oversight

Federal Land Management: Unauthorized Activities Occurring on Hardrock Mining Claims

Published by the Government Accountability Office on 1990-08-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                             T
                        -’ United   States   General   Accounting   Office

GAO                       Report to the Chairman, Subcommittee
                          on Mining and Natural Resources,
                          Committee. oqJnterior and Insular
                          Affairs, House of Representatives

August   1990
                          FEDERAL LAND
                          MANAGEMENT
                          Unauthorized
                          Activities Occurring on
                          Hardrock Mining
                          claims




                  RESTRIcTED--      Not to be released outside the
                  General Accounting Office unless specifically
                  approved by the Ofllce of Congressional
                  ReIatious.


GAO/RCED-90-111
..
                   United States
GAO                General Accounting  Office
                   Washington, D.C. 20548

                   Resources, Community,             and
                   Economic Development              Division

                   B-229205

                   August 17, 1990

                   The Honorable Nick J. Rahall, II
                   Chairman, Subcommittee on Mining
                     and Natural Resources
                   Committee on Interior and Insular Affairs
                   House of Representatives

                   Dear Mr. Chairman:

                   This report responds to your request that we identify the types of unau-
                   thorized nonmining activities occurring on hardrockl mining claims on
                   federal land and the problems resulting from these activities. As agreed,
                   we limited our review to the Department of the Interior’s Bureau of
                   Land Management (BLM) and the Department of Agriculture’s Forest Ser-
                   vice, which together manage about 460 mi.lIion, or about 64 percent, of
                   the approximately 724 million acres of federally owned land. We also
                   limited our review primarily to the states of Arizona, California, and
                   Nevada, which have the highest number of hardrock mining claims on
                   federal land and have a large number of new claims filed each year.
                   (App. I provides a more detailed explanation of our scope and
                   methodology.)

                    The issue of unauthorized no nmining surface activities on hardrock
                    mining claims falls under the purview of the Mining Law of 1872,
                    enacted to promote the exploration and development of domestic min-
                    eral resources. The act does not, however, clearly specify what types of
                    surface activities are not authorized. The Surface Resources Act of 1966
                    did, however, make clear that mining claims cannot be used for any pur-
                   *pose other than prospecting, mining, and processing operations, as well
                    as activities reasonably incidental thereto. Subsequent court rulings
                    together with regulations and policies promulgated by the federal land-
                    managing agencies have served to further clarify what activities the
                    federal government will tolerate on mining claims. However, ambiguities
                    remain concerning whether and under what circumstances activities
                    such as residency are authorized.


                   Our visits to 69 sites in Arizona, California, and Nevada together with
Results in Brief   our review of applicable laws, regulations, policies, and procedures as


                    ‘Hardrock minerals include cooper, gold, iron, lead, and silver.



                    Page 1                             GAO/‘WEDW-111        Unadmhd    Acdvitka   on Hadrock Claimm
        B229206




        well as discussions with federal land-managing agency officials showed
        that:

    l   Some claim holders are using their claims for unauthorized residences,
        nor-mining commercial operations, illegal activities, or speculative activ-
        ities not related to legitimate mining. Agency officials estimate that of
        the over 662,000 mining claims in the three states included in our
        review, about 1,600 have known or suspected unauthorized activities
        occurring on them.
    l   Unauthorized activities result in a variety of problems, including
        blocked access to public land by fences and gates; safety hazards to
        those using the land, such as threats of physical violence and bran-
        dishing of firearms; environmental eyesores caused by abandoned vehi-
        cles, dumped garbage, and road construction; environmental
        contamination caused by the unsafe storage of hazardous wastes;
        investment scams that defraud the public; and increased costs to reclaim
        damaged land or otherwise acquire land from claim holders intent on
        profiting from holding out for monetary compensation from parties
        wishing to use the land for other purposes.

        BLM and the Forest Service manage about 460 million acres that contain
        the vast majority of the 1.2 million active mining claims. The sheer
        number of claims and the extensive acreage involved make it difficult
        for the federal land-managing agencies to prevent unauthorized activi-
        ties or stop them at an early stage. And eliminating existing and often
        long-standing unauthorized activities is an unduly expensive, and com-
        plicated process. While there is no panacea for eliminating or preventing
        all unauthorized activities on mining claims, we believe that steps can be
”       taken to reduce the frequency of their occurrence and to more quickly
        eliminate existing ones.




        Page 2                   GAO/BCED9@111 Unauthorhd   Actlvitiee on Hardrock Claims
                         B2292Qb




                         The Mining Law of 1872 (30 U.S.C. 22 et seq.) allows U.S. citizens and
Chronology of Laws       businesses to freely prospect for hardrock minerals on federal land not
and Regulations          specifically closed or withdrawn from mineral entry.2 Prospectors can
Governing                file a claim, which covers about 20 acres, giving them the right to use
                         the land for mining-related activities. The mining law allows claim
Unauthorized             holders to preserve the rights to their claims by performing annually the
Activities On Hardrock   equivalent of at least $100 worth of drilling, excavating, or other devel-
                         opment-related work. Claim holders generally do not have to prove dis-
Mining Claims            covery of a valuable mineral deposit to maintain their claims unless, for
                         example, the government challenges the validity of their claims.

                         The Surface Resources Act of 1955 (30 U.S.C. 612(a)) requires that
                         mining claims be used only for prospecting, mining, mineral processing,
                         and activities reasonably incidental to those operations. The act left to
                         the federal land-managing agencies the task of determining what activi-
                         ties are reasonably incidental to mining.

                         The Forest Service issued regulations that became effective in 1974 to
                         protect surface resources on national forests during mining and explora-
                         tion. BLM’s companion surface management regulations became effective
                         in 1981. Roth regulations require that those proposing to mine and
                         occupy mining claims file a notice or plan of operations describing the
                         proposed operation and related activities. The responsible federal
                         agency must then either approve or reject the proposed activities.


                          Despite the intent of the Mining Law of 1872 to promote mining and the
Nonmining Activities      Surface Resources Act’s restriction of nonmining activities, some claim
and Their Related        .holders are using their claims for unauthorized residences, nonmining
Problems                  commercial operations, and illegal activities or speculative activities not
                          related to legitimate mining. Many of these unauthorized activities are
                          accompanied by environmental, public safety, or other problems.

                         Residency is the most frequent unauthorized activity on hardrock
                         mining claims. Of the 59 sites we visited, 33 had unauthorized resi-
                         dences ranging from small rundown shacks to permanent, more expen-
                         sive, year-round dwellings. The more elaborate residences have
                         amenities such as gazebos, garages, greenhouses, and satellite television
                         dishes. All these claim holders live rent-free on public land. Problems
                         associated with unauthorized residences included blocked access or


                         *Mlnhg Is not permitted on more than 136 million acres of federal land.



                         Page 3                           GAO/RCEIMSlll        Unaathorhd     Activities on Hardrock   Clnima
                            b22920fi




                            rights-of-way, which may be associated with threats of physical vio-
                            lence to the public and agency staff, and environmental eyesores such as
                            abandoned vehicles, dumped garbage, and road construction. (See app.
                            III.)

                            Some mining claims, usually with unauthorized residences, also are used
                            for nonmining commercial operations ranging from rental properties to
                            unsafe toxic chemical storage that can endanger the environment,
                            threaten underground water supplies, and increase the cost to reclaim
                            the land. (See app. IV.) Other claims are used for a variety of illegal
                            activities, including investment scams that have defrauded investors of
                            at least $250 million and marijuana cultivation frequently guarded by
                            armed men or booby traps. (See app. V.)

                            Still other claims are filed to profit by blocking an anticipated land use
                            until prospective users buy out the claim holders’ interest. These “nui-
                            sance claims” can impede government land transfers, cost the federal
                            government hundreds of thousands of dollars, and hinder legitimate
                            mining operations and other federal land uses. (See app. VI.)


Reasonsfor                  existing laws and agency policies, federal land-managing agencies are
Unauthorized                not likely to prevent all new ones or eliminate the backlog of existing
Activities Are Varied       ones for several reasons. Primary among these reasons is the simple fact
                            that to meet its purpose of promoting the exploration and development
                            of domestic mineral resources, the mining law makes it relatively easy
                            and inexpensive for claim holders to file and preserve the rights to their
                        e   claims. As a result, there are about 1.2 million active claims spread
                            throughout the western states and Alaska. The sheer number of claims
                            and the acreage involved make it virtually impossible for the land-
                            managing agencies to detect all existing unauthorized activities within
                            any reasonable level of staff resources.

                            In addition, the large number of new claims filed each year makes it
                            difficult and often impossible for the land- managing agencies to monitor
                            and interact with claim holders to avoid unauthorized activities or stop
                            them at an early stage. For example, about 160,000 new claims were
                            filed in 1988 alone.

                            When an unauthorized activity is identified, the responsible land-
                            managing agency faces an often long and costly process to either invali-
                            date the claim or eliminate the activity, in part because under existing


                            Page 4                   GAO/RcEDgolll   Unaathorlzed Activitlea on Hardrock Claim5
                         5229206




                         regulations, the burden of proof is on the federal government to show
                         that the activity is not incidental to mining rather than on the claim
                         holder to show that it is. Since mining operations range from multimil-
                         lion-dollar endeavors to very limited pick and shovel work, proving that
                         a claim is not being developed or that an activity is not incidental to
                         mining can be difficult. Moreover, while the federal government can
                         seek injunctive relief or damages for trespass relating to an unautho-
                         rized activity without first having to determine the validity of a mining
                         claim, U.S. attorneys are often reluctant to prosecute these cases
                         because of higher competing priorities.

                         Instead of proving that an activity is not incidental to mining, a federal
                         land-managing agency can invalidate a claim if it can show that a claim
                         cannot be mined economically. However, this requires that BLM or the
                         Forest Service perform a mineral examination which, according to BLM
                         officials, usually costs about $10,000 in staff time alone. Agency deci-
                         sions invalidating a claim or eliminating an activity determined not to be
                         incidental to mining can be appealed through the existing tiered admin-
                         istrative appeals process and in the federal courts. In those cases where
                         the federal government proves that an activity is not incidental to
                         mining, a claim holder’s potential losses are often limited to the invest-
                         ment in the unauthorized activity, and when a claim is invalidated, a
                         claim holder can immediately refile another claim on the same location.

                         Finally, decisions to eliminate an unauthorized activity, especially those
                         involving a claim holder’s permanent residence, can become both emo-
                         tional and controversial. According to the Forest Service, efforts to elim-
                         inate a residency sometimes result in an emotional conflict and
                         Unfavorable publicity followed by requests from public officials for
                         more time or different solutions. The Forest Service states that this adds
                         to, and significantly increases, the time and energy already spent.


