oversight

Oregon Dunes Recreation Area: Patenting of Mining Claims Complies With Law

Published by the Government Accountability Office on 1990-12-26.

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

                  United   States   General   Accounting   Office

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

December   1990
                  OREGON DUNES
                  RECREATION AREA
                  Patenting of Mining
                  Claims Complies With
                  Law
GAO
      United States
      General Accounting    Office
      Washington,   D.C. 20548

      Resources, Community,     and
      Economic Development      Division

      B-240377

      December 26,199O

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

      Dear Mr. Chairman:

      This report responds to your request that WC determine whether the federal government and
      the holder of mining claims in the Oregon Dunes National Recreation Area followed the legal
      and administrative requirements for patenting claims filed under the Mining Law of 1872.
      The report also discusses inconsistencies between the mining law’s patent provision and
      more recent national natural resource policitts.

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

      Please contact me at (202) 275-7756 if you or your staff have any questions about this
      report. Ma.jor contributors to the report art’ listed in appendix IV.

      Sincerely yours,




      James Duffus III
      Director, Natural Resources
        Management Issues
                   Executive Summary




                   The process to patent 780 acres of land in the Oregon Dunes National
                   Recreation Area began in 1959 when two sets of claims were located
                   along the Oregon coast-one called the Dreamer claims, on 3,160 acres,
                   and a second called the Fox claims, on 1,480 acres. The claims contained
                   sand high in silica content making it suitable for glass- making. In 1961,
                   the Bureau of Land Management withdrew 18,000 acres on the Oregon
                   Coast from mineral entry so that new mining claims could not be filed,
                   and in 1972 the Congress passed the Oregon Dunes National Recreation
                   Area Act, which set aside a 40.mile strip, including the land covered by
                   t,he Dreamer and Fox claims, for recreation purposes.

                   In 1968, the government invalidated the Dreamer claims, but in 1979 it
                   ruled that the Fox claims were valid because the sand was uncommon
                   and constituted a valuable mineral deposit before the lands were with-
                   drawn. In 1982, the claim holder filed an application to patent the Fox
                   claims, which were then within the recreation area. In July 1989, as the
                   government was about to patent the claims, the state of Oregon
                   requested that the government comply with a provision of the Coastal
                   Zone Management Act that requires federal agencies, under certain cir-
                   cumstances, to notify the states before undertaking activities that might
                   affect the coastal area.

                   On October 10, 1989, the government patented 780 of the 1,480 acres
                   covered by the Fox claims. The remaining 700 acres were not patented
                   because they were not on land open to patenting or they did not have
                   sufficient mineral value to meet patenting requirements.


                   The federal government acted properly when it concluded that the
Results in Brief   claims contained an uncommon variety of sand and, therefore, the
                   claims were subject to the patent provision of the Mining Law of 1872.
                   Also, the claim holder and the federal government complied with the
                   legal and administrative requirements for patenting. The Fox claims
                   were properly located, recorded, and maintained, and the patent appli-
                   cation was properly filed. In addition, GAO believes the government’s
                   position that it was not, required under the Coastal Zone Management
                   Act to notify the state of the proposed patenting is legally supportable.
                   Patenting these claims does raise questions about the consistency of the
                   mining law’s patent provision with more recent national natural
                   resource policies that call for the federal government to maintain owner-
                   ship of public lands and obtain fair market value for public resources.




                   Page 3                      GAO/RCED91-8 Patenting of Oregon Dunes Mii   Claims
                  ExecutiveSummary




                  mining law give claim holders the right to use the land for mining-
                  related activities.

                  From the perspective of resource management, because the land has
                  been patented and transferred to private ownership, the federal govern-
                  ment has lost control over its management. To maintain the control
                  needed to manage the recreation area and conserve the scenic and other
                  values that contribute to the public enjoyment, the Forest Service is
                  attempting to reacquire the lands through a land exchange. From a
                  fiscal perspective, the federal government received a patent fee of
                  $1:950, or less than 1 percent of the $350,000 estimated value of the
                  land. Moreover, if the sand-valued at millions of dollars-is extracted,
                  the federal government will not receive financial compensation for the
                  resources that it has given up.


                  GAO   makes no recommendations in this report.
Recommendations

                  The Department of Agriculture’s Forest Service and the Department of
Agency Comments   the Interior provided written comments on a draft of this report. Both
                  agreed with the facts in the report and GAO'S conclusions that the legal
                  and administrative requirements for patenting were followed. Interior,
                  however, said that GAO implied there are conflicts and inconsistencies
                  between the Mining Law of 1872 and the Federal Land Policy and Man-
                  agement Act. Interior pointed out that the Federal Land Policy and Man-
                  agement Act sets a policy of federal ownership of public lands and
                  obtaining fair market value for its resources, but in doing so excludes
                  the Mining Law of 1872 and specifically the patent provision. GAO recog-
                  nizes that the mining law is exempt from the Federal Land Policy and
                  Management Act and has inserted language in this report to emphasize
                  this point. However. GAO notes that patenting is not essential for min-
                  erals exploration and development because other provisions of the
                  mining law give claim holders the right to use the land for mining-
                  related activities.

                  Interior’s and Forest Service’s comments and     GAO'S   evaluation are
                  presented in appendixes II and III.




                  page5                        GAO/RCEDSl-EPatentingofOreSonDunesMiningClaims
Page 7   GAO/lUXD91.8   Patenthg of Oregon Dunes Mining Claims
                        Chapter   1
                        Introduction




                        1955, ch. 375 (30 USC. 601, Sll), commonly called the Multiple Use
                        Mining Act of 1955, removed common varieties of sand, stone, gravel,
                        pumice, pumicite, clay, and cinders from the mining law’s coverage, so
                        that the land containing such materials could not pass to private owner-
                        ship. The act also authorized federal agencies to sell the mineral mater-
                        ials on these lands. However, the 1955 act allows mineral deposits
                        having unique properties that give them special and distinct value to
                        remain under the mining law, thereby giving claim holders all associated
                        rights under that law, including the right to seek a patent.

                        A number of other pieces of land-use legislation, including the Federal
                        Land Policy and Management Act of 1976 (FLPMA) (43 lJ.S.C. 1701, et
                        seq.) and the Coastal Zone Management Act. (CZMA) (16 U.S.C. 1451 z
                        seq.) can be relevant to mining. FLPMA establishes policies that call for
                        the federal government to maintain ownership of federal lands and
                        obtain fair market value for its resources. IIowcver, FWMA also pre-
                        serves claim holders’ rights under the Mining Law of 1872, including the
                        right to patent public lands.

                        Among CZMA’S intended purposes is that of fostering consistency
                        between federal and state agencies regarding activities along the coast.
                        The act requires that federal agencies, to the maximum extent practi-
                        cable, conduct in a manner that is consistent with approved state man-
                        agement programs, those activities that are covered by the law and that
                        directly affect the coastal zone. When agencies determine that a pro-
                        posed activity is covered by the act and will directly affect the coastal
                        zone, they are required to provide the affected state with a “consistency
                        determination” at least 90 days before they grant final approval for
                        such an activity. If a federal agency proposes an activity covered by the
                        law and decides that it does not directly affect the state’s coastal zone, it
                        is still required to notify the state’s coastal zone management agency of
                        its decision at least 90 days prior to the proposed action.


                         Sand dunes line the Pacific Ocean beaches along the middle of Oregon’s
History of the Oregon    coast. In 1959 Mr. Maurice DuvaP located two sets of claims in the
Dunes National           Siuslaw National Forest along the Oregon Coast-one called the
Recreation Area          Dreamer claims on 3,160 acres and a second called the Fox claims, on
                         1,480 acres. Because thr sand in both sets of claims is very high in silica

                         “Several other people, mostly I)wal family members. were associated with the &mu through part-
                         nerships known as grub-stake- umtracts. WC will rcfrr tr, thex- claim holders collectively as the
                         DUL als




                         Page 9                                GAO/RCED-91-8    Patenting   of Oregon Dunes Mining   Claims
                                         Chapter 1
                                         Introduction




Figure 1.1: Duval Claims in the Oregon
Dunes National Recreation Area
                                                                                                          Siuslaw River
                                                                 \




                                                                                                                                                       ’
                                                                     \
                                                                         \
                                                                             \
                                                                                 \
                                                                                     \
                                                                                         ‘\
                                                                                              \
                                                                                                  \
                                                                                                      \
                                                                                                          \               Oregon
                                                                                                                  \


                                                                                                                      I
                                                                                                              :
                                                                                                          !!I
                                                                                                            i
                                                                                                              :
                                                                                                          :
                                                                 -:                                           Umpqua River




                                                                                                              q.:::>::::::::
                                                                                                               .../...i
                                                                                                                 ...
                                                                                                               i.....:...:.:
                                                                                                                          Oregon Dunes National
                                                                                                                          Recreation Area


                                                                                                                          Claims for which patents
                                                                                                              Ia          were approved (Fox claims)


                                                                                                                          Claims filed but not approve
                                                                                                              El          for patenting (Dreamer claim!




