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November 20, 1964

Bureau of Land Management dated July 24, 1963, which affirmed a decision of the Sacramento land office declaring null and void the Duguids' Duguid-Clifford placer mining claim located for gold within the Lassen National Forest in Butte County, California. The decision of the land office followed the filing of a complaint initiating a private contest against the claim based on charges that the land is nonmineral and that no discovery had been made within the limits of the claim and the failure of claimants to file an answer denying the charges within the 30-day period allowed by the Department's rules of practice.

The claim in question was located in 1936. On March 30, 1956, the U.S. Forest Service granted to Paradise Irrigation District a special use permit to do preliminary exploration, to use an earth fill borrow area, and to construct a dam and reservoir of 6,000 acre-foot capacity to supply domestic water within the district. On April 2, 1959, the Sacramento land office granted a right-of-way for Paradise Reservoir and Dam and the Paradise Irrigation District built the dam and reservoir. On May 19, 1959, the Duguids brought an action in the State Superior Court for Butte County, California, against the Paradise Irrigation District asking $30,000 in damages for the occupation of 3.7 acres and the removal of 55,000 cubic yards of gold-bearing gravel from their mining claim.

While this lawsuit was pending in the State court, the Paradise Irrigation District filed a private Contest, Na. 5740, in the land office against the claim, charging that the land within the boundaries of the claim is nonmineral in character and that no discovery of a valuable mineral deposit has been made within the limits of the claim. The complaint stated expressly that it was filed in the Sacramento land office and that, unless the contestees filed an answer within 30 days after service of the complaint upon them, the allegations of the complaint would be taken as confessed. The complaint was served separately upon the two contestees on February 18, 1960.

On March 10, 1960, within the 30-day period, the contestees brought an action in the United States District Court for the Northern District of California (Civil Action No. 8059) against local officials of the Bureau of Land Management and an Assistant Regional Solicitor, charging a conspiracy between them and the Paradise Irrigation District to harass and annoy the contestees in the use and enjoyment of their mining claim and requesting that the defendants be restrained from proceeding in any manner in connection with the contest complaint and that they and their subordinates be enjoined and restrained from issuing any notices or orders having reference to the contest complaint of Paradise Irrigation District or from taking any action tending to cloud the title to the contestees' mining claim and that the contestees be awarded such damages as might be proved. The contestees challenged the validity of private contest proceedings. The court issued a temporary restraining order on March 10, 1960.

On March 16, 1960, the Duguids filed a new action in the same court (Civil No. 8063) which superseded the earlier action. The Duguids prayed for the same relief and on March 16, 1960, the court issued a temporary restraining order enjoining the defendants from issuing any notices or orders based upon or having reference to any contest complaint filed by Paradise or taking any action to cloud the title to the Duguids' mining claim or “to cancel the same by any order or directive based upon or referring to said contest complaint.”

On June 1960, the District Court held that the Bureau of Land Management had authority to entertain the private contest initiated by Paradise. It therefore granted defendants' motion for summary judgment and “vacated and dissolved” the temporary restraining order. Judgment to that effect was filed on June 21, 1960.

On June 22, 1960, the State court granted the defendants' motion for a stay of proceedings in the damage suit until the Bureau of Land Management should have rendered a final decision on the validity of the Duguid mining claim.

The Duguids appealed on August 8, 1960, from the decision of the Federal district court, and on May 25, 1961, the Court of Appeals affirmed, Duguid v. Best, 291 F.2d 235 (9th Cir. 1961). The court expressly sustained the validity of the Department's regulations providing for private contests.

The Duguids petitioned the United States Supreme Court for a writ of certiorari, and on February 18, 1963, the petition was denied. 372 U.S. 906.

On March 5, 1963, the Duguids filed an answer to the contest complaint in the Sacramento land office. In this answer, they denied there is no gold on the claim and alleged affirmatively that there has been a finding of gold which it will pay to work. On March 19, 1963, the Paradise Irrigation District acknowledged service of the contestees? answer and requested that the claim be declared null and void because of the contestees' failure to comply with the applicable rule of practice, 43 CFR, 1964, rev., 221.65, now 43 CFR, 1964 Supp., 1852.1-7(a), which provides that if an answer is not filed within 30 days after service of a contest complaint.

the allegations of the complaint will be taken as admitted by the contestee and the Manager will decide the case without a hearing.

November 20, 1964

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On April 9, 1963, the land office declared the contestees' mining claim null and void because of the untimely filing of their answer to the contest complaint which, under the rule just quoted, constituted an admission of the charges contained in the complaint.

In their appeal to the Director, the contestees contended that the manager of a land office has no authority over a mining contest and that the land office acts only in the capacity of a clerk of court as a depositary of the contest complaint which long ago should have been turned over to a hearing examiner. The Division of Appeals affirmed.

In their appeal to the Secretary, the contestees renew their previous contentions and add the supplemental contention that the answer was filed in time to comply with the land office rule because it was filed within 30 days of the decision of the United States Supreme Court.