                         While there is no panacea for eliminating or preventing all unauthorized
Alternatives to Reduce   activities on hardrock mining claims, there are several alternatives for
the Number of            reducing their number. The Forest Service, in commenting on a draft of
Unauthorized             this report, suggested that federal land-managing agencies could revise
                         their regulations to (1) clearly state that residency and nonmining com-
Activities Are Limited   mercial activities are normally not authorized and (2) shift the burden
                         of proof to the claim holder to show that an activity is incidental to
                         mining. On the basis of our work, we agree that existing regulations
                         need to be revised to clearly state that residency and nonmining com-
                         mercial activities are not normally authorized. We believe that this


                         Page 5                   GAO/R~~lll     Unanthorlmd Actltiti-   on Hardrock   Claima
  B-229206




  would help shift the burden of proof to claim holders to show that an
  activity is incidental to mining and would reduce the number of unau-
  thorized activities.

  The Forest Service also suggested that the agencies simplify some of the
  government’s procedures involving claim contests, Specifically, it sug-
  gested that the time required to eliminate existing and many times long-
  standing unauthorized activities can be shortened if BLM did not have to
  review and approve work done by certified Forest Service mineral
  examiners and review examiners before beginning the administrative
  appeals process. We believe that the complexity and time-consuming
  nature of the existing process for invalidating claims suggests that the
  Forest Service and BLM should jointly review this and other procedures
  that could make the process for eliminating unauthorized activities more
  efficient.

  We believe that the number of unauthorized activities can be further
  reduced by reducing the number of claims that are not being actively
  explored, developed, or mined. While we support the purpose of the
  mining law, it makes little sense to allow it to continue to be used to
  encumber federal lands with mining claims not likely to be mined in the
  foreseeable future. While no hard data exist, BIM and Forest Service
  officials estimate that over 80 percent of the over 1.2 million claims con-
  sidered “active” are not being explored, developed, or mined. Some of
  these claims, in turn, are used for unauthorized activities that result in
  the variety of problems identified in this report.

  In a March 1989 report,3 we stated that the mining law’s annual work
  requirement (1) no longer ensures that a mining claim will be developed,
w (2) is difficult for federal land-managing agencies to enforce, and (3) is
  generally recognized by the mining community as being circumvented by
  many claim holders who certify that they have met the requirement
  without ever performing the work. The Forest Service noted that the
  work requirement can also help ensure that claims are held in good
  faith. However, its effectiveness is limited to the extent that claim
  holders actually perform the work. Therefore, we recommended that the
  Congress amend the act to require claim holders to pay the federal gov-
  ernment an annual holding fee in place of the existing annual work
  requirement. An identical proposal was made by the administration in


   3Fe&ral Land Management: The Mining Law of 1872 Needs Revision (GAO/RCED89-72. Mar 10.
   lxw).



   Page 6                       GAO/BcEDL)o111 Unauthorized    Activltlea   on Hardrock   Claima
              5229206




              the President’s fiscal year 1991 budget, and a bill to impose an annual
              holding fee of $100 per claim has been introduced in the Senate.

              In our March 1989 report, we concluded that, depending on the amount,
              requiring every claim holder to pay an annual fee would likely result in
              clearing more invalid, inactive, or abandoned claims from the records
              and making those claims available to others because claim holders not
              intent on developing their claims may be reluctant to pay the annual fee.
              In a February 1990 analysis of the expected impacts of an annual
              holding fee, the Congressional Budget Office agreed with our conclusion,
              stating that a yearly fee would clear inactive claims, thus opening up
              land formerly closed to hardrock mining. The President’s fiscal year
              1991 budget estimates that a $100 annual holding fee would clear about
              225,000 claims in fiscal year 1991 alone. This also would likely eliminate
              the unauthorized activities occurring on these claims. The higher the
              annual fee, the higher the likelihood that invalid, inactive, and aban-
              doned claims will be cleared and the higher the likelihood that unautho-
              rized activities will be eliminated.


               Claim holders who use their claims for unauthorized activities create a
Conclusions    variety of problems for federal land-managing agencies. Moreover, these
               activities are difficult and expensive to prevent or eliminate. However,
               several alternatives are available to reduce the frequency of their occur-
               rence. One is to implement our prior recommendation to require claim
               holders to pay the federal government an annual holding fee in place of
               the existing annual work requirement. On the basis of our work on
               unauthorized activities occurring on hardrock mineral claims, we believe
              that the Congress should consider an annual holding fee that is gradu-
               ated over time, thereby encouraging timely development of mineral
               resources rather than the hording of claims on federal lands. We also
               believe that BLM and the Forest Service should (1) revise their regula-
               tions to clearly state that residency and nonmining commercial activities
                are normally not authorized, thereby shifting the burden of proof to the
               claim holder to show that an activity is incidental to mining and (2)
               jointly review the process for invalidating claims to determine whether
                changes, such as eliminating BLM’S review and approval of the Forest
                Service’s mineral examinations, can make the process more efficient.




               Page 7                   GAO/RCEDBSlll   Unauthorized Acdvitiem on Ebrdmck Claima
                             5229205




                             In a March 1989 report, we recommended that the Congress amend the
Recommendationto             Mining Law of 1872 to require claim holders to pay the federal govem-
the Congress                 ment an annual holding fee in place of the existing annual work require-
                             ment. One likely result, depending on the amount of the fee, would be a
                             reduction in the number of invalid, inactive, and abandoned claims
                             together with a reduction in the number of unauthorized activities
                             occurring on them. To discourage more claim holders not intent on
                             developing their claims and more activities not incidental to mining, we
                             recommend that the mining law be amended to require claim holders to
                             pay the federal government an annual holding fee that can be graduated
                             over time. In establishing such a fee, a balance must be struck between
                             an amount high enough to discourage those not intent on developing
                             their claims from retaining existing claims and filing new ones and an
                             amount low enough not to discourage legitimate miners.



                             claims on federal land, we recommend that the Secretaries of the Inte-
the Secretaries of the       rior and Agriculture direct the Director of BLM and the Chief of the
Interior and                 Forest Service, respectively, to (1) revise their surface management reg-
                             ulations to clearly state that residency and nonmining commercial activ-
Agric ‘Ulture                ities are normally not authorized on hardrock mining claims, thereby
                             shifting the burden of proof to the claim holder to show that an activity
                             is incidental to mining and (2) jointly review the process for invalidating
                             claims to determine whether changes, such as eliminating BLM’S review
                             and approval of the Forest Service’s mineral examinations, can make
                             the process more efficient. If any of these revisions requires legislative
                             changes, the Secretaries should submit the appropriate language to the
                         *   Congress for its consideration.


Agency Comments and          ments on a draft of this report. Interior’s and Agriculture’s comments
Our Evaluation               and our evaluation of them are included as appendixes VIII and IX,
                             respectively.

                             Interior noted that it had implemented a criminal penalty authority as a
                             means to prevent or deter unauthorized activities on mining claims.
                             Therefore, we have deleted a proposal we made in our draft report
                             calling for Interior to adopt such a regulation. Concerning our recom-
                             mendation that the Congress amend the mining law to require claim
                             holders to pay a graduated fee, Interior noted that the President’s fiscal



                             Page 8                   GAO/RCED#Slll   Unauthorized   AcUvltIea   on lhrdmck   Clahw
    year 1991 budget proposes an annual $100 holding fee for each mining
    claim on federal land.

    Conversely, Agriculture disagreed with our recommendation to the Con-
    gress for a graduated annual holding fee, stating that it does not believe
    that such fees will effectively eliminate unauthorized activities and
    could adversely affect mineral development, particularly for small
    mining companies. Agriculture also identified actions that it believed the
    Congress and the federal land-managing agencies should take to reduce
    the number of unauthorized activities on hardrock mining claims. To
    respond to Agriculture’s concerns and suggestions, we added a new sec-
    tion to this report that discusses alternatives for reducing the number of
    unauthorized activities as well as our evaluation of Agriculture’s sug-
    gested revisions to federal surface management regulations.


    As agreed with your office, unless you publicly announce its contents
    earlier, we plan no further distribution of this report until 30 days from
    the date of this letter. At that time, we will send copies to interested
    parties and make copies available to others upon request.

    This report was prepared under the direction of James Duffus III,
    Director, Natural Resources Management Issues (202) 275-7756. Other
    major contributors to this report are listed in appendix X.

    Sincerely yours,




0          we
    J. Dexter Peach
    Assistant Comptroller General




    P8#e 9                   GAO/XCElHB111   Un~~thorlzed   Activltks   on timhock   Claims
Contents


Letter
Appendix I                                                                                                    14
Objectives, Scope,and
Methodology
Appendix II                                                                                                   15
Background
Appendix III                                                                                                  19
Unauthorized                Unauthorized Residences Cover a Wide Range of
                                Structures
                                                                                                              19
Residences                  Unauthorized Residences on Claims Where No Mining Is                              20
                                occurring
                            Unauthorized Residences Not Incidental to Mining                                  21
                            Problems Associated With Unauthorized Residences                                  21

Appendix IV                                                                                                   27
Nonmining
Commercial
Operations
Appendix V                                                                                                    30
Illegal Activities      I   Mining Claim Investment Scams
                            Marijuana Cultivation
                                                                                                              30
                                                                                                              33

Appendix VI
Nuisance Claims
Appendix VII
Unauthorized                Legislation and Regulations to Prevent Unauthorized
                                Activities Came Years After Many Problems Arose
Activities Continue         Unauthorized Uses Persist
                            Preventing New Unauthorized Uses Is Difficult




                            P8ge 10               GAO/ECED&%l   11 Un~thorIzed   Activt~ee   on lhrdmck   Claims
                        Contents




Appendix VIII                                                                                             40
Comments From the       GAO Comments                                                                      42
Department of the
Interior
Appendix IX                                                                                               43
CommentsFrom the        GAO Comments                                                                      49
U.S. Department
of Agriculture
Appendix X                                                                                                52
Major Contributors to
This Report
Tables                  Table I. 1: Claim Sites Visited                                                      14
                        Table II. 1: Known and Suspected Unauthorized Activities                             18
                            by State and Agency
                                                                                                         -
Figures                  Figure II. 1: Claims of Record as of January 1989                                   16
                         Figure III. 1: Unauthorized Shack and a Permanent                                   19
                              Residence on Claims
                         Figure 111.2:Unauthorized Residence on a Claim in the                               21
                              Tahoe National Forest With No Recent Mining
                        ‘Figure 111.3:Examples of Blocked Public Access                                   22
                         Figure 111.4:Blocked Access Associated With an                                   23
                              Unauthorized Residence on a Claim in the Tonto
                              National Forest, Arizona
                         Figure 111.5:Assorted Junk Associated With an                                       24
                              Unauthorized Residence in California’s Angeles
                              National Forest
                         Figure 111.6:Eyesores on Claims in the Tonto National                               25
                              Forest, Arizona
                         Figure IV. 1: Unauthorized Rental Unit on a Claim in                                27
                              Randsburg, California
                         Figure IV.2: Hazardous Materials Stored on Mojave Desert                            28
                              Claim




                        Page 11                 GAO/lEED~lll   Unmdhodzed   Activities   on Hardrock   Claims
Contents




Figure IV.3: Chemical Containers on a Claim in the                                    29
     Mojave Desert
Figure V. 1: Damaged Riparian Area on Forest Service                                  31
     Grazing Allotment in the Prescott National Forest,
     Arizona
Figure V.2: Unauthorized Residences and Truck Scale on a                              32
     Claim Near Lake Isabella, California, Pending
     Investigation as a Mining Scam
Figure V.3: Marijuana Observation Post on a Claim Near                                33
     Nevada City, California




Abbreviations

DOE             Department of Energy
BLM             Bureau of Land Management
EPA             Environmental Protection Agency
GAO             General Accounting Office
IBL4            Interior Board of Land Appeals


w          12                GAO/ECEDHblll   Unaotho~   Actlvitiea   on Hardrock   Claims
P8ge 13
Appendix I                                                                                                                               -
Objectives, Scope,and Methodology


                                     To identify the types of activities that are authorized and specifically
                                     unauthorized on mining claims, we reviewed the laws and the agency
                                     regulations, policies, and procedures related to mining claims on federal
                                     land.