                                                             +-----                                           Existing operations
                                                             I
                                                             !                                                Coos Bay




                                          Page 11       GAO/RCED-91-g Patenting of Oregon Dunes Mining Claims
Chapter    1
Introduction




office to verify that the notices had been filed in a timely manner both
with the county recorder’s office and, subsequent to FLPMA, with BLM.”

2) To determine whether the claims had been maintained, we reviewed
the affidavits filed with IHM certifying that the annual work require-
ment had been met.

3) To determine whether the patent application had been properly filed,
we reviewed the patent application documents that had been filed with
IKM to ensure that the information supplied met the requirements of the
federal regulations.

To determine whether proof of a valuable mineral deposit had been
established at the critical dates during the process, we reviewed the
information included in the transcripts of the Fox claims hearings in
1978 and the testimony of the witnesses for the claim holder. We also
reviewed the information filed with the patent application, including
affidavits from intercj>tcd buyers and financial statements from the
claim holder’s existing mining operation, as well as projected financial
statements from the, proposed mining operation.

To determine whetlLcr i%M was required to comply with the notification
provisions of the ~n1.4. we reviewed the correspondence between BLM
and the State of Orrlgon’s Department of Land Conservation and Devel-
opment and spoke to officials of both agencies. We also reviewed the
CZMA, the Interior Solicitor’s opinion on the applicability of the act, and
the court case upon which it was based.

To develop the chronological case study, we reviewed all relevant files
available at BLM’S Oregon State Office and the Forest Service’s Region 6
Office, which provided an extensive history of the 30-year process. We
also spoke to BLM and Forest Service officials who had been involved in
the processing of the c,laims and the patent application.

 Our work was conducted between October 1989 and March 1990 in
 accordance with gcncrally accepted government auditing standards.


 ‘Before implementation of FLPMA. tNc fding requirements for notices of location and annual assess-
 ment work performed wew iontrolled by state laws. There was no requirement before 1976 to file
 documentation on most mming &imh with RLM unless the claim holder was applying for patent.
 FLPMA required holders of &urns located before October 21. 1976-the date of FLPMA’s enact-
 ment-to   record their clamx bcforv October 22, 1979, or else they would be considered abandoned
 and void.




 Page 13                               GAO/RCED-91-8    Patenting   of Oregon Dunes Mining Claims
Patenting ProcessMeets Legal and
Administrative Requirements

                          To patent claims for sand, claim holders must first prove that the sand
                          is an uncommon variety. This entails establishing that the sand in ques-
                          tion has unique qualities that give it distinct and special value. Once
                          over that hurdle, claim holders then must meet the mining law’s various
                          requirements, including establishing that they have (1) discovered a val-
                          uable mineral deposit, (2) met the annual work requirement, and (3) met
                          the patenting requirements. In addition, the State of Oregon asserted
                          that, before issuing the patent, BLM had to meet the notification require-
                          ments of the Coastal Zone Management Act (CZMA).

                          We believe the Duvals, BLM, and the Forest Service met the relevant
                          requirements. However, we also believe that patenting these claims,
                          which in the absence of state and local zoning requirements would allow
                          mining in a national recreation area, illustrates the inconsistencies
                          between the patenting provision of the mining law and federal steward-
                          ship requirements in more recent national natural resource policies.


                          After BLM withdrew the Oregon Dunes National Recreation Area from
Sand in the Patented      mineral entry in 1961, the federal government challenged the validity of
Mining Claims Was         the Dreamer and Fox claims in an effort to invalidate them. The federal
Determined to Be an       government contended that the Dreamer claims contained common
                          variety sand and that, for both the Dreamer and Fox claims, discovery
Uncommon Variety          of a valuable mineral deposit had not been made before the lands were
                          withdrawn. After several appeals were exhausted, the Dreamer claims
                          were declared null and void on the basis that a valuable mineral deposit
                          had not been discovered. The government ruled that a valuable mineral
                          deposit had been discovered on the Fox claims and, except for certain
                          lands that were not subject to claim or did not contain enough valuable
                          minerals, they were eventually patented.


Dreamer Claims Were       When BLM closed part of the dunes to further exploration for minerals,
Challenged and Declared   the boundary enclosed the Fox and the Dreamer claims. However, the
                          Duvals maintained rights under the mining law to develop these claims.
Null and Void
                          The Forest Service began its efforts to invalidate the two sets of mining
                          claims by challenging the Dreamer claims in 1966. The mineral report
                          prepared by a Forest Service minerals examiner concluded that the sand
                          on the claims was so widespread that it was a common variety and
                          therefore not covered by the mining law. The report also concluded that
                          even if the claims had been covered by the mining law, they would be
                          invalid because the claim holders had not proven that a market existed


                          Page 15                      GAO/RCED-91.8 Patenting of Oregon Dunes Mining Claims
                       Chapter 2
                       Patenting Process Meets Legal and
                       Administrative Requirements




                        glass-making, a use which commanded a higher price than common
                        sand, the Forest Service agreed with the claim holders that the sand was
                        uncommon and therefore that the land was subject to claim under the
                        mining law. The minerals examiner also concluded, however, that the
                        claim holder had not proven the existence of a market for the sand
                        before the lands were withdrawn and therefore had not proven dis-
                        covery of a valuable mineral deposit. In response to this conclusion, BLM
                        challenged the validity of the claims. However, Interior’s Office of Hear-
                        ings and Appeals ruled in 1979 that the claims were valid, in part,
                        because additional information provided by the Duvals established that
                        in 1961, when the lands were withdrawn from mineral entry, there had
                        been a potential market for the sand. A government appeal to Interior’s
                        Board of Land Appeals was decided for the Duvals in 1981, and the Fox
                        claims were upheld as valid.

                        In 1982, the Duvals filed an application to patent the Fox claims. During
                        the patent application process, BLM disapproved patenting 480 acres of
                        the claims because they were filed on lands that had never been open to
                        exploration for minerals and an additional 220 acres because they did
                        not contain sufficient minerals to be considered a valuable mineral
                        deposit. The remaining 780 acres were recommended for patenting in
                        1987, and the patent was issued on October 10,1989. The government
                        received $1,960, based on a patent fee of $2.50 an acre, for this land.


                        The Duvals, BLM, and the Forest Service complied with the legal and
The Legal and           administrative requirements of the Mining Law of 1872 for filing, main-
Administrative          taining, and patenting the Fox claims. Implementing regulations require
Requirements of the     a claim holder to satisfy the following legal and administrative require-
                        ments during the mining claim and patent application process:
M ining Law of 1872
Were Met              . Locating. To locate a mining claim, the claimant must (1) stake the claim
                        (except for certain placer claims-claims for minerals found in masses
                        of sand or similar material), (2) post a notice of location on the claim,
                        and (3) comply with state laws, including filing a notice of location with
                        the county recorder’s office.
                      . Recording. To record a mining claim, the claimant must file a copy of the
                        official notice of location at the appropriate BLM office within 90 days
                        after the date of location of the claim, or by October 22, 1979, for claims
                        that were located before October 21, 1976.
                      . Maintaining. To maintain a mining claim, each year the claim holder
                        must file an affidavit attesting that at least $100 worth of development-
                        related work has been carried out for each claim. The claim holder must


                        Page 17                            GAO/RCED91-8 Patenting of Oregon Lhmes Mining Claims
                          Chapter 2
                          Patenting Process Meets Legal and
                          Administrative Requirements




                          BLM maintained that issuing a patent does not constitute a federal
                          activity as envisioned under the law and therefore declined to issue a
                          consistency determination or to give the state a go-day notice. In taking
                          this position, BLM determined that the act’s provisions did not apply to
                          patenting because issuance is not discretionary on BLM'S part and
                          because the mere transfer of a title does not constitute a federal
                          activity. As precedent for its actions, BLM cited a court decision (Ono v.
                          Harper, 592 F. Supp 698, 1983) in which the US. District Court for
                          Hawaii found that a sale of federal land by the General Services Admin-
                          istration to a private individual did not constitute a federal activity that
                          directly affected the coastal zone.