The issue presented on this appeal is the effect of appellants' failure to file an answer to the contest complaint within 30 days after it was served upon them. The Department's rules on the contests provide that

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Within 30 days after service of the complaint * * * the contestee must file

an answer specifically meeting and responding to the allegations of the complaint *** 43 CFR, 1964 Supp., 1852.1-6, formerly 43 CFR, 1964 rev., 221.64. and, as noted earlier,

If an answer is not filed as required, the allegations of the complaint will be taken as admitted by the contestee and the Manager will decide the case without a hearing. * * * 43 CFR, 1964 Supp., 1852.1-7(a), formerly 43 CFR, 1964 rev., 221.65(a).

The appellants did not file an answer within 30 days after they were served. Instead, within that time, they brought their action against the local Bureau of Land Management officials and secured a temporary restraining order which forbade continuance of the contest proceedings. However, the restraining order was dissolved on June 21, 1960, when the judgment of the District Court was entered. Thereafter, although the contestees appealed to the Court of Appeals, they took no action which prevented the re-running of the 30-day period against them.

Essentially the same facts were presented in United States v. Humboldt Placer Mining Company et al., 71 I.D. 434 (A-30055), decided today. In that case, there was involved a Government contest rather

. than a private contest but there too, after being served, the contestees, who were represented by the same counsel as the Duguids, elected not to file an answer but filed an action against the Bureau of Land Management officials to enjoin their proceeding with the contest. The same United States District Court issued a temporary restraining order but dissolved it on June 21, 1960, the day it entered judgment against the Duguids. The contestees in the Humboldt case also appealed to the Court of Appeals but, as here, took no action to protect themselves against administrative action while the appeal was pending.

In the Humboldt decision it was pointed out that Rule 62 of the Federal Rules of Civil Procedure expressly provides that a judgment in an action for an injunction is not stayed during the period after entry of the judgment and until an appeal is taken or during the pendency of an appeal. Rule 62 provides further that, when an appeal is taken from a judgment dissolving an injunction, the court may restore the injunction during the pendency of the appeal. In the Humboldt decision it was noted that the contestees there could have but did not apply for a restoration of the injunction when they appealed from the District Court decision. It was also noted that, in addition or in the alternative, they could have requested from the Department an extension of time to file their answer to the contest complaint pending final action in the litigation. Finally, they could have filed an answer and requested postponement of further proceedings. They did none of these.

The Duguids had the same three courses of action open to them but pursued none of them.

Despite the default of the contestees in Humboldt, we waived the pertinent regulation, 43 CFR, 1964 Supp., 1852.1-7(a), supra, because of the unusual circumstances pertaining in that case and because the rights of third parties were not involved. The Humboldt contest was instituted by the Bureau of Land Management of this Department and there were no other governmental agencies outside of this Department involved or any other third parties. It was held that because of the absence of third parties, the Secretary had authority to waive the regulation.

In the present proceeding we are concerned with a private contest instituted by the Paradise Irrigation District, an agency of the State of California. This makes squarely applicable the ruling of the Department in Earl D. Deater v. John C. Slagle, A-28121 (May 24, 1960). In that case, which involved a private contest against a homestead entry, it was held that the Secretary has no authority to waive the pertinent regulation in order to permit a late answer to the complaint to be considered. See also F. Don Wadsworth v. Don Farrell Anhder, Sr., 70 I.D). 537 (1963).

The Duguids, howerer, contend that the regulation is invalid because it inrests the manager rather than a hearing examiner with

November 24, 1964

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the authority to decide the case when an answer is not filed as required. They contend that this is contrary to the Administrative Procedure Act, 60 Stat. 237, 5 U.S.C. $ 1001 et seq. (1958). They do not, however, point to any provision of the act which is violated, and we are not aware of any.

Section 11 of the act, 60 Stat. 244, 5 U.S.C. § 1010 (1958), provides for the appointment of such examiners as may be necessary for proceedings under sections 7 and 8 of the act. Section 7, 60 Stat. 241, 5 U.S.C. $ 1006 (1958), provides for examiners to "preside at the taking of evidence” in hearings. Section 8, 60 Stat. 242, 5 U.S.C. $ 1007 (1958), provides for initial decisions to be rendered by the officers who presided at the hearings. There is nothing in the act which provides for the procedure to be followed in cases where a hearing would be held upon a joinder of issues but issue is not joined because of a party's default so that no hearing is held. In short, there is nothing in the Administrative Procedure Act which requires an examiner to act in the situation that we have under consideration.

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 affirmed.

FRANK J. BARRY,

Solicitor.

UNITED STATES v. E. V. PRESSENTIN AND DEVISEES OF THE

H. S. MARTIN ESTATE

Decided November 24, 1964

A-30004

Mining Claims: Determination of Validity-Mining Claims: Discovery
To validate a mining claim covering minerals for which a market must be

shown, it must appear that the minerals probably exist on the claim in such

quantities as will justify extraction. Mining Claims: Discovery A showing of the probable existence of minerals in such quantities as will

justify the further expenditure of labor and money with a reasonable prospect of success in developing a valuable mine must be made to meet the test

of discovery under the mining laws. Mining Claims: Discovery Where mining claimants have not shown that deposits of talc and silica on

their claims probably exist in sufficient quantities to justify a prudent man in spending his labor and means with a reasonable prospect of developing

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