                                     To identify the types of not-mining activities occurring on hardrock
                                     mining claims, we first identified the total number of mining claims of
                                     record and the number of new claims filed annually with the Bureau of
                                     Land Management (BLM) since 1985. BLA4 records mining claims for all
                                     federal land open to mining. We selected Arizona, California, and
                                     Nevada because they have the most claims filed on federal land and
                                     they have large numbers of new claims filed each year. We limited our
                                     review to BLM and the Forest Service because, together, they are respon-
                                     sible for managing about 64 percent of federal land.

                                     To identify unauthorized activities, we reviewed applicable data on the
                                     claims and interviewed BLM and Forest Service headquarters and field
                                     officials. We also asked the two agencies to provide estimates, by state,
                                     of the number of known and suspected unauthorized activities on
                                     mining claims.

                                     To develop specific case studies, we asked BLM and Forest Service offi-
                                     cials to identify sites in the three states selected for our review that pro-
                                     vide examples of the types of no nmining activities occurring on mining
                                     claims. Forest Service and BLM officials identified 59 such sites in the
                                     three states we selected and accompanied us on visits to all the sites
                                     during January through March 1989. Table I. 1 identifies the number of
                                 s   sites by state and agency.

Table 1.1: Claim Sites Visited
                                                                                                   Claim sites
                                     AtmlCY
                                       -    -                                 Arizona        California        Nevada                Total
                                     Forest Service                                  6                29            Oa                 35
                                     BLM                                              9                 9            6                 24
                                     TOtd                                            15               36            6                  59
                                     We did not visit any Forest Service sites m Nevada because of snow cover at the few stes that the
                                     Forest Service tdenhfied.


                                     We conducted our work between December 1988 and March 1990 in
                                     accordance with generally accepted government auditing standards. The
                                     Departments of the Interior and Agriculture provided written comments
                                     on a draft of this report. These comments and our evaluation of them
                                     are included in appendixes VIII and IX, respectively.


                                     P8ge 14                           GAO/ECED4&111       Unanthoriwd     Activities on Hardrock   CLaims
Background


              The Mining Law of 1872 (30 U.S.C. 22 et seq.) promotes the exploration
              and development of mineral resources on federal lands. These lands
              cover approximately 724 million acres and are located primarily in the
              western United States. The principal federal land-managing agencies are
              the Department of the Interior’s Bureau of Land Management and the
              Department of Agriculture’s Forest Service. These two agencies manage
              about 270 million and 191 million acres, respectively, or about 64 per-
              cent of all federally owned lands. Each agency is responsible for the sur-
              face management of mining-related activities on its lands.

              Under the mining law, U.S. citizens and businesses can freely prospect
              for hardrock minerals on federal lands not specifically closed or with-
              drawn from mining and file claims with BLM (for a fee of $10 each),
              giving them the right, without prior federal approval, to use the land for
              mining-related activities. In the intervening 118 years since the law was
              enacted, over 6 million claims have been filed, of which about 1.2 million
              were active during 1988. The term “active” means that the claims were
              either actively being mined or their active status was being maintained
              by claim holders who filed affidavits with BLM certifying that they have
              annually performed at least $100 worth of drilling, excavating, or other
              development-related work (often referred to as the act’s “diligence” or
              “annual work” requirement) for each claim. By filing a claim, a claim
              holder obtains, certain legal rights1 However, these rights may be chal-
              lenged by the federal government until the claim holder establishes the
              claim’s validity by proving that a valuable mineral deposit has been
              discovered.

               Over 99 percent of the land covered by mining claims is concentrated in
             * 11 western states and Alaska. Figure II. 1 shows the claims of record as
               of January 1989 for these states.




              ‘A valid mining claim provides the claim holder an exclusive px%aesmxyinterest In the claim-a form
              of propertythatcanbesold, transferred, or inherited without infringing the paramount title of the
              United States. The claim holder has the full legal right to explore, develop, mine, and sell minerals
              from these federal lands.



              P8ge 15                          GAO/‘WED4Wlll        Unauthorized Activities on Hardrock Claims
Figun 11.1:Clrlmr   of Rocofd as of Jmmy   1909




                      Pacific   Ocean
                                                                         Colorado
                                                                          80,255




                                                              s.-
                                                                        New Mexico
                                                      \   t         I      30,130




I




                                            P8ge 16
 Appendix   Jl
 -d




 The Mining Law of 1872 granted claim holders the right to use the land
 covered by a claim (about 20 acres) for mining-related activities. While
 the act’s intent is to promote mining, it does not clearly specify which
 types of surface activities are authorized and which are not. In the inter-
 vening years, many claim holders have used their claims for nonmining
 activities. In the process of eliminating some of these nonrnining activi-
 ties, a body of case law has developed clearly establishing that to be
 authorized, activities on mining claims have to be mining related.

 The Surface Resources Act of 1956 (30 U.S.C. 612 (a)) clarified the claim
 holder’s surface rights by specifying the circumstances under which a
 claim holder may occupy a claim. It specifically provides that mining
 claims can be used only for prospecting, mining, or processing opera-
 tions and “uses reasonably incident thereto.” Agency policies, set out in
 a manual for dealing with residential occupancy on mining claims, and
 developed from the Surface Resources Act and subsequent Interior
 Board of Land Appeals (IBLA)* decisions, further provide that in order
 for claim holders to reside on claims, they must be actively and dili-
 gently engaged in substantially continuous mining activities and their
 residences must be reasonably incidental to those activities. The phrase
 “reasonably incidental” provides some latitude for interpretation. Part-
 time or weekend prospectors would not meet the standard to reside on a
 claim. Residency would, however, be reasonably incidental to mining
 where there are substantial improvements or mining equipment that is
 reasonably incidental to the ongoing operations or occupancy is required
 to prevent theft of valuable minerals or equipment.

  After the Surface Resources Act helped clarify the long-standing ques-
y tion of what are authorized activities on mining claims, the Forest Ser-
  vice, pursuant to its enabling legislation, the Organic Act of 1897 (16
  U.S.C. 561), adopted regulations (36 C.F.R. 228) which became effective
  in 1974 to protect surface resources affected by mining-related activities
  on National Forest System lands. BLM, pursuant to the Federal Land
  Policy and Management Act of 1976 (43 U.S.C. 1701, et seq.), adopted
  companion regulations (43 C.F.R. 3809), which became effective in
   1981. These regulations establish procedures which enable the agencies
  to identify and approve or reject proposed activities on mining claims.




 *Interior’s Board of Land Appeals, Office of Hearings and Appeals, is an authorized representative of
 the Secretary of the Interior, for the purpose of hearing, considering, and determining, as fully and
 finally as might the Secretary, matters such as the disposition of lands and their resources.



  Page 17                          GAO/RCED9&111       Unauthohed     Activities   on Hardrock   Claims
                                       Appendix II
                                       Background




                                       Despite these requirements, some claim holders continue to use their
                                       claims for unauthorized residences, nonmining commercial operations,
                                       and illegal or speculative activities. Agency officials estimate that in the
                                       three states we visited, of a total of over 662,000 mining claims, about
                                       1,600 have known or suspected unauthorized activities. (See table II. 1.)

Table 11.1:Known and Suspected
Unauthorized Activities by State and                                              Aqency
Agency (as of January 1989)                                                          Forest                        Active
                                       State                              BLM       Service           TOtSI        claims
                                       Arizona                             254            91            345        142,803
                                       Califorma                           559           600          1,159        150,480
                                       Nevada                               85            21             106       369,048
                                       Total                               696           712          1,610       662.331




                                       Page 18                   GAO/BcED9O-111 Unauthorized Activities on Hardrock Claims
Appendix III

Unauthorized Residences


                                        BLM  and Forest Service officials in Arizona, California, and Nevada told
                                        us that unauthorized residency is the most frequent nonmining activity
                                        on mining claims. Unauthorized residences adversely affect the agen-
                                        cies’ ability to effectively manage public land because the residences are
                                        often accompanied by a variety of associated problems.

                                        We visited 59 claim sites in the three states, 49 of which contained resi-
                                        dences BLM or the Forest Service considered the residences on 33 of
                                        these sites to be unauthorized at the time of our visit. Residences are
                                        unauthorized if no mining is taking place on a claim or if the residence is
                                        not reasonably incidental to the mining that is taking place. These resi-
                                        dences covered a wide variety of structures, and many residences had
                                        one or more other unauthorized uses associated with them.


                                        The unauthorized residences on claims we visited included small run-
Unauthorized                            down shacks; various types of trailers; summer cabins; and permanent,
ResidencesCover a                       more expensive, year-around houses. At one extreme, many of the older
Wide Rangeof                            shacks do not meet local health and sanitation codes. By contrast, the
                                        more elaborate residences have amenities such as gazebos, garages,
Structures                              greenhouses, and satellite television dishes. The shack and permanent
                                        residence shown in figure III. 1 illustrate the range of unauthorized
                                        residences.