                          We believe BLM'S position is legally supportable. In this instance,
                          although the act requires all federal activities that directly affect the
                          coastal zone to be coordinated with a state’s coastal management
                          agency, like the Ono case, transfer of title alone does not directly affect
                          the coastal zone since, of itself, it does not change the way the land is
                          being used.


                          The Forest Service’s policy in managing the recreation area is to acquire,
Forest Service Seeks to   through purchase or land exchange, all private lands in the “dunes
Restore Patented          sector,” which includes the area where the patented claims are located.
Lands to Federal          The purpose of these acquisitions is to give the Forest Service the con-
                          trol needed to manage recreation and conserve the scenic and other
Ownership                 values that c0ntribut.r to the public’s enjoyment. To this end, it has
                          acquired 1,200 acres since the recreation area was established and, until
                          the Fox claims were patented, no private land remained in the dunes
                          sector.

                          In an attempt to restore the 780 acres of patented lands to federal own-
                          ership, the Forest Service, ELM, and the Duvals agreed to explore
                          exchanging the patented land for land outside the recreation area.
                          Accordingly, the Duvals agreed not to exercise their ownership rights
                          until March 1991 to allow the Forest Service time to evaluate suitable
                          options for an exchange.

                          Establishing the value of land to be exchanged is difficult. In the case of
                          the Fox patent, when t,he land covered by the claims passed from public
                          to private ownership, it became subject to state and county restrictions
                          that limit its use and value. For example, the state’s legally binding land-
                          use plan prohibits mining in significant shoreland areas and residential
                          development on beaches and active foredunes-grassy sand hills rising


                          Page 19                             GAO/RCEDBl-S Patenting of Oregon Dunes Mining Claims
                      Chapter 2
                      Patenting Process Meets Legal and
                      Administrative Requirements




                      From the perspective of resource management, because the land is pat-
                      ented, the Forest Service has lost control over its management. If an
                      exchange cannot be made by March 1991, the Duvals are free to use the
                      780 acres in any way they choose within state and county restrictions.
                      Forest Service officials believe that mining is unlikely because of the
                      county’s strict zoning. However, they believe that the presence of pri-
                      vate land within the recreation area will limit the agency’s ability to
                      effectively manage adjoining public land. For example, they believe it
                      would be more difficult to implement planned programs to enhance wet-
                      lands. They also anticipate that activities such as the use of off-road
                      vehicles-which they consider inconsistent with the area’s use as a
                      roadless, isolated area noted for its quiet and scenic beauty-will
                      increase with or without the Duvals’ approval, and/or that a waterfowl
                      hunting club could be established.

                      From a fiscal perspective, the federal government received $1,950, or
                      less than 1 percent of the $350,000 estimated value of the land with
                      constrained options for development. Moreover, if the sand-valued at
                      millions of dollars-wcrt: to be extracted, the federal government would
                      not receive any monetary compensation.


                      The responsible federal agencies and the claim holder met the legal and
Conclusions           administrative requirements for patenting mining claims within the
                      Oregon Dunes National Recreation Area. We believe, however, that the
                      patenting of mining claims within this scenic public recreation area for a
                      fraction of the lands’ estimated value, coupled with the accompanying
                      management problems that it creates, illustrates the inconsistencies
                      between the mining lavv’s patent provision and more recent national nat-
                      ural resource politics.


                      The Department of Agriculture’s Forest Service and Interior provided
Agency Comments and   written comments on a draft of this report. Both agreed with the facts in
Our Evaluation        the report and GAO'S conclusions that the legal and administrative
                      requirements for patenting were followed. Interior, however, said that
                      GAO implied that thcrc are conflicts and inconsistencies between the
                      Mining Law of 1872 and FLPMA. Interior pointed out that FLPMA sets a
                      policy of federal ownership of public lands and obtaining fair market
                      value for its resources. but in doing so excludes the Mining Law of 1872
                      and specifically the patent provision. Interior also commented that GAO
                      had not recognized other national policies that call for managing public



                       Page 21                            GAO/RCED-91-8 Patenting of Oregon Dunes Mining Claims
Page 23   GAO/RCED91-3 Patenting of Ore&m Dunes Mh@   Chha
Appmiix I
Time Line of Key Events in the Oregon Dunes
Mining Claims and Patent
Application Process




Date                    Action
                        the deposits were held to be a common vatlety and not subject to
                        locatlon In addltlon, because no market for the sand had been
                        establlshed, the claim holders had falled to meet the test of dlscovery
                        Dreamer claims Nos. l-14 and 16-25 were declared null and void. The
                        Duvals subsequently    appealed this declslon.
November       5        BLM’s Office of Appeals and Hearings afflrmed the hearing examiner’s
                        March 15 declslon This declslon stressed the widespread occurrence of
                        the sand but did not specIfIcally affirm that the sand was a common
                        variety The Duvals appealed this declslon
1970
November       23       The lnterlor Board of Land Appeals (IBLA) Issued a declslon (1 IBLA 103,
                        1970) that upheld the lower rulmgs that the Dreamer claims were null
                        and vo10 IBLA decided the Issue on the basis of the fact that a valuable
                        mlneral deposit had not been dlscovered and did not address the
                        common variety questlon
1971
July 2                  The Duvals flied a petItIon for reconslderatlon of IBLA’s decision stating
                        that the record did not support the conclusions reached by IBLA As an
                        alternatlve to reversing IBLA’s decision, the Duvals requested a further
                        heanng to present addItIonal evidence to establish proof that a valuable
                        mlneral deposit had been discovered prior to the date of wlthdrawal
August    24            Denying the petihon for reconslderatlon,   IBLA stated that the
                        preponderance    of the evidence, lncludlng new evidence in the petItIon,
                        continued to support the conclusion that there was no valid dlscovery
                        pnor to July 16. 1961, the date of withdrawal   At this point the Duvals
                        had exhausted the possible remedies wIthIn Interior’s admlnlstratlve     law
                        process
September          29   The Duvals flied a CIW complalnt in the U S. Dlstnct Court for Oregon
                        against the Secretary of the lnterlor (Duval v Morton, Civil No. 71-664)
                        stating that IBLA had erred, was arbitrary and capncious, had not
                        supported Its declslons, and had abused Its dlscretlon when it denied
                        the Duval’s petItIon
1972
March 23                Public Law 92~260 establtshed    the Oregon   Dunes National    Recreation
                        Area
August    23            U S. Dlstrlct Court Issued a judgment III Duval v Morton dlsmisslng the
                        CIVII cornplaInt and flndlna that IBLA had consldered all the evtdence
                        and correctly concluded That there had not been a valid dlscovery The
                        District Court’s declslon also stated that there had been no abuse by
                        IBLA In denying the request for reconstderatlon    of the further hearing
                        The Duvals appealed this declslon to the U.S Court of Appeals for the
                        9th Clrculi
1973
August                  The Duvals began mlnlng sand near Coos Bay on pnvate land and
                        selling sand for use In glass manufactunng and In other Industries.
December       19       The U S Court of Appeals    for the 9th Circuit afflrmed   the District Court
                        declslon
1974
                        IBLA Issued a declslon In another case-McClarty       v Secretary of the
                        Interior regarding whether a mlneral deposit was common or uncommon
                        Inreaching    Its declslon, IBLA used the guidance that the U S Court of
                        Appeals for the 9th Clrcult established in 1969 when It remanded the
                        case 10 W A for reconslderatlon     of whether the mineral on which the
                                                                                         (continued)



Page 26                                 GAO/RCEDI)l-8     Patenting of Oregon Lhmes Mining Claims
Appendix I
Time Line of Key Events in the Oregon Dunes
Mining Claims and Patent
Application Process




Date                     Action
September           29   Interror’s Regronal Solrcrtor Issued a favor? able oprnron statina that the
                         trtle evrdence and accompanvrnq      data disclosed that the applrcants had
                         valid trtle to the clarms          -


