Chapter 8 Common vs. Uncommon Mineral Determinations and Implications for Developing Locatable or Saleable Mineral Deposits

• Jurisdiction: United States

Chapter 8 Common vs. Uncommon Mineral Determinations and Implications for Developing Locatable or Saleable Mineral Deposits
Randall E. Hubbard Davis Graham & Stubbs LLP Denver, CO

RANDALL E. HUBBARD is a mining lawyer at Davis Graham & Stubbs LLP in Denver. Randy's practice is concentrated primarily in domestic mining law, representing clients in the business of exploring for and developing hard-rock minerals, as well as industrial minerals, coal, uranium, and other energy minerals, primarily on federal lands in the United States. Mr. Hubbard has authored or co-authored seven papers presented at Rocky Mountain Mineral Law Foundation Annual Institutes or Special Institutes. He is a contributing author to The American Law of Mining. Mr. Hubbard was the chairperson of the committee that prepared the Rocky Mountain Mineral Law Foundation Form 5 LLC Agreement, published in 2015. He has also chaired and made presentations at three Rocky Mountain Mineral Law Foundation workshops, one on the BLM's 3809 regulations in January of 2001, and the others on the Form 5 LLC Agreement in October of 2015, in Denver, and in March of 2016, in Toronto. From 20002005, Mr. Hubbard was an adjunct professor at the University of Denver Sturm College of Law, teaching a mining law course. He has served on the Foundation's Board of Directors, and also as a member of the Special Institutes Committee and on the editorial board of the Rocky Mountain Mineral Law Foundation Journal. He was the program chair for the 54th Rocky Mountain Mineral Law Foundation Annual Institute. In 2009 and 2010, he was on the faculty for the Rocky Mountain Mineral Law Foundation's Mining Law Short Course, and in 2014 he was the chairperson of that week-long short course.

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Introduction

Mining practitioners in the western United States whose clients seek to acquire rights to minerals on federal lands are generally familiar with locatable minerals (under the General Mining Law of 1872, 30 U.S.C. §§ 21-47) (the "Mining Law"), as well as federal leasable minerals under the 1920 Mineral Leasing Act, 30 U.S.C. §§ 181-287 (the "Mineral Leasing Act"). Many practitioners, however, including the author, have less familiarity with the disposal of a third category of minerals, saleable minerals, under the Materials Disposal Act of 1947 (the "Materials Act")¹ as amended by the Surface Resources Act of 1955 (that portion of the act amending the Materials Act known as the "Common Varieties Act").² Moreover, many practitioners (the author included) are not well-versed in the interplay between common and uncommon varieties of minerals established by the Common Varieties Act and agencies' implementing regulations, and the complex and confusing issues that arise in trying to make a determination as to whether a particular mineral is a common variety (and thus saleable by the federal government under the Materials Act) or an uncommon variety (and thus locatable under the Mining Law).

Against that backdrop, discussed below are some of the issues that arise when attempting to determine whether a particular mineral deposit is locatable or saleable, which if nothing else serve to illustrate the difficulties a client, and its counsel, will likely face in trying to make the correct decision. The last paper presented at a Special or an Annual Institute to address in detail the question of when so-called common variety minerals become uncommon (and thus locatable rather than saleable) was a paper written by Bill Marsh and Tom Erwin and delivered at the 38^th Annual Institute in 1992.³ This paper borrows heavily from that one in terms of structure, and the status of the law at that time, and in many ways serves as an update of that analysis now that 30 years have passed. The focus is on (1) the relevant statutory language, (2) the relevant regulations, and (3) IBLA and court decisions interpreting items (1) and (2) since that time. Also included are a couple of "case studies" examining specific IBLA decisions which highlight (but don't necessarily resolve) many of the referenced issues. All of this will hopefully shed a little more light on the challenge for a mineral developer, expressed by John Lonergan in a paper delivered at the Annual Institute in 1969, which unfortunately seems to remain true today, that "one may not confidently say at this time what is or is not a common variety of any particular mineral, nor what is or is not a mineral deposit that may be located and held with assurance."⁴

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I. The Statutes

As indicated above, there are three primary federal statutes to consider when deciding whether a particular mineral deposit is a common or an uncommon variety.