Figure 111.1:Unauthorized Shack and a
Permanent Residence on Claim8




                                        Page 19                  GAO/BcEDQolll   Unauthorized Actlvitiea   on   Hardmck Claims
                        Appendb Ill
                        U~uchorizmi   Residences




                        Even when a claim is being mined, elaborate residences are not necessa-
                        rily allowed. IBLA explained in 1985 that “. . . the right to occupy does
                        not necessarily embrace the right to live in the style one might desire if
                        he or she owned the land in fee.“’

                        In some scenic locations, claim holders live in unauthorized residences
Unauthorized            on mining claims where there is no pretense of mining. Often, the mining
Residenceson Claims     that may have occurred at one time and justified the residency has long
Where No Mining Is      since ceased, but residency continues. These claim holders live rent-free
Occurring           .   on public land. For example, a Forest Service official showed us a claim
                        in California’s Tahoe National Forest which had a residence that he said
                        was unauthorized. The claim holder lived on the banks of the Yuba
                        River in a large house with a picturesque setting, but no mining was
                        taking place. (See fig. 111.2.)A Forest Service official told us that the
                        agency became aware of the unauthorized residence when the claim
                        holder questioned why the Forest Service sent her a questionnaire con-
                        cerning mining operations. No mining had occurred on the claim in
                        years, she said.




                        ‘Bruce W. Crawford et Ux., IBL4 83-861, May 17, 1986. “Fee” means acquiring all nghts and mter-
                        ests associated with a property.



                        P8ge 20                         GAO/RCED9&111 Unauthorized Acdvitiea on Hardrock Claims
                                          Appendix Ill
                                          Unauthorized Residences




Figure 111.2:Unauthorized Residence on
a Claim in the Tahoe National Forest
With No Recent Mining




                                           Many residences, particularly in scenic areas, are associated with part-
Unauthorized                               time mining operations where the mining is minimal or seasonal. These
ResidencesNot                              residences are not authorized because they do not meet BLM and Forest
Incidental to Mining.                      Service policies that diligent mining-related activities be in progress and
                                           residences be reasonably incidental to those activities. For example,
                                           about 200 claim holders and their families live in unauthorized resi-
                                           dences near the Salmon and Klamath rivers in the Klamath National
                                           Forest, California. According to Forest Service officials, in most of these
                                         * cases, the mining appears incidental to the residency rather than the
                                           reverse. Forest Service officials also told us that in one area of the Kla-
                                           math National Forest, a rural mail route served 40 residences-37 of
                                           which were unauthorized because they were not reasonably incidental
                                           to ongoing mining.


                                          Problems associated with unauthorized residences on mining claims
Problems Associated                       include blocked access or rights-of-way, which may be associated with
With Unauthorized                         threats of physical violence to the public and agency staff attempting to
Residences                                use what should be open public land; environmental eyesores caused by
                                          abandoned vehicles, dumped garbage, and unauthorized road construc-
                                          tion; and management complications.




                                           Page 2 1                 GAO,4tCED~111   Un~~~thorhed   Actlvtttes   on   Hardrock   Cm
                                          Appendix Ill
                                          Unauthorized Residencea




Blocked Access                            Unauthorized residences deny the general public their right to safely
                                          enjoy the benefits of public land. Claim holders often block public land
                                          through a variety of means including erecting fences and gates and
                                          posting “no-trespassing” and “private property” signs. There have also
                                          been instances of claim holders issuing verbal threats, and brandishing
                                          firearms. (See fig. III.3 for pictures of blocked accesses.)

Figure 111.3:Examples of Blocked Public
Access




                                          Page 22                   GAO/BCED-g&111 Un~~thocized Activities on Hardrock Chhs
                                         Appendix Ill
                                         Unauthorized Residences




                                         For example, Forest Service officials told us that the Tahoe National
                                         Forest contains about 360 unauthorized residencies-most located on
                                         mining claims. They said that one stretch of the north Yuba River,
                                         which runs through the forest, was closed to camping because the banks
                                         are covered with claims, many of which involve unauthorized
                                         residences.

                                         Some unauthorized residents block access to public land with threats of
                                         violence. We saw video recordings taken by agency officials on mining
                                         claims in northern California that showed claim holders, some with
                                         automatic weapons, threatening agency officials. Because of concern for
                                         how one potentially violent claim holder might react to our visit, Forest
                                         Service officials decided that we needed to be accompanied by an armed
                                         law enforcement ranger when we visited his claim in the Angeles
                                         National Forest, California.

                                         We visited another unauthorized residence in the Tonto National Forest,
                                         Arizona. The claim holder had a gate across a Forest Service road about
                                         5 miles from a Forest Service campground. (See fig. 111.4.)Forest Service
                                         documents revealed several instances where individuals, including an
                                         off-duty Forest Service ranger, reported that the claim holder told them
                                         they could not pass through the area or that they were blocked from
                                         leaving the area after entering.

Figure 111.4:Blocked Access Associated
With an Unauthorized Residence on a
Claim in the Tonto National Forest,
Arizona




                                         Page 23                   GAO/IKEBB&lll   Unauthorized Activities on Hardrock Claims
                                           Appendix Ill
                                           Unauthorized   Residencea




Environmental Eyesores                     Environmental eyesores are often found on claims with unauthorized
                                           residences. Some claim holders operate on public land like it is private
                                           property-dumping     junk and storing old equipment and vehicles. We
                                           observed a wide variety of junk strewn about a claim in California’s
                                           Angeles National Forest that also contained an unauthorized residence.
                                           (See fig. 111.5.)

Figure III.5 Assorted Junk Associated
With an Unauthorized Residence in
California’s Angeles National Forest




                                          At the unauthorized residence which we visited in Arizona’s Tonto
                                          National Forest, the claim holder had constructed many unauthorized
                                        * roads. Some, including the one shown in figure 111.6,parallel existing
                                          Forest Service roads. This claim holder also has a number of inoperable
                                          vehicles, trash piles, and an unused cyanide pond located on his claims.
                                          Forest Service officials told us that no recent mining has taken place on
                                          these claims.




                                           P8ge 24                     GAO/UCEBBt%lll   Unauthorized   Actlvitlea   on Hardrock   Claims
                                         API=*     m
                                         Unanthorized Re&dencea




Figure 111.6:Eyesores on Claims in the
Tonto National Forest, Arizona




                                                                     -   ,,
                                                                              _. ,_ - ,--.
                                                                                       ;
                                                                                    ..a




Management Difficulties                  Unauthorized residences in a national forest can have adverse conse-
                                         quences on forest management. For example, the Forest Service’s first




                                         P8ge 25                  GAO/,%cFD#lll        unulthoria?d   A42tivtuu on &rrdrock fxaima
    ‘4ppendi.s III
    Unauthorized Residences




    priority in fire fighting is to protect people and structures. Forest Ser-
    vice officials said that as a result, sometimes forest fires get out of con-
    trol because fire fighting resources must be diverted to protect people
    and structures regardless of whether they are authorized.




.




    Page 26                   GAO,%CEDWl   11 Unaathorlzed Actividw   on   brdrock   Claima
Appendix IV

Nonmining Commercial Operations


                                            Some mining claims are used for nonmining commercial operations
                                            ranging from rental properties to toxic chemical storage. We visited a
                                            site in Randsburg, California, where a ELMofficial told us that a claim
                                            holder lived in an unauthorized residency. The claim holder was also
                                            using an unauthorized cabin as a rental property. (See fig. IV. 1.) The BLM
                                            official told us that the area is an old mining district; however, no recent
                                            mining has occurred on this claim. The cabin shown in figure IV. 1 was
                                            one of an estimated 20 unauthorized structures in the area.

Figure IV.1: Unauthorized Rental Unit on
a Claim in Aandsburg, California




                                             Nonmining commercial operations on claims may cause far greater envi-
                                           * ronmental and reclamation problems than those associated with the
                                             more numerous unauthorized residences. These problems include unsafe
                                             storage of hazardous waste materials, which can endanger the environ-
                                             ment and threaten underground water supplies. In addition, commercial
                                             operations may involve large accumulations of equipment and other
                                             material that have nothing to do with mining and will have to be
                                             removed to reclaim the mine site.

                                            We visited two sites in the Mojave Desert in southern California where
                                            commercial operations were being conducted on mining claims. Near
                                            Lancaster, California (see fig. IV.2), one claim holder was using an 1 l-
                                            acre claim site to store scrap metal which, a BLM official said, he was
                                            selling overseas. In addition to the scrap metal, the claim holder stored



                                            Page 27                   GAO/BCEDM-111   Unauthorized   Activities   on Hudrock   Claims
                                             other materials including arsenic, copper, cyanide, and heavy metals.
                                             The state regional water quality control board determined that three of
                                             the settling ponds on the property were toxic pits, and the Environ-
                                             mental Protection Agency (EPA) initially estimated that site clean-up
                                             would cost about $1 million. A BLM  official told us in March 1990 that
                                             the estimated cost had been reduced because the claim holder had
                                             recently sold some of the scrap that had been stored on the claim. None
                                             of the.operations on the claim were authorized.

Figure IV.2: Hazardous Materials Stored
on Moiave Desert Claim




                                          0. We visited another nearby site where the claim holder was using the
                                             claim to recover silver from photographic processing materials. This site
                                             had numerous drums strewn about which BLM officials believe contain
                                             hazardous chemicals. (See fig. lV.3.) In 1989, BLM had a hazardous
                                             materials contractor sample materials at the site for laboratory analysis.
                                             As of March 1990, BLM had not received the results of the contractor’s
                                             analysis.




                                             Page 28                  GAO/IKXD-Wlll   Uwthorhd   ActivItiea   on Hudrock   Cldma
                                      Appendix N
                                      Notunhing Commercial   Operatlo~




Figure IV.3: Chomkal Containen on a
Claim In the Mojave Desert




                                      Page 29                        GAO/RCED9&111   Unauthorized   Acthider,   on Hardrock   Claima
Appendix V

Illegal Activities


                      Mining claims are also used for a variety of illegal activities. Some
                      mining claims have provided the basis for investment scams whereas
                      others have been used for marijuana cultivation.

                      Mining claim investment scams have long been a method of defrauding
Mining Claim          the public. However, the scams have become more sophisticated and
Investment Scams      prevalent in recent years. Documented investor losses have reached at
                      least $250 million, according to the Director, New Mexico Securities
                      Division, who heads a multiagency and multi-state mining scam
                      clearinghouse called “Project Goldbrick.” He also told us that during
                      1988 and 1989, they have learned of over 100 suspected mining scams.
                      While not all of these scams involve claims on federal land, many do and
                      most of these have operations in Arizona, California, or Nevada. In
                      1989, these states had at least 21 cases under investigation or prosecu-
                      tion, all of which involved claims on public land.

                      Many scams follow a similar format. Investors are offered the opportu-
                      nity to buy a specific amount of ore-bearing material at a set price under
                      delayed delivery contracts, usually ranging from 6 months to 3 years.
                      The operator is able to show investors that claims have already been
                      staked on federal land-ostensively    for the purpose of mining a valu-
                      able mineral. The problem is that either the ore is never mined or the
                      material mined is not valuable.