February       17        BLM requested      addrtronal informatron from the applrcants to venfy that
                         at least $500 of   development    work had been done for the benefit of
                         each clarm The      Duvals furnished the necessary documentatron
                         attesting to the   development    work performed
June 22                  BLM Issued the Mrneral Entry Final Certlfrcate certrfying that the Duvals’
                         patent applrcatlon for the Fox clarms (1,000 acres) met all requrrements.
                         After thus document was issued, the claim holder no longer had to
                         comply wrth the annual work requirement
August     4             A Forest Servtce consultant submitted hrs mrneral examrnation. whrch
                         recommended     that 220 acres of the Fox clarms should not be patented
                         because they did not contarn sufficrent valuable minerals to be
                         economrcally mrned and that the remanning 780 acres should proceed to
                         patent The consultant also stated that on the basrs of rnformatron
                         suppked by the applrcant, he belreved that the $500 expendrture
                         requrrement had been satisfied.
1999
May 26                   The Forest Servrce notrfred BLM that It had no obfection to patenhng
                         780 acres of the Fox clatms as recommended     bv the mrnerals
                         exammatron report.
July 28                  The U S House of Representative’s      Commrttee on Intenor and Insular
                         Affairs. Subcommrttee    on Minrna and Natural Resources, reauested the
                         Secretary of the Interior to delay patentrng the Fox claims pendrng a
                         thorough Investigation by the Intenor Department and the General
                         Accountrng Offrce
July 28                  The Charrman. Subcommrttee      on Minrng and Natural Resources,      House
                         Commrttee on Interror and Insular Affarrs, requested the General
                         Accounting Offrce to Investigate the Fox mrnrng claims.
July 28                  The State of Oregon’s Department of Land Conservation and
                         Development    requested that BLM submit a consistency determrnatron
                         on the rssuance of the mrnrng patent under the provrsions of the Coastal
                         Zone Management Act
 September          26   The Duvals, BLM, and the Forest Servtce srgned a letter of Intent for a
                         land exchanae and the Duvals aareed to take no achon on the clafms for
                         17 months w?lile the parhes attempted to complete the exchange
 October       7         The Subcommrttee  on Mining and Natural Resources held a heanng rn
                         Eugene, Oregon, on the proposed patent of mrnrng clarms wrthrn the
                         Oregon Dunes National Recreatron Area
 October       10         BLM Issued Patent 36~90-0002 to 780 acres




 Page 27                                    GAO/RCED-9148 Patenting of Oregon Dunes Mining Claims
                                 Appendix II
                                 Comments From the Department of
                                 the Interior




                  r
                                                                   Response to
                                            Draft   Report     by the General Accounting            Office

                                FEDERAL LAND MANAGEMENT: "Oregon Dunes National   Recreation                        Area:
                                          Patenting of Mining Claims Complies with Law"
See comment   1                                         (GAO/RCED-90-216)




                      GENERAL C O M M E N T S

                      The principal      findings   of the report         are:

                           1.    Sand on the Fox mining         claims     is subject     to the Mining         Law of 1872.

                           2. The legal and administrative                requirements     for     determination      of
                           validity of an "uncommon variety"               and application         for mineral      patent   were
                           met.

                           3. Patenting     of mining        claims   is inconsistent       with     national      natural
                           rescJurce policies.

                      Items one and two, above,         vindicate        BLM's handling     of the Oregon Dunes case
                      during the last 30 years.

                      The finding  in item three is incorrect.   The GAO report quotes the Federal
                      Land Policy and Management Act of 1976 (FLPMA) as setting    the policy of
                      Federal ownership of public lands and obtaining   fair market value for its
See comment   2       reaotlrces.  This Is generally  correct, however, FLPMA excludes the patenting
                      provisions  under the Mining Law of 1872 from this policy   (43 U.S.C. 1701, Sec.
                      302(b)).

                      As expanded below, the GAO stresses the inconsistencies                        between FLPMA policy
                      and the 1872 Mining Law. However, FLPMA states that:

                           "Except as provided in section        314, section 603, and subsection    (f) of
                           section    601 of this Act and in the last sentence of this paragraph
                            [section    302(b)], no provision    of thfs section or sny other section of
                           this Act shall in any way amend the Mining Law of 1872, or impair the
                           rights    of any locators    or claims under that Act, including,    but not
                           limited    to, rights   of ingress and egress."      43 U.S.C. Sec. 1732(b).




                                  Page 29                                  GAO/RCEB91-9 Patenting of Oregon Dunes Mining Claims
                                Appendix II
                                Comments From the Department of
                                the Interior




                  -

                                                                                                                    3


                      minerals   reclamation     industries,     [and] (2)       the orderly      and economic
                      development of domestic mineral resources,                 reserves,     and reclamation     of metals
                      and minerals    to help assure satisfaction          of      industrial,     security,   and
                      environmental     needs.... " 30 U.S.C. Sec.2la.                And further    in the Act, "It
                      shall be the responsibility          of the Secretary          of the Interior      to carry out this
                      policy when exercising        his authority     under      such programs as may be authorized
                      by law other than this section."            30 U.S.C.        Sec.21.9.

                      Mining,  claim-staking, and patenting    are legitimate       uses of the public lands,
                      and as such, are the means by which private        enterprise     is encouraged to
                      develop sn economically  sound and stable domestic mining industry,            as mandated
                      by the Mining and Mineral Policy Act of 1970.          The BLM has managed mining
                      use6, along with range, recreation,     wildlife,     lands, and other uses through
                      its planning and environmental    processes to try to meet the needs of the
                      public in an equitable  and environmentally       sound manner.

                      Again on page 26, GAO fails      to mention that the same act (FLPMA) calling     for
                      "maintain[ingl     ownership of public lands and . . . obtain[ingl    fair market
                      value ," also calls for "the public lands [to] be managed in a manner which
                      recognizes     the Nation's  need for domestic sources of minerals...."
                      43 U.S.C. Sec. 1701(a)(12).

See comment   6       2. On page 9, paragraph 1 under "Background",       states "First,  neither    prior
                      notification      to the government nor a permit is required  when prospecting     for
                      minerals     covered by the act."

                      This statement         is misleading.        The Mining Law of 1872 requires            $100 of annual
                      labor,     and 43 CFR 3833.2-4 requires             that a mining claimant        file    annually    an
                      affidavit      of assessment work, or a notice of intent                 to hold the claim--43         CFR
                      3822.2-S.        Assuming that a mining claimant is being diligent,                    and complying
                      with the intent          of the mining laws and regulations,             the mining claimant        is
                      giving "notification"            to the Federal Government, as well as the State and
                      counties,      by filing      this affidavit      that he is actively        prospecting      his mining
                      Claim.      In addition,       under 43 CFR 3809.1-3,         a notice must be filed          by the
                      mining claimant with the authorized                 officer   for operations,       including
                      prospecting,        that will      disturb   5 acres or less of surface.            Approval for
                      notice-level       activity      is not required,        but reclamation     of the site,       is
                      required.        For surface disturbances          over 5 acres, an approved plan of
                      operations       and an environmental         review, including       reclamation      plans, are
                      required      prior to commencement of mining activities,                   The standard for all
                      activities       by mining claimants/mine          operators,     regardless     of acreage
                      disturbed,       is that they not create undue or ""necessary                 degradation      of the
                      land as per FLPMA at Sec. 302(b).

                      On page 22, it is pointed out under "Maintaining"                   that   an annual     filing   is
                      required by BLM and the counties.

See comment   7       3. 0" page 10, regarding    the reference  to "the COMMONVARIETIES ACT OF
                      1955."  This is s   the title   this Act is known by, and only a portion of
                      this Act deals with common varieties.




                                 Page 31                                GAO/RCED91-9 Patenting of Oregon Dunes Minhg Claims
                          Appendix U
                          Comments From the Department of
                          the Interior




                                                                                                       5


See comment   8   7.   On page 16, again, the GAO stresses the problems with the incongruity
                  between mining and recreation.       However, once again, the mining ‘activity     in
                  this area pre-dated    the establishment      of the recreation area.  The recreation
                  area was crested to prohibit      any further    mining of the area.  On page 24, the
                  GAO states that the Forest Service wants to prevent mining in the recreation
                  area by acquiring   the patented land through an exchange.

See comment   7   0.   Page 20,     paragraph   1, again   refers   to “the   Common Varieties     Act.”

                  RECOMMENDATIONS

                  We feel that the discussions involving alleged inconsistencies                 end conflicts
                  between the 1872 Mining Law and FLPMA are incorrect  and should                be revised.

