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April 24, 1964

acre tract included in a placer claim be shown to be mineral in character. United States v. Charles H. and Oliver M. Henrikson, 70 I.D. 212 (1963); Crystal Marble Quarries Co. v. Dantice et al., 41 L.D. 642 (1913). Accordingly, in opening reclamation withdrawn land to location under the mining laws, it would seem essential that each 10acre subdivision be shown to be mineral in character.1

In determining the character of each 10-acre subdivision, it does not appear to be essential that each acre be found to be mineral in character before the 10-acre tract can be opened to mining location. See the Henrikson case, supra. Thus it may be that a portion of a 10acre tract which is opened to mining location will be nonmineral land.

According to appellants' statements on appeal, only 3 acres of the 57.50 acres applied for are not included in existing mining claims. If the 10-acre subdivision or subdivisions including the 3 acres are known or believed to be valuable for minerals, there would seem to be no question that the subdivision or subdivisions could be opened to location under the mining laws despite the fact that 3 acres contained therein are nonmineral land. Once the subdivision or subdivisions are opened to location, there would appear to be no legal bar to including the nonmineral land in a mill site.

It may be objected that this conclusion circumvents the plain language of the 1932 act. However, the public land laws are, of necessity, based upon practical considerations. They do not require that the character of each acre or of each square foot of land must be determined in making disposals under the mineral and nonmineral land laws. The practice of dealing with land in terms of smallest legal subdivisions of 40 acres or 10 acres or even 21/2 acres ? reflects this.

Accordingly, the case should be reconsidered to determine whether all of lots 1 and 3 or parts thereof including the three acres in question may be opened to mining location under the 1932 act in accordance with the principles discussed in this decision.3

Therefore, pursuant to the authority delegated to the Solicitor by the Secretary of the Interior (210 DM 2.2A (4) (a); 24 F.R. 1348), the decision appealed from is set aside and the case remanded for further consideration in accordance with this decision.

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ERNEST F. HOM,

Assistant Solicitor.

1 As for lode claims, which are not located in conformity with the public land surveys, it would still seem proper to require that each 10-acre subdivision part of which is to be located be shown to be mineral in character.

- See John McFayden et al., 51 L.D. 436 (1926).

* This assumes that no other withdrawal or reservation would bar a mill site location even if lots 1 and 3 are opened under the 1932 act.

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Mining Claims: Discovery-Mining Claims: Determination of Validity Although a mining claim may have been valid in the past because of a dis

covery on the claim of a valuable deposit of mineral, the mining claim will lose its validity if the mineral deposit ceases to be valuable because of a change in economic conditions.

Mining Claims: Discovery-Mining Claims: Determination of Validity Mining claims located for manganese must be declared null and void for lack

of a discovery where, although manganese was sold from some of the claims and other claims in the vicinity during World War II and the post-war period when a Government buying program was in existence, the evidence shows that since the end of the buying program in 1959 the price of manganese has dropped 50 percent and sales of domestic manganese have ceased and there is no reasonable prospect of a future market, the need for manganese being supplied by higher grade imported manganese.

APPEALS FROM THE BUREAU OF LAND MANAGEMENT

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Separate contest proceedings ' initiated by the United States Forest Service, Department of Agriculture, were brought against certain lode mining claims located in Coconino County, Arizona, within either the Coconino or Sitgreaves National Forests, following the filing of mineral patent applications for the claims by the locators or their successors in interest. In all the proceedings, the Forest Service charged basically that the claims were invalid because no valid discovery, within the meaning of the mining laws, existed on the claims, and because the lands were nonmineral in character. In the proceedings against Leo E. Shoup's mining claims, a third charge was made that patent was not sought in good faith because the applicant seeks ownership of the land for purposes other than mining. Separate hearings were held on the charges in each case.

In two of the proceedings, those involving claimants Reid Smith and the Estate of Robert F. Beecroft, the liearing examiners dismissed the contests on the ground that the claims were valid. The Assistant Director, Bureau of Land Management, affirmed those actions, finding

1 The contest numbers, mineral patent application numbers, and the names of the claims involved are set forth in the appendix by the claimant's name and the appeal numbers listed above, together with a general description of the sections where the claims are located. Also listed in the appendix are the dates of the hearing examiners' decisions, with the action taken therein, and the dates of the decisions of the Assistant Director, Bureau of Land Management, with the action taken on the appeals from the hearing examiners' decisions.

2 Rev. Stat. 8$ 2319, 2320, 2325 (1875) ; 30 U.S.C. $$ 22, 23, and 29 (1958).

April 24, 1964

that there was a discovery as required by the mining laws on each claim. The Forest Service has appealed to the Secretary of the Interior from the Assistant Director's decisions.

In the proceeding involving Leo E. Shoup's mining claims, the hearing examiner found that there was not a valid discovery of a vein or lode in rock in place bearing a valuable mineral deposit and declared the claims to be null and void. On the charge that there was not good faith he ruled that there was no showing that the claimant had not located the claims in good faith and therefore evidence which was produced at the hearing showing his intent to sell the claims after patent was obtained was not sufficient ground for invalidating the claims. The Assistant Director affirmed the decision on the first ground but held that it was unnecessary, therefore, to make a ruling on the good faith question. Shoup has appealed to the Secretary from that decision, requesting a reversal or a rehearing.

In the proceeding involving Alvis F. Denison's mining claims, the hearing examiner found that none of the claims had mineralization of value or extent as lodes in rock in place, rather than as placers, sufficient to constitute lode discoveries, and rejected Denison's mineral patent applications. The Assistant Director in effect reversed that decision as to the question whether the claims may be considered as lodes or whether they are actually placers and vacated the decision as to four of the sixteen claims involved, finding that there was a valid lode discovery on those claims. However, he affirmed the action of the hearing examiner in declaring the other claims to be null and void for lack of discovery by finding that there was no discovery on them. Both the Forest Service and Denison have appealed from that decision.