                     As an example of the types of mining claim investment scams operating
                     on federal land, Forest Service officials told us about an alleged scam
                     operation in the Kaibab and Coconino National Forests in Arizona. In
                     1988, the operator filed 1,263 claims covering about 200,000 acres of
                   w public land. The claim holder then began seeking money from investors
                     through delayed delivery contracts to mine gold. However, the Forest
                     Service independently sampled various claim sites in March 1989 and
                     found only a common variety basaltic rock and cinder material. The Ari-
                     zona Securities Division is investigating this operation because of con-
                     cern that no gold is present.

                      In January 1989, we visited 19 claims covering 365 acres in the Prescott
                      National Forest in Arizona, which the Forest Service suspects may also
                      be a scam operation. The operator was offering the public contracts for
                      future gold deliveries from this gold mine. At the time of our visit, the
                      operator had failed to make promised ore deliveries and, at least one
                      state-Wisconsin-had       prohibited the company from continuing to sell
                      its stock in the state because it was an unregistered security. In addition
                      to potentially defrauding investors, the operator created significant


                      Page 30                  GAO/ECELh~l   11 Unauthoriad   Activities   on Hardrock   Claims
                                           Appendix V
                                           Illegal Activities




                                           areas of surface disturbance and heavily damaged a riparian area.1 (See
                                           fig. V.1.)

Figure V.l: Damaged Riparian Area on
Forest Service Grazing Allotment in the
Prescott National Forest, Arizona




                                           We also visited a site on BLM land near Lake Isabella, California, where
                                           the claim holder was under a securities investigation. The claim holder
                                           had allegedly misled the public into investing in gold which may not
                                           exist. At the time of our visit in February 1989, the site contained sev-
                                           eral unauthorized structures (see fig. V.2) and, according to BLM docu-
                                           ments, a criminal investigation was pending by the U.S. Postal Service
                                          *and the Securities and Exchange Commission. In addition, EPA and the
                                           county were investigating the storage of hazardous materials on the site.




                                           ‘Riparian areas are the narrow bands of green vegetation along the banks of rivers and strem     and
                                           around springs, bogs, lakes, and ponds.



                                           Page 21                          GAO/RCED2&lll       Un~~~thorlzed   Actlvitiea   on Hardrock   Cl&ma
                                       Appendix V
                                       Illegal Activities




Figure V.2: Unauthorized Residences
and Truck Scale on a Claim Near Lake
Isabella, California, Pending
Investigation as a Mining Scam




                                                                     .-,,                c                      1.   .h




                                       i. _          .
                                          e                                                                               a.-




                                       Page 32              GAO/RCEDgCLl    11 Unauthorized   Activities   on Hardrock          Claims
                                          Appendix V
                                          lllegd Activities




                                          In 1982 and again in 1984, we reported on the problem of marijuana
Marijuana Cultivation                     cultivation on public land.’ Forest Service and BLSI officials told us that
                                          marijuana is being grown on mining claims in northern California as well
                                          as on other federal land. In addition to being illegal and unauthorized
                                          activities on mining claims, these operations can cause safety hazards
                                          because they are frequently guarded by armed men or booby traps.

                                          We visited two sites in California’s Klamath National Forest where in
                                          1988, claim holders lived on the claims and the county sheriff found
                                          marijuana. We also visited a claim site on BLM-managed lands near
                                          Nevada City, California, that had been used for marijuana cultivation.
                                          During the visit, we observed a drip irrigation system and an observa-
                                          tion post in a tree over an underground marijuana drying shed. (See fig.
                                          V.3.)

Figure V.3: Marijuana Observation Post                        .
on a Claim Near Nevada City, California




                                                                   GAO/RCED-90-111   Unauthorized   Activities   on Hardrock   Claims
    Some claim holders record claims but do not mine on them; rather, they
    profit by blocking an anticipated land use until a prospective user buys
    out their interest, probably for thousands of dollars more than the min-
    imal amounts they paid to record their claims. These claims are referred
    to as “nuisance claims.” Nuisance claims can impede government land
    transfers and cost the federal government substantial amounts of money
    to invalidate claims or buy out the claim holders. In addition, nuisance
    claims impede legitimate mining operations and other public land uses.
    A BLM official in Nevada told us that nuisance claims are a problem on a
    national level and a major problem in the Las Vegas area.

    Claim holders profit from such claims because interested parties know
    that it is both costly and time-consuming for the government to invali-
    date claims. Therefore, potential users will often buy out the claim
    holder rather than pursue the process required to invalidate the claim.

    The Department of Energy (DOE), in 1989, came to terms with a claim
    holder who was blocking construction of a proposed nuclear waste
    repository at Yucca Mountain, about 100 miles from Las Vegas, Nevada.
    DOE officials identified this location as a possible repository site in 1976,
    and since 1977, over 170 drill holes, trenches, and pits have been con-
    structed to obtain site-specific data. In August 1987, an individual filed
    10 claims, and in 1988, he filed another 17 claims covering, in total,
    about 540 acres in the proposed repository area. After reviewing its
    options, DOE decided that rather than go through the lengthy mineral
    validation process, it was more expedient to buy out the claim holder,
    which it did for $249,500.

.   DOE's  experience with nuisance claims at Yucca Mountain is not unique.
    Individuals can also find out about proposed land uses through agency
    planning actions or when such information otherwise becomes public.

    Others outside the federal government, such as municipalities, also are
    affected by nuisance claims. For example, the Congress passed legisla-
    tion giving the city of Mesquite, Nevada, the exclusive right to purchase
    a parcel of BLM land, subject to valid existing rights, at fair market
    value. However, before the act was signed, an individual located claims
    on about 600 acres of land that the town wanted to buy from BLM, effec-
    tively blocking the sale. The town paid the claim holder $10,000 to give
    up the mining rights to the claims, according to the city manager.




    Page 34                   GAO/RCED9@111   Unauthorized   Activities   on Hardrock   Claims
Appendix VII

Unauthorized Activities continue


                          Many of the currently known and suspected unauthorized activities on
                          mining claims have been in existence for a long time, according to
                          agency officials. Some of the sites we visited involve residences which
                          have been in existence for more than 20 years-two for over 50 years,
                          Our review of the mining law and agency regulations and policies, and
                          our discussions with agency officials show that unauthorized activities
                          on mining claims have grown over a long period of time, in part, because
                          the Mining Law of 1872 was not specific in prohibiting nonmining activi-
                          ties, and agencies did not have adequate surface management regula-
                          tions. However, even after the development of surface management
                          regulations, unauthorized activities persist. There is little in existing
                          laws or regulations to deter claim holders from initiating unauthorized
                          activities or to encourage them to promptly terminate such activities
                          when discovered.


                           The Mining Law of 1872 has several provisions that make management
Legislation and            difficult. The act provides that prospective claim holders can file a claim
Regulations to Prevent     and obtain ownership rights after discovering a valuable mineral
Unauthorized               deposit. However, from the time of the law’s enactment, BLM’S prede-
                           cessor organization adopted the practice of local mining districts, which
Activities Came Years      did not require mineral discovery to precede filing a claim. In 19 19, the
After Many Problems        Supreme Court accepted this practice when it ruled that, in order to
                           create valid rights or initiate a title against the United States under the
Arose                      mining law, a discovery of minerals within the location is essential, but
                           such discovery could precede or follow the filing of a claim.’ As a result
                           of the court’s ruling, BLM’S predecessor formally adopted this interpreta-
                           tion. The Mining Law of 1872 is also unique in that while other transfers
                         ~ of interest in federal land require an overt act by the government, the
                           mining law provides for the transfer of legal rights to a claim holder,
                           provided certain requirements are met.

                          These provisions make it easy for an individual to obtain a claim and
                          difficult for the government to invalidate one. For the government to
                          invalidate a claim for lack of discovery, it must establish a prima facia
                          case that a discovery has not been made. The burden is on the govem-
                          ment to conduct a mineral examination as the normal first step in estab-
                          lishing this case. Once the government establishes its initial case, the
                          miner then has the burden of proving, by a fair preponderance of the
                          evidence, that he has made a discovery. The cases will be heard by an
                          administrative law judge in Interior’s Office of Hearings and Appeals.

                           ‘Union Oil Company of California v. Smith, 249 U.S. 337 (1919).



                          Page 35                           GAO/XCJD9@111 Una~~thorhed Actlvitles   on Hardrock Claims
    Appendix vu
    Unaathocized Activitie9 Continue




    Either party can appeal the judge’s decision to IBLA. Further appeals can
    be made to the Secretary of the Interior and to the federal courts.

    The mining law further complicated agency efforts to prevent new
    activities and eliminate existing unauthorized activities on claims by
    giving claim holders the right to occupy their claims, but it did not
    specify what types of occupancies were authorized. The Surface
    Resources Act of 1955 was the first legislative directive that specifically
    provided that mining claims shall not be used for any purpose other
    than prospecting, mining, or processing operations and uses reasonably
    incidental thereto.

    In 1968, the 9th Circuit Court of Appeals stated that a permanent resi-
    dence not reasonably related to mining is not justified.* Additionally, the
    court held that the United States could seek injunctive relief or damages
    in the US. district court for trespass against persons without first
    having to determine the validity of their mining claims.

    In 1985, IBM, in Bruce W. Crawford,3 helped clarify under what circum-
    stances occupancy was justified if there was some level of ongoing
    mining activity. This ruling provided BLM the basis for administratively
    resolving occupancy questions before Interior’s Office of Hearings and
    Appeals.

    It was many years after the Surface Resources Act before the Forest
    Service and BLM implemented surface management regulations which
    can help ensure that claim holders do not initiate unauthorized activities
    on mining claims. The Forest Service, pursuant to its enabling legisla-
c   tion, implemented its surface management regulations (36 C.F.R. 228),
    which became effective in 1974. These regulations require that those
    proposing to mine and occupy mining claims fiie a notice or plan of oper-
    ations with the Forest Service describing the proposed mining operation
    and the related occupancy. A court decision in 1984 further strength-
    ened the regulations by establishing the precedent that fixed resi-
    dences-the most frequent occupancy problem-must be covered in a
    plan of operations.4 These plans require prior written approval from the
    Forest Service.


    %ited   States v. Nogueira, 403 F. Zd 816,826, (9th Cir., 1968).
    3Bruce W. Crawford et Ux. IBLA 83-861, (1986).

    4United States v. Langley, 587 F. Supp. 1253 (E.D. Cal. 1984).



    Page 36                           GAO/RCEDMblll        Unauthorized Activities on Hardrock Claims
                    Appendix VU
                    Unauthorlaed Actlvitiee   Continue




                    In 1981 BLM, pursuant to authority granted in the Federal Land Policy
                    and Management Act of 1976 (43 USC. 1701, et seq.), established its
                    surface management regulations (43 C.F.R. 3809). Similar to the Forest
                    Service’s regulations, advance notice or approval of a plan of operations
                    governing mining activities (and related occupancy) are required.