                  If these discusslons    are retained,  we feel       that   our comments regarding       these
See comment   2   inconsistencies   be included   in the report.




                           Page 33                              GAO/I(CEDSl-(I   Patenting of Oregon Dunes Mining Claims
Appendix ff
Comments From the Department of
the Interior




4. Interior commented that the diligence requirement should be referred
to as the “annual labor” requirement rather than the “annual work”
requirement. The Mining Law of 1872 provides that the annual amount
of work necessary to hold a mining claim would be “not less than one
hundred dollars’ worth of labor.” However, the range of activities that
currently satisfy the annual diligence requirement, such as geological,
geochemical, and geophysical surveys, go far beyond a miner’s labor.
Accordingly, we believe that the phrase “annual work requirement,”
which appears to be virtually interchangeable with “annual labor
requirement,” is more descriptive, and thus we use it consistently
throughout our reports.

5. Clarifications have been made to the text of this report

6. The text has been clarified to better describe the mining law’s right of
self-initiation that allows citizens, either corporate or individual, with
no governmental permission, to locate mining claims or to conduct neces-
sary activities that do not disturb the surface on lands open to mining.

7. We have replaced the “Common Varieties Act of 1955” with the “Mul-
tiple Use Mining Act of 1955.”

8. Interior commented that the Fox claims in the Oregon Dunes do not
illustrate an inconsistency between mining and recreation because the
mining activity (staking the claims) occurred before the recreation area
was established. Our report clearly acknowledges the existing rights of
the claim holders, including the right to patent the lands. However, we
believe that the patenting of mining claims within a national recreation
area for a fraction of the land’s estimated value, coupled with the
accompanying management problems that it creates, is another example
of the mining law’s inconsistency with more recent national natural
resource policies.




Page 36                           GAO/ECED-91-8 Patenting of Oregon Dunes Mining Claims
                    Appendix III
                    Cnmments From the Forest Swvicr




                  Hr.   John W. Harma"                                                                           2

See comment   2          (7)    The correct   spelling   is Hcclarty,   not ncc1arity        (page 20).

                        (13) On page 23, the first       paragraph indicates     that the validity       of the
                        claims was challenged      by the Forest Service.      In the context used, this
                        general statement    needs clarification.      The Forest Service challenged           the
                        validity   of the claims in a" administrative        hearing  (contest)     and also
                        challenged   the information     submitted  by the claim holders      indicating      $500
See comment   2         of expenditures   per claim.      The paragraph is referring      to the latter
                        challenge.

                  These are OUT points of concern.      Thank you for the opportunity                to cmmnent on
                  the draft   report.    If you have any questions o" our comments,               please contact
                  Sam Hotchkiss     at 453-8235




                  CC:
                  OIG (J.      Hill)
                  N&CM
                  Lands
                  F-SF’S




                        Page 37                                GAO/RCED-91-8     Patenting     of Oregon Dunes Mining   Claims
Appendix IV                                                  -___

Major Contributors to This Report


                          Robert W. Wilson, Ass&ant Director
Resources,                Robert E. Cronin, Assignment Manager
Community, and
Economic
Development Division,
Washington, D.C.

                          D. Lamar White, Evalual.or-in-Charge
Seattle Regional Office   --
                          Carole J. Moore. Staff Evaluator


                          Stanley G. Feinstein, Senior Attorney
Office of the General
Counsel,
Washington, D.C.




(140257)                  Page 39                     GAO/RCED-91-8   Patenting   of Oregon Dunes Mining Claims
                 Appendix IlI
                 Comments From the Forest Servicr




                 The following are GAO’S comments on the Forest Service’s letter dated
                 September 13, 1990.


                 1. The identification number for this report has been changed to
GAO’s Comments   (GAOIKCED-91.8)  to reflect the fiscal year in which it was issued.

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

                 3. The Forest Service commented that the report’s statement concerning
                 claim holders’ rights to sell extracted materials without monetary com-
                 pcnsation to the government is not germane to the scope of the report.
                 The report describes the mining law’s provisions governing the sale of
                 minerals because it is an integral part of the mining law and because it
                 makes clear one of the important benefits derived from having the sand
                 in the Oregon Dunes claims determined to be uncommon rather than
                 common and therefort) subject to the Multiple IJse Mining Act of 1955.




                 Page 38                            GAO/RCEB9lB   Patenting   of Oregon Dunes Mining Claims
Appendix III

Comments From the Forest Service


Note GAO comments
supplementing   those I” the
report text appear at the
                                                       Forest              Washington           14th 6 Independence SW
end of this appendix                                   service             Office               P.O. Box 96090
                                                                                                Washington.  DC 20090-6090


                                                                                 Reply To:      1420

                                                                                        D*=*:   SEP I3   1890



                               Hr. John W. Harman. Director
                               Lend and Agriculture     Issues
                               Resources,   Community. and Economic
                                  Development Division
                               General Accounting    Office
                               Washington,   D.C.   20548

                               Dear Mr. Harman:

                               We have reviewed the draft       report entitled   Federal Land Hanagement:   Oregon
See comment    1               Dunes National    Recreation    Area Patenting   of Hining Claims Complies With Law,
                               GAO/RCED-90-216.     We believe     the report accurately  describes the events that
                               took place,    the actions by the Government, and addresses the issues and
                               specific  questions     (pages 15 and 16) by Chairman Nick Rahall of the House
                               Subcommittee on "ining       end Natural Resources.

                               Tbe fallowing   technical    aspects   need to be addressed:

See comment   2                    (1)    Tbe statement    on page 2. paragraph 3, implies      the Forest Service     is
                                   required    to sell mineral materials.      The disposal   of mineral materiels       is
                                   a discretionary     action,  and frequently   done without    user fees.

See comment    2                   (2)   The references   that the Forest Service withdrew   lands from mineral
                                   entry are not correct.      The Government does this through the Bureau of
                                   Land Management.

See comment    3.                  (3)   Most of the first   line on page 2 is not germane to the scope of the
                                   ?Xp.Jrt.   We recommend it reed "for mining activities  and extract the
                                   minerals."

See comment    2                   (4)    The second sentence of paragraph       2, page 2, is not technically
                                   correct.    The test for discovery  only      requires a reasonable  prospect      of
                                   success.

See comment    2                   (5)   There is not e specific       name far the Act of July 23, 1955, but the
                                   popular name most frequently        used is the Multiple Use Mining Act of 1955.

                                   (6)    Paragraph 2, on page 9 is misleading        in implying   that e mining claim
                                   holder can prospect     an National    Forest System lend without     notifying     the
See comment   2                    Forest Service.      Tbe text should reflect     the language of the Federal
                                   regulations    for locatable   minerals    (36 CF'R 228.4) which requires       the
                                   filing    of a Notice of Intent with the Forest Service,         end a Plan of
                                   Operations    when surface disturbance      will be significant.




                                   Page36                                GAO/RCEDSl-SPatentingofOregonDunesMiningClaims
                 AppendixIl
                 CbmmentsFromtheDepartmentof
                 the Interior




                                      -
                 The following are GAO'S comments on the Department of the Interior’s
                 letter dated October 12, 1990.


                 1. The identification number for this report has been changed to
GAO’s Comments   (GAO/RCED-91-8)  to reflect the fiscal year in which it was issued.

                 2. Interior commented that GAO implied that there are conflicts and
                 inconsistencies between the Mining Law of 1872 and the Federal Land
                 Policy and Management Act of 1976 (FLPMA). Interior pointed out that
                 FLPMA sets a policy of federal ownership of public lands and obtaining
                 fair market value for its resources, but in doing so excludes the Mining
                 Law of 1872 and specifically the patent provision. Interior also com-
                 mented that GAO had not recognized other national policies that call for
                 managing public lands to meet the demands for domestic sources of min-
                 erals and fostering and encouraging private enterprise to develop these
                 resources.

                 We are sensitive to the need to manage public lands to meet demand for
                 domestic sources of minerals and to foster and encourage private enter-
                 prise to develop these sources and recognize that FLPMA exempts the
                 Mining Law of 1872 and its patent provision from current national nat-
                 ural resource policies relating to federal stewardship of public lands. To
                 clarify this, we have made changes to the report text. However, pat-
                 enting is not essential for mineral exploration and development because
                 other provisions of the mining law give claim holders the right to use the
                 land for mining-related activities. In addition, our 1989 report also iden-
                 tified (1) a number of laws enacted subsequent to FLPMA that accommo-
                 date mining while requiring that the federal government retain title to
                 the land, subject to valid existing rights and (2) other legislation that
                 has left hardrock minerals, such as gold, silver, lead, iron, and copper,
                 and uncommon varieties of mineral materials, such as the sand in the
                 Fox claims, as the only minerals still subject to the mining law’s patent
                 provision.