All of the claims in these proceedings were located for, and the claimants allege them all to be valuable for, manganese. The Shoup, Smith, and Beecroft claims lie in adjoining townships and the Denison claims are about 40 miles distant. In all of these cases, the Forest Service has raised a central issue as to what criteria should be applied to determine whether there has been a valid discovery. It contends that the Bureau improperly failed to consider present economic conditions in determining whether the mineral deposits on the claims are "valuable" within the meaning of the mining laws and that the Bureau improperly relied only on past economic conditions and hypothetical possibilities in the future. It contends that there is no general market in this country for manganese of the quality and quantity that may be found on these claims, that market conditions are depressed due to the availability of imported manganese of a much higher quality at cheaper prices and the termination of the United States Government's stockpiling program in manganese, with manganese currently being declared in excess quantities in the stockpiles.

The mining claimants object to these contentions. Generally, the claimants allege that manganese is a mineral having intrinsic value and that therefore marketability need not be shown, citing a Solicitor's opinion of September 20, 1962 (69 I.D. 145), and that the test of discovery as enunciated in the leading case of Castle v. Womble, 19 L.D. 455, 457 (1894), requires only that a prudent man have a reasonable prospect of success in developing a “valuable” mine and not a "profitable” mine, as contended by the Forest Service.

Although in these cases there does appear to be a diversity in the quality and quantity of manganese present on the claims, which may to a certain extent account for the differences in the rulings of the hearing examiners and the Assistant Director in these cases, there also appears to be some inconsistency in the application of the prudent man test to these cases. Because of the importance of the central issue raised by the Forest Service and similarities in these cases as to the nature of the minerals involved, their disposition, and their commercial usage and marketability, and because several of the witnesses testified in two or more of the hearings, these cases have been consolidated for consideration of the appeals.

The prudent man test, as originally stated in Castle v. Womble,

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supra, is:

* * where minerals have been found and the evidence is of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success, in developing a valuable mine, the requirements of the statute have been met. (P. 457.) This test has been quoted or cited with approval by the United States Supreme Court in Chrisman v. Miller, 197 U.S. 313, 322 (1905), and other cases, most recently in Best v. Humboldt Placer Mining Co., 371 U.S. 334,335 (1963).

After establishment of the basic rule on discovery, the Department was confronted with situations in which applications for mineral patent were filed for claims which might previously have been valuable for gold but which were not shown to be valuable for gold at the time of the applications for patent. In United States v. Margherita Logomarcini, 60 I.D. 371 (1949), the Department held that before a patent can be issued it must be shown as a present fact that the claim is valuable for minerals. The Department held to the same effect in United States v. Lem A. and Elizabeth D. Houston, 66 I.D. 161 (1959), pointing out that although a mining claimant need not apply for a patent to his claim he exposes himself to the chance that at some time the conditions on his claim will no longer support the issuance of a patent.

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Alvis Denison testified for the claimants in all four cases, John Beecroft for the claimants in all but the Denison case, and H. J. Vander Veer for the claimants in the Smith and Beecroft cases. Joseph H. Morgan and Donald J. Morgan were counsel for the claimants in all the cases.

April 24, 1964

Both the Logomarcini and the Houston decisions were cited for these propositions by the Supreme Court in Best v. Humboldt Mining Co.,

supra at 336.

.

In the Houston case, the Department cited as precedent not only the Logomarcini case but also the cases of United States v. Pumice Sales Corporation, A-27578 (July 28, 1958), and United States v. Alonzo A. Adams, A-27364 (July 1, 1957). The Pumice case, unlike the others, involved mining claims located for a mineral of widespread occurrence, pumice. The validity of such claims depends upon an affirmative showing of a present demand or market for the mineral. Foster v. Seaton, 271 F. 2d 836 (D.C. Cir. 1959). In the Pumice case it was shown that pumice from one of the claims had been sold and used for commercial purposes in the past but that operations were then shut down and no present demand existed for the pumice. The Department held that although the claims may have been valid in the past they had become invalid for lack of a discovery. The Pumice case did not involve applications for patent.

The Adams case involved applications for patent to gold placer claims. The Department held the claims to be null and void for the reason that the evidence showed that the gold values on the claims were so low in comparison to the cost of operations required to recover the gold that a prudent man would not be justified in the further expenditure of labor and means with a reasonable prospect of developing a valuable mine. The Department rejected the claimant's contention that more weight should have been given to the evidence of values recovered in the past, saying that it was not sufficient that a valuable discovery may have been made in the past, citing the Logomarcini case.

The Adams decision was challenged in court but sustained in Alonzo A. Adams v. United States, 318 F. 2d 861 (9th Cir. 1963). The court expressly affirmed the ruling in the Logomarcini case.

More recently the same court has rendered another decision which appears to be decisive of the central issue presented in the appeals under consideration. In Mulkern v. Hammitt, 326 F. 2d 896 (1964), the court sustained a decision of the Departmnet holding two mining claims null and void for lack of a valid discovery of gypsum or silica. United States v. G. C. (Tom) Mulkern, A-27746 (January 19, 1962). The claims, which were located on December 23, 1922, were contested in 1944 and a hearing was held in 1957. The issue was whether during the period from December 23, 1922, to May 15, 1926, or between August 31, 1928, and May 3, 1929, there had been a valid discovery on the claims. The two periods of time were the only times in which the land in the claims was open to mining location. The evidence at the hearing was largely to the effect that at the time of the hearing there was no

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