withdrawal may be initiated by an agency of the Department of the Interior itself or by the head of any other agency.⁵⁵² The notation of the application for withdrawal on the tract books or plat at the B.L.M. Land Office segregates the lands from all entries which the final withdrawal would prohibit.⁵⁵³ The mineral operator will have the first opportunity to know of the already existing segregation when the application is published in the Federal Register and possibly, through other publicity means. There usually is the opportunity to send written objections to the withdrawal to the B.L.M. office designated in the notice.⁵⁵⁴ In practice, however, it is rare that the objections of mineral interests will affect the decision to make the withdrawal because it is frequently just to preclude mineral activities that the withdrawal is intended.

The other important pre-application procedure is conducted by the Branch of Mineral Classification of the Geological Survey Conservation Division which classifies federal lands accordin

[Page 5-6]

to their mineral value for the purpose of preventing the disposal of federal mineral deposits under non-mineral laws⁵⁶¹ and to assure that mineral lands which are made available are disposed of under the proper mineral system.⁵⁶² The classification of land as being valuable for leasable minerals causes them to be available for competitive lease only and prospecting permit applications will be rejected automatically.⁵⁶³ Competitive leasing areas are determined by the Regional Mining Supervisor after the geologic, economic and engineering information is studied by the branches of Mineral Classification and Mining Operations.⁵⁶⁴ The result is a leasing area plat which is distributed to the appropriate B.L.M. Land Office, showing the area within which leasing may be by competitive bidding only.⁵⁶⁵

B. Application.

The application for a mineral prospecting permit is initiated by completing and filing five copies (or seven copies for acquired lands) of "a form approved by the Director, or an exact

[Page 5-7]

reproduction thereof"⁵⁷¹ in the State Land Office of the B.L.M. having jurisdiction over the particular lands.⁵⁷² The same form is used for applications for prospecting permits for any of the minerals covered in this section of this paper whether the land applied for is public domain or acquired lands, but separate applications must be filed if the tract applied for contains both types of lands.⁵⁷³ Each application must contain or be accompanied by the following:

1. Statement that the applicant is the sole party in interest, or a signed statement giving the names, qualification, and interests of the other parties.⁵⁷⁴ If the application is submitted for a corporation or by an attorney-in-fact, evidences of the applicant's authority must accompany the application.⁵⁷⁵

2. A filing fee of $10.00 and payment for the first year's rent must accompany the application.⁵⁷⁶

3. The legal description of the land must be included, or if the land is not surveyed, it must be described

[Page 5-8]

by courses and distances. If the lands are acquired lands, the application must contain the legal description from the acquiring document and be accompanied by a map.⁵⁸¹

4. An application for...