                 3. Interior requested that the portion of the appendix dealing with the
                 Duval exchange be deleted because it is beyond the scope of the report.
                 We continue to make reference to the Duval exchange because we
                 believe the potential land exchange is an integral part of the report in
                 that the factors prompting the Forest Service to pursue an exchange and
                 its potential cost to the government illustrate why we believe the patent
                 provision of the mining law should be eliminated.



                 page34                        GAO/RCEDSI-SPatentingofOregonDuner,MininBClaims
                             Appendix II
                             Comments From the Department of
                             the Interior




                                                                                                      4


                  This 1955 Act has always         been referred     to in case law,   and other   references      as
                  the following:

                      a)     An Act to Amend the Act of July 31, 1947
                      b)     Public Law 167
                      c)     the Act of July 23, 1955
                      d)     the Multiple  Use Mining Act of 1955
                      e)     the Surface Resources Act of 1955--a misnomer

                  As far as the citation   goes, the proper citation is 69 Stat. 367,
                  30 U.S.C. Sec. 601.    Sec. 611 is only the part of the Act of 1955 that                refers
                  to cOmmO" varieties.

See comment   5   4. Referring       to comments on page 12, it should be noted that Sec. 10 of the
                  Oregon Dunes National      Recreation     Area Act withdraws   the affected   lands from
                  location,    entry,   and patent under the US mining laws subject to valid existing
                  rights    (emphasis added).     16 U.S.C. Sec. 4602-8.       Congress recognized     that
                  there may be valid activities         taking place that were to be protected       from a
                  takings.

                  5. In reference    to footnote    6, page 16, mining claims located prior     to
                  October 21, 1976, had to be recorded with the ELM on or before October 22,
                  1979, or else they would be considered       abandoned and void (see 43 CFR
                  3833.1-l).   Therefore,   the last sentence of the footnote      is true that before
See comment   5   1976 BLM had no filing    requirement   on most public lands (PL 359 lands and O&C
                  lands were some exceptions),      but pursuant to FLPMA, after October 22, 1979,
                  they had to file annually     with ELM to maintain    their mining claims.

                  However,     this   point   -is made on page 22 under "Recording."
                  6. On page 18, paragraph I, GAO states that the presence of a patented mining
                  claim in a national     recreation  ares "illustrates  the inconsistencies     between
                  the patenting   provision    of the mining law and federal   stewardship   requirements
                  in other national    resource legislation."

See comment   8   The GAO points out on page 1, that these claims were properly         located in
                  1959.     This is before any of the legislation   introducing   the alleged
                  inconsistencies    between these two valid (multiple)     uses of this land.    The
                  clsims were located prior     to the Oregon Dunes Act of 1972, prior to the
                  Wilderness    Act of 1964, FLPMA of 1976, etc.

                  The claims were in existence      in the Oregon Dunes prior   to the Act of 1972.
                  Congress did recognize    that there were valid existing    rights    in the area--see
                  no. 4 above.    Congress could have adjusted the boundaries        to exclude the
                  mining activity   from the recreation    area, and thereby avoiding conflict.
                  However, by withdrawing     the land, Congress restricted   the uses of this area.




                              Page 32                              GAO/RCED-918 Patenting of Oregon Dunes Mining Claims
                           Appendix II
                           Comments Fmm the Department of
                           the Interior




                                                                                                                              1




                   The FLPMA also calls for "the public lands [to] be retained                in Federal
                   ownership,     unless...it       is determined   that disposal  of a particular    parcel will
                   serve the national         interest."     43 U.S.C. Sec. 1701(a)(l).     The FLPMA also
                   provides    that "the United States receive fair rarket            value of the use of the
                   public lands and their           resources unless otherwise    provided for br
                   statute....   "" 43 U.S.C. Sec. 1701(e)(9).           [Emphasis added.1

                   It would seem that Congress 1) did not want to repeal or amend the Mining Law
                   when FLPNA was passed, 2) did want to retain   lands, unless it "as better for
                   the national interest  to dispose of the land, and 3) did "ant to receive fair
                   market value for lands and their resources , unless otherwise   provided for by
                   st*tute.

                   The GAO quotes FLPMA for support that the Mining Law and the management of
                   other national      resources are incongruent,    and yet in that same Act, FLPMA is
                   trying    to provide guidance so a.6 not to preclude mining and other valid uses
                   of the land, i.e.,       guidance for the multiple-use   of the public lands,
                   including    mining.     The GAO is not showing the whole picture.

                   OTHER COMMENTS

See comment   4.   1.   Page 2, paragraph 1: "diligence"    or "annual         work"         requirement   should   he
                        "diligence"  or "annual labor" requirement.

See comment   5    2.   Page 5, paragraph 1: II . ..GAO concluded in a March 1989 reportl..."
                        --footnote   numbering not clear ; number should be raised or typed                  as
                        follo"s:   J/.

See comment   5    3    Page 12, paragraph 1: "Oregon Dunes National    Recreation                   Area Act of March
                        23, 1972," also 86 Stat. 99, Public Law 92-260.

                   SPECIFIC COMMENTS

See comment   2    1. On pages 5, 10, and 26-27, the GAO emphasizes that the mineral patent
                   process ss authorized   by the 1872 Mining Law runs counter to other national
                   natural resource policies    as provided for in the Federal Land Policy and
                   Management Act (FLPMA) of 1976.

                   However, nowhere does the GAO report         point   out that      FLPMA in Sec. 102(12)
                   states that:

                        "the public lands he managed in a manner which recognizes         the Nation's
                        need for domestic sources of minerals . ..from the public lands including
                         [the] implementation  of the Mining and Minerals    Policy Act of 1970 (84
                        Stat. 1876, 30 U.S.C. 21a) as it pertains     to public lands..."
                        43 U.S.C. sec. 1701(a)(lZ).

                   The Mining    and Mineral   Policy   Act of 1970 states     that     it     is:

                          . . . the continuing    policy of the Federal Government in the national
                        interest     to foster    and encourage private  enterprise in (1) the development
                        of economicslly        sound and stable domestic mining, minerals,   metal, and




                            Page 30                             GAO/RCED-91-8 Patenting of Oregon Dunes Mii              Claims
Appendix II

Comments From the Department of the Interior


supplementing   those In the
report text appear at the      r
end of this appendix
                                                  United States Department of the Interior
                                                                  OFFICE OF THE SECRETARY
                                                                   WASHINGTON, DC. 10243                               I        .



                                   Mr. James Duffus, III
                                   Director,  Natural Resources            OCT 1 ? 1990
                                     Management Issues
                                   General Accounting Office
                                   Washington, D.C. 20548

                                   Dear Mr. Duffus:

                                   Thank you for the opportunity to comment on the General Accounting Office's
See comment    1                   (GAO) report, FEDERAL LAND MANAGEMENT,Oregon Dunes National Recreation Area:
                                   Patenting of Mining Claims Complies with Law (GA)/RCED-90-216).

                                   In general, we agree with the findings            of the report.    We are pleased to see
                                   that GAO concludes that the Bureau of Land Management (BLM) handled the Oregon
                                   Dunes case properly and consistently           with all legal and administrative
                                   requirements.      However, we disagree with the GAO implication           that there are
                                   conflicts    and inconsistencies     between the 1872 Mining Law and the Federal Land
See comment    2.                  Policy and Management Act of 1976 (FLPKA). The FLPMA does set a policy of
                                   Federal ownership of public lands and obtaining             fair market value for jts
                                   IesOUrCeS. However, FLPMA also specifically             excludes the 1872 Mining Law, and
                                   specifically    the patenting    provisions,      from this policy,   thereby, showing the
                                   support of Congress for continuing          this type of activity     on public lands.
                                   The FLPMA further     states that the public lands will be managed so as to meet
                                   the need for domestic sources of minerals,            and to implement the Mining end
                                   Minerals Policy Act of 1970.