A. The 1872 Mining Law. The Mining Law provides that "all valuable mineral deposits in lands belonging to the United States . . . 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 . . . ."⁵ As summarized by a Solicitor of the Department of the Interior in 1967, the Mining Law "authorized a prospector to go out upon the public lands, to occupy mining claims, to attempt to discover valuable minerals and, if he (sic) made a discovery, to purchase the land from the Government."⁶ So what was the problem? Questions quickly arose as to the meaning of the phrase "valuable mineral deposits" - did the Mining Law really apply to all valuable minerals, including minerals of widespread occurrence such as sand, gravel and limestone?⁷ Were those minerals of widespread occurrence actually valuable?⁸ Concerns also arose about whether allowing for the location (and ultimately, patenting) of such minerals was consistent with evolving notions of federal policy on uses of federal land, which changed from encouraging development, settlement and disposition of those lands in the late 1800s to looking askance at such disposition by the middle of the 20th century.⁹ By that time, the Mineral Leasing Act had been enacted, so leasable minerals were disposed of under that statute, and valuable minerals were covered by the Mining Law - but there was still uncertainty about other, non-valuable minerals.¹⁰

B. The Materials Act. The first effort by Congress to address the question of how non-valuable minerals were properly disposed of was to enact the Materials Act in 1947. The Materials Act authorized the Secretary of the Interior, under rules and regulations to be prescribed by the Department of the Interior, to dispose of materials including, but not limited to, sand, stone, gravel, yucca, manzanita, mesquite, cactus, common clay, and timber or other forest products on lands of the United States, if such disposal (1) was not otherwise expressly authorized by law, including the Mining Law, (2) was not expressly prohibited by federal law, and (3) would not be detrimental to the public interest.¹¹

There is some disagreement among courts and commentators as to the effect of the Materials Act. One court has noted with approval a statement that, "because 'certain very common minerals, such as common earth and common clay, were never disposable under either the mining law or the mineral leasing acts,' Congress enacted the Materials Act of 1947."¹² By contrast, commentators point out that

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the Materials Act did not remove any such materials from location under the Mining Law.¹³ In any event, the Materials Act created a legal mechanism for the disposal of non-valuable minerals, where perhaps none had existed before, but it did not answer the question of when those minerals of widespread occurrence were locatable under the Mining Law, and when they were not.

C. The Common Varieties Act. That broad question was addressed in 1955, when Congress enacted the Multiple Surface Use Act (Act of July 23, 1955, 69 Stat. 368, 30 U.S.C. §§ 611-615).¹⁴ The Common Varieties Act amended Section 1 of the Materials Act to allow the Secretary of the Interior or the Secretary of Agriculture (with respect to national forest lands) to dispose of mineral materials (rather than just materials), including but not limited to common varieties of sand, stone, gravel, pumice, pumicite, cinders, and clay, as well as vegetative materials (including but not limited to yucca, manzanita, mesquite, cactus, and timber or other forest products).¹⁵ Again, such disposals were allowed only if they were (1) not otherwise expressly authorized by law, including the United States mining laws, (2) not expressly prohibited by federal law, and (3) not detrimental to the public interest.¹⁶ That amendment to Section 1 of the Materials Act did not answer the question posed above, because the enumerated mineral materials could still only be disposed of if their disposal was not authorized under the Mining Law. The other significant provision in the Common Varieties Act, however, did address the question directly.

Section 3 of the Common Varieties Act provides specifically that "(n)o deposit of common varieties of sand, stone, gravel, pumice, pumicite or cinders¹⁷ and no deposit of petrified wood shall be deemed a valuable mineral deposit within the meaning of the mining laws of the United States so as to give effective validity to any mining claim hereafter located under such mining laws."¹⁸ Thus, common varieties of the listed materials were clearly no longer locatable under the Mining Law. Notably, however, the statute did not define what "common varieties" were. Instead, the statute attempted to define what they were not - "'Common varieties' as used in this subchapter (and Section 1 of the Common Varieties Act) does not include deposits of such materials which are valuable because the deposit has some property giving it distinct and special value and does not include so-called 'block pumice'" which occurs in nature in pieces having one dimension of two inches or more.¹⁹

Although it answered on a macro level the question about whether...