                    Before October 1989, BLhl policy required that mining operations under a
                    notice or operating plan-operations    causing surface disturbance and
                    certain other operations- be inspected at least annually. However, in
                    October 1989, BLM headquarters issued instructions requiring that pro-
                    ducing operations and nonproducing operations which cause any sur-
                    face disturbance be inspected at least biannually. Forest Service
                    regulations require inspections but leave it up to the various field offices
                    to determine inspection frequency.


                    The Surface Resources Act of 1955, which is key to preventing new
Unauthorized Uses   unauthorized uses, is also key to the agencies’ efforts to eliminate
Persist             existing no nmining activities. The act’s clear statement that activities
                    unrelated to mining are not allowed gives the agencies a stronger basis
                    for eliminating unauthorized activities. However, the procedures for
                    demonstrating that activities are not justified are complex, time-
                    consuming, and staff intensive, and the burden of demonstrating that
                    activities are unauthorized rests with the federal government. The
                    Forest Service told us that when mining operations are covered by a
                    plan of operations, it is easier to eliminate activities not authorized by
                    the plan.

                    -Agency efforts to resolve unauthorized activities with a claim holder
                     begin with a series of informal steps. These steps may drag on for years
                     as agency staff make personal visits, write letters, make a formal deter-
                     mination that the activity is unauthorized and obtain agency approval
                     to contest the case. If the unauthorized activity cannot be resolved
                     through these procedures, the agencies proceed to formal administrative
                     and legal remedies.

                    The agencies have attempted to terminate unauthorized activities which
                    could not be informally resolved by proving that a valid mineral dis-
                    covery had not been made and that the claims were, thus, invalid. How-
                    ever, this procedure proved to be costly and time-consuming. For
                    instance, a mineral examination must be conducted to determine the
                    validity of a claim, and agency officials told us that these examinations



                    Page 37                          GAO/RCEDKblll   Umthoclzed   Activlliea   on Hardrock   Claima
                            Appendix VU
                            Unauthorized ActivitAes Continue




                            usually cost the government about $10,000 in staff time alone. Typi-
                            cally, it takes more than a year to conduct the necessary examinations
                            and work through the appeal process which is often required to uphold
                            the invalidation of a mining claim. In addition, BLM'S manual governing
                            residential occupancy on mining claims notes that validity contests are
                            generally ineffective and inappropriate in cases of unauthorized mining
                            claim occupancy on land open to mineral entry because new mining
                            claims may be located after a claim is held to be null and void.

                            While the 1968 court ruling provided a remedy which does not require
                            invalidating the claim, the remedy has major shortcomings because it
                            requires cooperation from U.S. Attorneys, some of whom are reluctant
                            to prosecute these cases because of higher priority work. In addition,
                            according to a BLM official, the administrative approach will not be fully
                            effective until a body of precedent develops to help determine when
                            activities are unauthorized. Moreover, these cases can be appealed to
                            the federal courts.


Preventing New              and BLM prevent or identify new unauthorized activities, the agencies
Unauthorized Uses Is        face major problems in implementing them. Their enforcement resources
Difficult                   are spread thinly for managing the approximately 460 million acres
                            they control. These BLM- and Forest Service-managed lands contain the
                            vast majority of the approximately 1.2 million active claims, and in
                            1988, about 160,000 new claims were filed. Agency mining enforcement
                            activities are carried out by relatively small staffs that have other
                       .-   duties as well. Although BLM anticipates some increase in staff as a
                            result of new revenue from budget increases, the vast acreage of federal
                            land and the large number of claims will continue to make enforcement
                            under existing budget constraints difficult, if not impractical.

                            The enforcement burden on agency staff is large because the law and
                            regulations contain few self-policing controls. The mining law allows an
                            individual to file a claim and obtain mineral rights without first proving
                            that a valuable mineral deposit has actually been discovered. The cost of
                            filing a claim is only $10, and the minimum yearly cost of maintaining a
                            claim involves submitting an affidavit with a $5 fee certifying that at
                            least $100 of development work was done for each claim. These require-
                            ments make it easy and relatively cheap to obtain and hold a claim
                            whether or not mining is being pursued. While no hard data exist,
                            agency officials estimate that over 80 percent of currently recorded
                            claims are not being actively explored, developed, or mined.


                            Page 38                        GAO/BCJD9@111 Unauthorized   Activities   on Hardrock Claim-
 Appendix VII
 Unaathorized Actlvltlea   Continue




 With the limited self-policing requirements contained in the law and
 agency regulations, the agencies must rely on their inspection and
 enforcement activities to ensure that claim holders do not exceed
 approved activities. However, agency enforcement efforts are not fully
 effective. For example, BLM was not able to consistently meet the limited
 inspection requirements that existed before 1989. Further, RIJ officials
 in the three states covered in our review said they also will not be able
 to meet the more frequent inspection schedule in the new inspection
 requirement.

 Inspecting operations covered by notices and plans is necessary because
 several agency officials told us that claim holders sometimes build unau-
 thorized structures or exceed what is authorized in a plan. For example.
 a Forest Service official told us that one claim holder built a landing
 strip on his claim and the Forest Service did not know about it until a
 plane crashed. We saw other examples of unauthorized activities at sev-
 eral sites. For example, at one site on BLhi lands, the claim holder added
 an unauthorized truck scale to a claim that already had several unau-
 thorized residences and structures. At a site on Forest Semite lands.
 although the claim holder had submitted a plan, he built roads that ivere
 not authorized by the plan.

  Other problems exist where claim holders conduct operations on their
  claims without filing a notice or plan of operations. Not only are unau-
  thorized mining operations conducted, but nonmining operations may be
  ongoing. For example, at one of the sites we visited, the claim holder
  was operating a scrap metal and hazardous waste storage site without a
-,plan. During his operation, he contaminated the soil with heavy metals.




 Page 39                              GAO/WED-~111   Unauthorized   Activities   on Hardrock   Claims
Appendix VIII

Comments From the Department of the Interior


Note: GAO comments           ,, _    ,_
supplementing those In the
report text appear at the
end of this appendtx.
                                                  United States Department of the Interior
                                                                OFFICE OF THE SECRETARY
                                                                 WASHINGTON,  D.C. 20240




                               Mr.   James Duffus,  III
                               Director,   Natural  Resources
                                  Management Issues
                               General Accounting     Office
                               Washington,   D.C.   20548

                               Dear Mr.      Duffus:
                               Thank you for   your letter   of April            5, 1990, asking the Department
                               of the Interior     to comment on the             draft report  entitled,  FedQFal
                                                .                                                        Q Clam
                                (GAO/RCED-90-111).
                               We have reviewed        the   report    and our general     comments are:
                               Page 1 - The number of mining claims which have known or suspected
See comment 1                  unauthorized    activities     is cited as 1,600 of 662,000 mining claims.
                               You may wish to put this number in perspective         by pointing out that
                               the 1,600 claims         with  unauthorized   activity  are less than one
                               quarter    of one percent     (0.24 percent).
                               Page 4 - The report        recommended that the Secretary        of the Interior
See comment 2                  adopt     regulations      implementing   the criminal      penalty     authority
                               contained      in FLPMA.     The Bureau of Land Management (BM) has such
                               regulations       in place at 43 CFR 9262.1.     The regulations      provide for
                               pena&ties     for unauthorized     use, occupancy,  or development       of public
                               lands.
                               Formal comments prepared by BLM are enclosed for your incorporation
                               into the GAO report.    Thank you for the opportunity to comment.




                                                                                 Secreta & - Land and
                                                                      Minerals    Management

                                Enclosure




                                            Page40                       GAO/RCEXMO-111   Unauthorized   Activities   on Hardrock   Claims
                        AppendirVIIl
                        CommentaProm the Deputment Of
                        the Interior




                                 Bureau of Land Management's          Comments on
                          General Accounting   Office Report          (GAO/RCED-90-111)

                                          BIONAL CONS-
                 . ..ne believe        that the Congress should con8ider       replacing     the $100
                 annual work requireaient           with an annual holding      fee that could be
                 graduated      over time,       recogniaing    that a balanoe      mu8t be struck
                 between     an amount high enough to dhcourage           penon       not intent   oa
                 mining    from    filing     sew alaim      and keeping  l xi8ting     one8   and an
                 amount low l nough to not diacouraga             8ariou8 niner8.
                 The 1991 President's         Budget,    published     on January      29, 1990,
See comment 3.   includes  proposed appropriations         language that would establish         an
                 annual holding     fee of $100 for each unpatented       mining claim located
                 on public   lands.     This holding   fee would be established        in lieu of
                 the assessment       work requirement      contained   in the Mining       Law of
                 1872, as amended (30 U.S.C.            28),    and the filing      requirements
                 contained    in Sec. 314(a) and (c) of the Federal             Land Policy     and
                 Management Act of 1976 (43 U.S.C. 1744).


                 RECOMMENDATIONTO THE SECRETARY OF THE INTERIOR
                 We recommend that the Secretary      of the Interior        adopt      regulations
                 implementing the criminal   penalty    authority     contained         in FLPNA as
                 a means to prwent      or d8ter    unauthorized      activities          on mining
                 claims.
                 The Bureau of Land Management did implement such regulations
See comment 2    June 20, 1989, at 43 CFR 9262.1.        These regulations    provide    for
                 penalties   for unauthorized  use, occupancy, or development    of public
                 lands.    Section  43 CFR 9262.1 reads as follows:
                 Under section    303(a) of the Federal Land Policy and Management Act
                 of 1976 (43 U.S.C. 1733(a))          any person who knowingly       and willfully
                 violates   the provisions         of Sec. 2801.3(a),      2812.1-3,     2881.3,     or
                 2920.1-2 (a) of this        title     by using   public     lands    without      the
                 requisite    authorization,         may be tried     before    a United       States
                 magistrate    and fined no more than $1,000 or imprisoned              for no more
                 than 12 months, or both.




                        Page41                       GAO/RCEDSOlllU~uthorizedA~vitl~onH~kC~
               Appendix VIII
               Conunenm Prom the Deputment    of
               the Interior




               The following are GAO’S comments on the Department of the Interior’s
               letter dated May 17, 1990.


               1. We believe that the report provides adequate perspective by identi-
GAO Comments   fying the total number of claims and the number of known or suspected
               unauthorized activities associated with these claims.

               2. The proposal in our draft report on criminal penalty authority has
               been deleted.

               3. The report has been revised to reflect the proposal in the President’s
               fiscal year 1991 budget to establish an annual holding fee of $100.