                                   We recommend that the discussions      in the GAO report regarding alleged
                                   inconsistencies  be revised,  to fully    reflect   that 1) the FLPMA excludes the
                                   Mining Law, and 2) the FLPMA does recognize the need for development of
                                   mineral resources on public lands.       We further    request that the portion of the
                                   appendix dealing with the Duval exchange be deleted as being beyond the scope
See comment   3                    of the report.

                                   If there are any further    questions regarding the enclosed comments, please
                                   call Reed Smith, Chief,    Division  of Mining Law and Salable Minerals, at
                                   208-4147.




                                                                                 Assistant  Secretary, Land and
                                                                                   Minerals Management



                               L   Enclosure




                                           Page 28                            GAO/RCED-91-S Patenting of Oregon Dunes Mining Claims
Appendix I
Time Line of Key Events in the Oregon Dunes
Mining Claims and Patent
Application Process




Date                     Action
                         McClarty patent application was based was common               or uncommon      The
                         court’s guidance remams germane today
1977
March 31                 The Forest Service Report of Mlneral Examination concluded that the
                         Fox claims were not valid because a valuable dlscoverv had not been
                         made prior to the date of wlthdrawal This report, how&er, did not
                         comment on whether the sand was a common variety.
April 18                 The Forest Service requested that BLM Issue complalnts challenging
                         the validity of the 10 Fox claims because the claim holders had not
                         demonstrated     that a valuable mlneral deposit had been located prior to
                         July 18, 1961, the date of withdrawal of the lands from mlneral locatlon
                         and entry
November        4        BLM Issued complamts OR 17779~17886 challengmg the valldlty of the
                         IO Fox claims on the basis of the lack of a dlscovery of a valuable
                         mlneral deposit t3LM did not contest whether the sands were a
                         common variety
1978
May 17                   In a pre hearing conference before an admlnlstratlve law judge,
                         attorneys for the claim holders and the government agreed that the
                         sand in the claims was an uncommon variety and that this would not be
                         an issue In the proceedings.
September           19   A hearing took place before Interior’s Offlce of Hearings and Appeals              on
                         the challenge to the validity of the Fox claims (U S v Duval)
1979
October     19           The Office of Hearings and Appeals Issued a declslon upholdmg the
                         valldlty of the Fox claims The Duvals were requtred to prove that they
                         had a valuable mlneral deposit at the time of the wlthdrawal and at the
                         time of the hearing The declslon was based on the fact that (1)
                         sufflclent evidence was Introduced (much of It new) to rebut the
                         government’s    testimony that dIscovery was not made prior to
                         wlthdrawal and (2) no contradictory   evidence was presented about
                         dlscovery at the time of the hearing. By the time of the hearing, the
                         Duvals were selling sand at a proflt from their mlnlng operation near
                         Coos Bay The Forest Service appealed this decision to IBLA
1981
March 26                 IBLA Issued a declslon (53 IBLA 341, 1981) that afflrmed the declslon              of
                         the admlnlstratlve law judge upholdlng the valldlty of the Fox claims
                         The Forest Service said that at this point they had exhausted all
                         possible remedles in the admlnlstratlve   law process.
1982
January    27            Duval filed an appllcatlon     for patent for Fox claims l-10. comprising
                         1,480 acres
May 27                   BLM Issued a declslon voldlng 480 acres of the Fox claims that had
                         been located on land acquired from lndlvldual cltlzens, businesses, and
                         nonfederal governmental    organlratlons    and not covered by the mlnlng
                         law This left 1,000 acres for conslderatlon    In the patent appllcatlon The
                         Duvals appealed this declslon to IBLA
October     12           IBLA Issued a declslon       (68 IBLA 1, 1982) that afflrmed   BLM’s declslon       of
                         May 27
1986
September           22   BLM requested an oplnlon from Interior’s Reglonal         SolIcItor to establish
                         that title was vested with the claim holders
                                                                                               (contmued)



Page 26                                   GAO/RCEDSl-9 Patenting of Oregon Dunes Mining Claims
Appendix I

Time Line of Key Events in the Oregon Dunes
Mining Claims and Patent Application Process

               Date                   Action
               1959
               March                  Senator   NeubFgFpr&posed     a natronal seashore   in the Oregon    Dunes
               September-             Maurrce Duval located Dreamer clarms l-25 on 3,160 acres just north of
               December               Coos Bay wrthtn the proposed national seashore area
               December         30    Maurice Duval located Fox clarms l-10 on 1,480 acres on the north sprt
                                      of the mouth of the Umpqua River wrthrn the proposed natronal
                                      seashore area
               1960
               July 6                 The Forest Service notrfied tfneouvalsthat It be;eved the sand rn the
                                      area of the clarms was a common varrety and thus not subject to the
                                      Mrnnq Law of 1872
               1961
               July 18                BLM wrthdrew from mineral entry about     18,000 acres between      the
                                      Sruslaw Rover and Coos Bay
               1962
               No specrfrc date       Interior’s Bureau of Manes Issued lnformatron Crrcular 8112. lndustrral
                                      Srlrca Deposrts of the Pacrfrc Northwest   This report establ&iZT%Zof
                                      82 srlrca deposrts evaluated rn the Pacrfrc Northwest, 37 were of hrgh
                                      qualrty and 16 were large enough to be rndustnal silrca resources
               1963
               September         30   The Sruslaw National Forest requested a mineral examrnatron      and/or
                                      tnrtratron of rnvalrdatron proceedrngs on the Dreamer clarms.
               1964
               No specrfrc date       The Bureau of Manes Issued Report of lnvestrgatron 6484, Benefrcration
                                      Studres of the Oregon Coastal Dune Sands for Use as Glass Sand I he
                                      rnformatron rn this report was used extensrveiy rn the 1Ybb Forest
                                      Servrce Report of Mrneral Examrnatron on the Dreamer ciarms and was
                                      the basrs of testrmony grven by both sides rn the proceedings
                                      challengmg the valrdity of the clarms
               1966
               February     2         The Forest Servrce’s Report of Mrneral Examrnation recommended       that
                                      the Dreamer clarms be challenged on the basts ot [l) lack of drscovery
                                      of a valuable mrneral deposrt due to farlure to establish a market as of
                                      July 18. 1961, the date of wrthdrawal from mrneral entry and (2) the
                                      wrdespread occurrence of srmrlar srlica sands along the Oregon Coast,
                                      whrch makes the sand on the clarms a common variety and not under
                                      the Mrnrng Law of 1872 Thus report also noted that Dreamer claim No
                                      15 had been located on private land and was therefore Invalid
               May 18                 BLM Issued complarnts OR 018149-018153     declarrng the 24 remarnrng
                                      Dreamer clarms null and vord because a valuable mineral had not been
                                      drscovered and the materral on the clarms was a common variety not
                                      subtect to locatron


               October      9         A hearing took place before BLM’s Office of Heanng Examrners          on the
                                      valrdrty of the Dreamer claims (U S. v. Maurrce Duval et al)
               1968
               March 15               The Office of Heanng Examrners Issued a decrsion agarnst the clarm
                                      holders Because the Pacrfrc Northwest, and the Coos Bay area rn
                                      particular contarned a vast quantity of sand surtable for glass-making,
                                                                                                      (continued)




                Page 24                                GAO/RCED-91-S Patenting of Oregon Dunes Mining Claims
Chapter 2
Patenting Process Meets Legal and
Administrative Requirements




lands to meet the demands for domestic sources of minerals and fos-
tering and encouraging private enterprise to develop these resources.

We recognize that FLPMA exempts the Mining Law of 1872 and, specifi-
cally, its patent provision from current national natural resource poli-
cies relating to federal stewardship of public lands and have added
additional language to emphasize this point. However, it should be noted
that patenting is not essential for minerals exploration and development
because other provisions of the mining law give claim holders the right
to use the land for mining-related activities. In addition, our 1989 report
also identified (1) a number of laws enacted subsequent to FLPMA that
accommodate mining while requiring that the federal government retain
title to the land, subject to valid existing rights, and (2) other legislation
that removed fuel and common variety minerals leaving hardrock min-
erals, such as gold, silver, lead, iron, and copper, and uncommon vari-
eties of mineral materials, such as the sand in the Fox claims, as the only
minerals still subject to the mining law’s patent provision.




Page 22                             GAO/RCED9143 Patenting of Oregon Dunes Mining Claims
                        chapter 2
                        Patenting Process Meets Legal and
                        Administrative Requirements




                        from the beach. The county zoning plan covering the patented lands is
                        even more restrictive in that it would prohibit not only mining but also
                        residential development in this dunes area.