               Page 42                       GAO/IUXDWlll   Unauthorized   Activities   on Hardrock   Claixw
Appendix IX

Comments From the U.S. Department
of Agriculture

Note, GAO comments
supplementing those In the
report text appear at the
end of this appendix.                                                                     14th & xndepe!ndQoe 91
                                                                                          201 14th street     sv
                                                                                          P.O. Box %o%l
                                                                                          Washi%on, Df2M0906090

                                                                              Reply To:     1420

                                                                                  Date: NAY 2 1990


                             Hr. John GI. Hat-man,Director
                             Food and Agriculture Issues
                             Resources, Cormunity, and Econanic
                               Developacnt Division
                             General Accounting Office
                             Washington D.C. 20548

                             Dear Hr. Harman:
                             We have reviewed the draft report r                        * I
                             m,                                       RED-9C-111. We believe that the
                             report does an excellent job of accurately describing the types and
                             consequences of unauthorized residences, nonmlning cOmnerCia1 ventures,  and in
                             some cases, illegal or speculative activities  on mining claims on National
                             Forest System lands.
                             We have the following   comments on the section “Results in Brief”:
                                 Our experience is that m             additional unauthorized use is not an
See comment 1.                   unduly expensive or ccmplicated process as implied under the third finding
                                 on page 2. If our field personnel are present on-the-ground and interact
                                 periodically  with a mining claimant, we are able to gain an understanding
                                 of the rights of both parties, and we can avoid unauthorized cccupancy or
                                 stop it at an early stage. This does require a coaxuitment by the
                                 (Ibvernmcnt to have a field  force  sufficient  to monitor mining activity.
                                 We fully concur with the finding    as it applies to existing and many times
                                 long-standing unauthorized activity.
                                 The responsibilities    and authorities  of the Secretary of Agriculture on
See comment 2.                   National Forest System lands mrst be recognized. Therefore, we recommend
                                 that the Vkcretary of Agriculture”      be included along with the “Secretary
                                 of the Interlor,n    and Vongressn in the last paragraph of this section on
                                 page 2.
                             We believe the report needs to clearly recognize that we can control future
See comment 3.               unauthorized use and eliminate existing    unauthorized use by applying current
                             laws, regulations,  policies, and procedures.     We say this while conceding the
                             difficulty  that we have eXpcrietn%?d in eliminating unauthorized use. This
                             requires that we conxnit the legal and administrative    personnel needed, and
                             that we maintain frequent contact with the mining claimant at the field level.




                                  P8ge 43                     GAO/RCEDB@lll      Unauthorized   Activities   on Ihrdmck   CZlaha
                            Appendix M
                            Commenta From the     U9. Department
                            0fAgTicuiture




                 r
                     Mr. John W. Hannan, Dlrector                                                               2
                     In fact, if there is lack of couxnltment to either         requirement,    any other
                     chenges will likely not succeed.
                     Our ctmnents      on   changes proposed by the report are made in the context of the
                     following:
                          1) Unauthorized residence is the rrajor unresolved mining claim use issue
                          on National Forest System lands. Most other unauthorized uses of mining
                          claims such as “illegal activitiesn occur in conjunction with unauthorrzed
                          residences .
                          2) In our efforts to remove unauthorized residences, we have
                          scrupulously:    (a)   sought input from literally       everyone    with any possible
                          interest including elected and appointed        officials      at all levels, the
                          claimant, mining interests,     and the public;      (b) looked at the possible
                          legal alternatives;     and (c) followed both the intent and rquiranents             of
                          the applicable laws. We also believe we have been both compassionate and
                          patient.    Adequate time has been allowed for the people involved to
                          relocate, and in soau? cases of extrema personal          hardship, we have
                          authorized sane residential     occupancy   through special-use permits.
                          Despite this, we end up with wtional          conflicts that generate unfavorable
                          publicity uhereby many public officials        ask for more time or new, or
                          different   solutions.    These add to, and significantly         increase the time
                          and energy already spent in reaching what we consider to be a legally
                          correct, but compassionate and fair decision.
                     In context with the above and the information presented in the report, we
                     believe the following points should be incorporated into recommendedcnanges
                     and other report sections:
                          1) We need a declaration of policy from Congress that it clearly intends
See comment 3.            for unauthorized uses to be eliminated from public lands, and that it will
                          support the agencies efforts to accomplish this.    The policy should also
                          include  a statement to the effect that residential  occupancy is not a
                          normal rquirawnt     for mining activity under the 1872 Hining Laws. This
                     c    could easily   be expressed in an amendmentto the Surface Use Act of 1955.
                          2) Simplify saae of the Government’s procedures involving claim contests
See comment 3.            with the Office of Hearings and Appeals (OHA). Based upon Current
                          practice, It is necessary for the Bureeu of Land Management (BLM) to
                          review    and approve work done by certified   Forest Service Mineral Examiners
                          and Certified Review Examiners, both of which are highly experienced and
                          trained    at the BLM Phoenix Training Center.    The legal basis for this
                          needs to be reviewed, and if it can be eliminated by administration
                          action,    it should be. If not, Congress should give the Forest Service the
                          necessary    legal authority to avoid the BLM review and go directly to the
                          OH4.
                          3) Agencies need to revise their existing regulations to include stronger
See comment 3.            language involving unauthorized use. It is iuperative that revised
                          regulations clearly state that: (a) residency and nonmining corfxnercial




                             Page 44                         GAO/lKEDWlll      U~nthorizd   Activitlem   on Hardrock   Claim
                        Commenta From the US. Jh9partment
                        0fAgricuitwe




                tD   Mr. John W.    Herman,      Director
                        uses are normelly not authorized, and (b) the burden of proof to
                                                                                                                             ?

                        demonstrate that residency is rquired is upon the claimant. With the
                        developed transportation    system for most areas, there is alrmst no need
                        for residency in connection    with mlnlng activity.  Reaote nonroadq areas
                        like perts of Alaska could be the exception.
                        4)    Eliminate the imposition of higher fees. We do not believe this will
See comment 4           prove    effective in eliminating the problems, and this could have adverse
                        effeots on mineral development, particularly            for smaller mining
                        co-nits.         The isPosition of higher fees will definitely       not have much
                        effeot on mining ralatad       scams.      Those who intend to run a scam and
                        defraud     the public can easily     afford   higher fees, uhlle the legitimate
                        miner could not.
                 The proposed changes will              not be effective if there is no support for an
                 effective    on-the-ground          work  force that can interact with a mining claimant on
                 a one-to-one      basis.

                 These constitute our major points of concern.                   San minor points and technical
                 corrections are included in the enclosure.
                 Thank you for the             opportunity to coament       on the draft report. If you            have any
                 questions on our             cements, please contact        Sam Hot&kiss at 453-8235.

                 Sincerely,
                                ,




                 EnoloLure




                        P8ge 46                             GAO/lKXIM@lll       Unauthorized   Activ-itiea   on   Hardrock       Claims
                                 Appendix M
                                 Comment8 From the US. Department
                                 0fAgritnlture




                                                              ADDITIONAL COMENTS


                        Paso 3, Paragraph 1 - So long as the landr are               open  to mineral exploration,
                        the claimants need no federel l ctlon to obtain               the full legel rights to their
                        claims.
                        CCmENT: The referenced              statement is not accurate.        There are vary well
See comment 2           established       legel requirements       which cost considerable       money that must be
                        completed       to gain full legal rights.         We also do not agree that the number of
                        mining    claims filed      in 1988 roflactr      that the self-initiating        character  of the
                        mining laws is problematic.              The number of mining clalme       filed in 1988 is
                        Iergely     reflectiva   of today’s       mineral veluae.   Wa recommend        that the material
                        relating      to those two polntr be deleted.

                        Page 3. Pare8raph 1 - Although tha purpose of this l nnual work requirement                ie
                        to encourage mineral development,         we reported     in March 1989 that much of the
                        wrk  dona or certified       to have bean done by claim holderr to meet the ennual
                        work requiremantr     had not brought     the claim      en7 cloeer Uo development,    end
                        the requirement    Le difficult     for federel     lend  managing l gencles to enforcs.

                        COMMENT:    The courta have recognized that thb annual assessment requirement
See comment 5           serves both the purpose of promoting diligent       development of mining claima and
                        the purpoee   of ensuring that mining claims are held in good feith.         These
                        purposes are not necessarily    coextensive    and should not be so. Othawlse
                        mlnlng claima might be relinquished      because of temporary fluctuations     in
                        mineral values.    We recosssend that the report discuss the effectiveness        of the
                        annual assessment requirement    in light of both of its recognized      purposes.

                        Page 3, Paragreph 2 - Because mining operations     may range from multi-mlllfon
                        doller endeavors  to ror~ llmlted   pick end shovel vork.   the determination                      of
                        vbat constitutes  “incidental   to mining” can be difficult    at times.
                        COMMENT: We agree that the determination              of what constitutes        an activity
See comments 2 and 6.   incldantal     to mining can be difficult        at times.      However, an important fact to
                        remember    is that any significant       surface disturbing        activity    on National
                        Forest    System land. regardless      of whether or not the activity             is incidental      to
                        mining, must be approved by the Forest Service.                  If an activity     incidental     to
                        mining which causas significant          surface resource disturbance           is not approved,
                        thsn it is not authorized.          The courts     have generally     used a low threshold         in
                        deciding whether or not surface          disturbing    activities      are significant       for the
                        purpose of requiring        that chore activities      be approved by the Forest Service.
                        For example,     the courts     have held that the maintenance of residential
                        stactures      on mining claims causes significant            surface resource disturbance.

                        Page 4, Paragraph 2 - In the Forest    Service,  eha lack of penalty   euthorlty                        In
                        the mining laws is mitigated    to soma extent by l ganaral criminal    penalty
                        authority within its reguletlons    governing prohibited  l ctione  in national
                        forests.
                        COIimNT : The crlmlnal penalty authority     for unauthorized uses on National
See comment 7           Forest System lands is quite clear.     Authority  to impose criminal   penalties    is
                        provided by 16 U.S.C. 551     The Forest Service regulations    implementing    that




                                  Page 46                           GAO/BCEDSSlll           Unauthorized   Activities   on Hardrock   Claim
                          AppendlrM
                          Commen~FromtheUS.Department
                          ofAgriculture




                 authority   art     net forth at 36 CFR Part 261. The ptnalcies               that can be imposed
                 art described      by 36 CW 261.lb. while the unauthorized             actions for which such
                 penalties    may bo impostd      are set forth     at 36 CFR 261.10.        The maximum penalty
                 allovable     is rarely lmpostd      by the courts who tend to provide            miners     an
                 opportunity      to bring their conduct into compliance           vlth   pertfnenc       Forest
                 Se~lct     regulations     in lieu of being criminally        fined or incarcerated.
                 Therefore,     vt vould like to see the folloving         more accurate language be
                 included in your final report:            'The Fortsc Service has regularions              which
                 provide the agency full authority            to levy criminal     penalties      for unauthorized
                 uses    of National    Forest System lands, even though there is a lack of penalty
                 l uthorfty    in the mining     1~s."
                 Page 4, Paragraph          * - These claim holders..    .pey little       or no real-estate
                 taxes.
                 coNMNT:         This fa not a Federal matter, and generally        is not true.
See comment 8    Real-estate       tax.8 by local officials     art not restricted    in any way.              County
                 officials       comnly   tsx prlvaeely     owned facilities    on Federal land.          This
                 language       should be de1ot.J.
                 Page 12, Paragraph 2 - So long as cho lands are open to mineral exploration
                 the federal  govtnmtnt her no dfscrotion  about granting the claimants their
                 full logal riphta to the claim.

See comment 2    COMMENT: The first           response made for    page 3, paragraph        1 is applicable.

                 Page 37, Paragraph 1 - There is lfttle           in existing       lavs    or regulations  to
                 dottr claimants   from initfatfng       unauthorirtd     activities        or encourage them to
                 promptly terminate    such l ctiviftits    vhtn discovered.

See comment 9    connENT :          The response made for page 4, paragraph       2 is applicable.
                 Page 38, Paragraph 2 - The Forest    StrPieo ca*ta             have tvo lntra-*gamy
                 l dm.lnistrat:vta-1     ltrtls btlond tht initial              field  office decision          before
                 the ctst can bt apptalod to tht courts.

                 coNl4ENT: This stnttnct        does not belong in a paragraph having to do with the
See comment 2    procedures that muse bt follovtd            for the government     to invalidate     a mining
                 claim     on which a discovery      has not been made. The Forest Service
                 adminrstrativt      appeal procedure is used in connection           with decisions     about the
                 approval of activities        on mining claims, not in connection with decisions
                 about vhtthtr      t discovery has been made on a claim.            Also, revisions     were made
                 in cho Forest      Strict    admlnlstra~ivo     appeal regulations      approximately     18
                 montha ago vhfch providt         that many docislons      relating   to the regulation       of
                 actlvftlts      on mining claims art subject to only one level of adminisrracive
                 review.      For rhtse reasona, ve recommend that this sentence be deleted.

                 Page 40. Paragraph 3 - Bu+ tht procedurea for demonstrating       that activities
                 art no+ justified   art COmpltx, tlmo consuming, and staff intanafvt.       and the
                 burden of dtmonwratiag    t’at activities are unauthorisod  rests     with cht
                 fodtral govtrnmtnt.

See comment 2.         : The response
                 COMMENT                         madt   for Page 3, Paragraph      2 Is applicable.




                          Page47                           GAO/RCED9@l11UnauthorizedActivitieson                 HanirockClaims
                                                                                                                             -
                         Appendix LX
                         Commenta    FYom the   US.   Department
                         0fAgricultnre




                 Pago 41, Ptragraph 2 - Unltrs the land bar bean vithdravn    from mineral entry
                 tha claimant can rm-filt the claim and tht whole fmalfdation     proctss vould
                 ban to sear+ ovar.

                 COhnaNT: Once a mining claim hss been doclarrd invalid,                 tht govornmtnt may
                 bring an action in fedora1 court soaking rho tjtc~tnc                 of persons who wart
                 conducting unauthoriztd      actfvitit8      on mining claims and an order requiring           the
See comment 2.   rtmoval of ttructuros      and improvements from rho invalidaced             claim.  The face
                 that a mining claimant ro-files          the claim has not barrod the successful
                 prosecution     of such actions.       Normally,    the insCltutfon    of such proceedings       is
                 not necessary to obtain the abactmtnt of unauthoriztd                uses as mining   claimants
                 typfcally    art cooperative     once chair claims art dtclartd          fnvalid.   Thus, the
                 tht implication      that a claimant's      ability    to ro-fflt   a mining claim prtvtncs
                 the govtrnmant from resolving unauthorized use of mining claims ft not
                 accurate.     Thtrtfort.   vt recommend that this sentence bs dtltttd.
                 Page 02, Paragraph 2 - Tbo mining lav allow               claimtnes to file a claim and
See comment 10   obtain mineral rightr     vichout first proving          elur a vtluablt   mintral deposit
                 haa l cruslly bttn discovtrod.
                 COMMENT: This staIxmtnt      Cs misleading.  The rights of the miner art very
                 limited  until  it LJ proven a valuable mineral deposit txists.     The early rlghc
                 gtintd  fs mortly protocrion    from other miners.




                   c




                           Page48                             GAO/RCED4&lllUnamtborizedActivities         onHardrockCh.im~
               Appendix Lx
               Canmentd From the US. Department
               0fAgrlculture




               The following are GAO'S comments on the Department of Agriculture’s
               letter dated May 2, 1990.


                1. The Forest Service does not believe that preventing additional unau-
GAO Comments   thorized activities is an unduly expensive or complicated process if
               there is support for an effective work force in the field that can periodi-
               cally interact with mining claim holders. While it may be possible to pre-
               vent additional unauthorized activities with an effective work force in
               the field, our concern is that with current budget restrictions and the
               sheer number of mining claims spread over the approximately 460 mil-
               lion acres which BLM and the Forest Service manage, it is unlikely that
               the land-managing agencies will be able to provide the needed interac-
               tion with claim holders to prevent unauthorized activities. We therefore
               are recommending that the Congress amend the Mining Law of 1872 to
               provide a less staff-intensive, more readily enforceable alternative-a
               graduated holding fee which could discourage unauthorized activities.

               2. Clarifications have been made to the text of the report.

                3. The Forest Service commented that our report should recognize that it
                 can prevent future unauthorized activities and eliminate existing ones
                 by applying current laws, regulations, policies, and procedures although
                 it acknowledges that this has been difficult. Our report recognizes that
                 current law specifically provides that mining claims should not be used
                 for unauthorized activities and that regulations establish procedures
                 which enable the agencies to identify and eliminate unauthorized activi-
                ties. The Forest Service also pointed out that its task could be facilitated
               if the Congress declared that unauthorized activities should be elimi-
                 nated from public lands and amended the Surface Use Act of 1955 to
                 clearly state that residential occupancy is not a normal requirement for
                 mining, and that both BLM and the Forest Service revise their regula-
                 tions. Because we believe that existing law already prohibits unautho-
                 rized activities, we sought solutions which could discourage new or
                 continued unauthorized activities. We agree with the Forest Service that
                 the federal land-managing agencies should revise their regulations to
                 clearly state that residency and nonmining commercial activities are
                 normally not authorized, thereby shifting the burden of proof to the
                 claim holders to show that activities are incidental to mining. We also
                 believe that the complexity and time-consuming nature of the existing
                 process for invalidating claims suggest that the agencies should jointly
                 review existing procedures that could make the process for eliminating
                 unauthorized activities more efficient.


               Page 49                      GAO/RCED-Wlll   Unauthorized   Actlvlties   on Hardrock   Clahu
    Appendix IX
    Chnmenta From    the U.S. Depnrtment
    ofAgricu.lture




    4. The Forest Service disagreed with our recommendation that the Con-
    gress replace the annual work requirement with a holding fee, noting
    that such a fee will not prevent unauthorized activities and could
    adversely affect mineral development, particularly for smaller compa-
    nies While we agree that a holding fee may have little effect on illegal
    mining-related scam operations for which there are other legal remedies
    we believe such a holding fee can help prevent or terminate other unau-
    thorized activities such as unauthorized residences, which the Forest
    Service notes is the major unresolved mining claim activity on National
    Forest System lands. We belie7’ 1 -he holding fee would be effective in
    preventing and eliminating ur ‘. .;+rized activities because it would
    increase the cost of holding c....:“‘- I cost which is now minimal, particu-
    larly where claim holders do noi actually meet the annual work require-
    ment. Preventing or eliminating unauthorized residences would have a
    widespread impact because the Forest Service points out that most
    other unauthorized activities on mining claims occur in conjunction with
    unauthorized residences. In setting the amount of the holding fee, we
    recognize that a balance must be struck between an amount high enough
    to discourage persons not intent on mining from filing new claims and
    retaining existing ones, and an amount low enough not to discourage
    legitimate miners.

    5. The report has been changed to show that the annual work require-
    ment can also help ensure that claims are held in good faith. However,
    the effectiveness of the annual work requirement as an assurance that
    claims are held in good faith is limited to the extent to which claim
    holders actually perform the work.

c   6. We believe that the report fairly deals with the thrust of the Forest
    Service’s comment that it has approval authority for activities that
    would cause significant surface disturbance on its lands. Specifically,
    the report notes that the Forest Service has regulations which allow it tc!
    identify and approve or reject proposed activities on mining claims.

    7. The reference to penalty authority has been deleted.

    8. The reference to real estate taxes has been deleted.

    9. In response to our statement that there is little to deter claim holders
    from initiating unauthorized activities, or to encourage them to termi-
    nate such activities, the Forest Service commented that it has criminal
    penalty authority even though such penalty authority in the mining law



    P8ge 60                           GAO/lK%MXbl   11 Unaathorhd   Activities   on Hardrock   Claim
Appendix Ix
Comments Prom the US. Department
of.4grhllture




is lacking. However, the Forest Service points out that its maximum pen-
alty of $500 or imprisonment for not more than 6 months is rarely
imposed by the courts, which tend to provide miners the opportunity to
bring their conduct into compliance with pertinent Forest Service regu-
lations. Accordingly, we continue to believe that there is little deterrent
to unauthorized activities on mining claims.

10. According to the Forest Service, our statement that claim holders
can file a claim and obtain mineral rights without first proving that a
valuable mineral deposit exists is misleading. We do not believe this
statement is misleading because once a claim is filed, claim holders have
the right to explore, mine, sell the minerals contained on the claim, and
sell their rights to the claim. In addition, the courts have held that claim
holders, prior to discovery, have legal rights in the claim that the gov-
ernment cannot abrogate without due process. We believe that this pro-
vides claim holders, even those who have not proven discovery, with
substantial rights in their claims.




Page 61                      GAO/BCEM&lll   Unaathorired   Activities   on Hardrock   Clalma
Appendix X

Major Contributors to This Report


                        Robert W. Wilson, Assistant Director
Resources,              Robert Cronin, Assignment Manager
Community, and
Economic
Development Division,
Washington, D.C.

                        Jeff H. Eichner, Jr., Regional Management Representative
San Francisco           D. Patrick Dunphy, Evaluator-in-Charge
Regional Office         Thomas G. Cox, Site Senior
                        Kathryn Rose, Evaluator




                   c




(140246)                Page 62                 GAO/BCED@@lll   Unaathorized   Activities   on Hardrock   Chin
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