                        Thus, the options for developing the patented lands are limited. On this
                        basis, Forest Service staff have preliminarily estimated the value of the
                        Duvals’ patented land at about $350,000. The Duvals, on the other hand,
                        believe the exchange value should recognize the mineral value of the
                        sand. If the mineral value is recognized, the exchange value would be
                        much higher than the value for land whose use is restricted. For
                        example, in a 1987 mineral evaluation of the Fox claims conducted for
                        the Forest Service, the author, a consulting mineral geologist, estimated
                        that the Fox claims contained between 13 and 25 million tons of silica
                        sand and that the cost, selling price, and resulting profit that the Duval’s
                        were experiencing at their existing operation, which is located near the
                        Fox claims, provided a rough indication of the profit they could obtain
                        from the Fox sand. On the basis of a profit figure of about $6 per ton, 19
                        million tons of sand, a 95-year operating life, and a lo-percent discount
                        rate, we estimate t,hat the Fox patent could be worth $12 million3


                        The transfer of 780 acres of public lands within a national recreation
Patenting Is Not        area into private ownership illustrates why in our 1989 report? we con-
Consistent W ith More   cluded that the patent provision of the Mining Law of 1872 runs counter
Recent National         to more recent national natural resource policies relating to federal
                        stewardship. These policies call for the federal government to maintain
Natural Resource        ownership of public lands and to obtain fair market value for public
Policies                resources. Moreover, patenting is not essential for minerals exploration
                        and development because other provisions of the mining law give claim
                        holders the right to USCthe land for mining-related activities.




                         % our present value calculatwn we used 19 nulhon tons of sand (the mid-point of the range in the
                         1987 mineral evaluation of the Fox claims), a $6 per ton profit (a conservative figure within the
                         range discussed in the mmeral waluation), a 95.year operating life, and a 10.percent discount rate.
                         The 95.year operatmg life 1s an approximation that takes into account the amount of sand available
                         to be mined and the market demand for the sand. At current rates, 10 percent is between the govern-
                         ment’s borrowing cost and private sector capital costs (and expected returns). We did not conduct
                         sensitivity analyses on the parameters of the valuation. However, larger estimates of the tons of sand
                         and the profit per ton and a lower discount rate would produce a higher valuation. Smaller estimates
                         of the tins of sand and the profit per ton, and a higher discount rate would produce a lower
                         valuation.

                         4Federal Land Management. The Minmg Law of 1872 ?ieeds Revision (GAOIRCED-89-72,           Mar. 10,
                         1989).




                         Page 20                                GAO/RCED-91-S Patenting of Oregon Dunes Mining Claims
                          chapter2
                          Patenting Process Meets Legal and
                          Administrative Requirements




                          file the affidavit with BLM as well as with the county recorder’s office.
                          Under certain conditions, such as those in which legal impediments pre-
                          vent the work from being done, the claim holder may request a defer-
                          ment of the annual work requirement, but must file a notice of intention
                          to hold the mining claim.
                      l   Patenting. To patent a mining claim, the claim holder must prove that at
                          least $500 of development work has been performed for each claim and
                          that each claim to be patented contains a valuable mineral deposit, i.e.,
                          one that can be extracted and marketed at a profit, and provide the doc-
                          umentation required by federal regulations.

                          We found that BLM had documentation to support compliance with the
                          legal and administrative requirements noted above. The evidence we
                          reviewed also shows that when the validity of information submitted by
                          the claim holder was challenged, BLM requested and received additional
                          information verifying that the requirements had been met.


Proof of a Valuable       Under the provisions of the Mining Law of 1872, the question of
Mineral Deposit Was       whether a valuable mineral deposit has been discovered can arise when
                          the validity of a claim is challenged by the government or when a patent
Established               application is filed by a claim holder. In addition, if a mining claim is
                          located within an area that is subsequently withdrawn from mineral
                          entry, the claim holder must also prove that a valuable mineral deposit
                          has been discovered as of the date the land was withdrawn.

                          For the Fox claims, discovery was required and established at all three
                          of the above points. On November 4, 1977, BLM issued a complaint chal-
                          lenging the validity of the Fox claims because a valuable mineral deposit
                          had not been discovered as of 1961 (the year the lands were with-
                          drawn). In its answer to the complaint, the Duvals proved to both Inte-
                          rior’s Office of Hearings and Appeals and to Interior’s Board of Land
                          Appeals that a valuable mineral deposit had been discovered as of 1961,
                          and as of the date of the challenge. In addition, during the patent review
                          process the Duvals proved that the claims contained a valuable mineral
                          deposit as of that time.


                          When the state of Oregon’s Department of Land Conservation and
The CZMA and the          Development learned that a mining patent was to be issued for the Fox
Patent Process            claims, it requested that BLM provide either the consistency determina-
                          tion or the go-days notice called for by the CZMA.



                          Page 18                             GAO/RCEDBl-O Patenting of Oregon Dunes Mining Claim
                        Chapter 2
                        Patenting Process Meets Legal and
                        Administrative Requirements




                        for the sand prior to withdrawal-a  key factor in meeting the require-
                        ment for discovery of a valuable mineral deposit. The initial BLM hearing
                        examiner’s decision agreed with that of the government, and the
                        Dreamer claims were ruled invalid in 1968.

                        The claim holder appealed this decision, but BLM'S Office of Hearings
                        and Appeals upheld it. A further appeal to the Interior Board of Land
                        Appeals was also decided in favor of the government. The Board’s deci-
                        sion, however, did not rule on the question of whether the sand was
                        uncommon. Rather it ruled that because the claim holder had not proven
                        that a market existed at t.he time the lands were withdrawn from min-
                        eral entry, the claims did not meet the valuable mineral deposit test, and
                        therefore the Dreamer claims were null and void.


Fox Claims Were         In 1977, the Forest Service reviewed the Fox claims to determine
                        whether they too could be invalidated. However, before the Forest Ser-
Challenged but          vice challenged the Fox claims, a court decision reviewed, approved, and
Subsequently Patented   further clarified the requirements which the Secretary of the Interior
                        had established for determining whether a material listed in the Mul-
                        tiple IIse Mining Act is common or uncommon.’ The court held that
                        deposits of materials listed in the act as common variety minerals can be
                        determined to be uncommon if their unique properties give them special
                        and distinct value, and that value leads to a higher price or lower pro-
                        duction costs.

                        Given this legal precedent and the Forest Service minerals examiner’s
                        conclusion2 that the sand had unique properties that made it suitable for

                         ‘In McClarty v. Secretary of thr Intrnor, 408 F.Zd 907,908 (9th Cir. 1969) the following guidance
                         w+.s used for determinmg whrthrr andesite (a building stone) on Forest Serwce land was common or
                         ,111w”mlo”

                         I There must be a comparwn      ctf the mineral deposit in question with other deposits of such minerals
                         gmerally

                         %.The mmcral deposit musf hake a muqoe property.



                         4 If the special value IS fat- w(.11 uses to which ordinary vaneties of the mineral are put, the deposit
                         must have wme distinct and special value for such use.

                         6. The distinct and specul vale must bc reflected by the higher price which the material commands
                         m rhe marketplace or by Iwvw production cost.

                         ‘i2lthough we did not exan~mc the or~gmal geologic data in detail, we reviewed the minerals exam
                         mer’s report and concludcvl that rhr proper steps were taken and the report’s conclusions seemed
                         appropi-Em.




                         Page 16                                  GAO/RCED-91-8 Patenting of Oregon Dunes Mining Claims
Chapter 1
htroduction




Interior and the Forest Service provided written comments on a draft of
this report. Interior’s comments are presented and evaluated in
appendix II, and Forest Service’s comments are presented and evaluated
in appendix III.




Page 14                    GAO/RCED-914 Patenting of Oregon Dunes Mining Claims
                                       Chapter 1
                                       Introduction




Figure 1.2: View of the Oregon Dunes
National Recreation Area




                                       Source U S Forest Serwce S~uslaw National Forest


                                       asked that we provide a chronological case study from staking of the
                                       claims through patent issuance. (See app. I for the chronology.)

                                       To evaluate the government’s determination that the sand on the claims
                                       was an “uncommon variety” and therefore covered under the Mining
                                       Law of 1872, we reviewed the transcripts and related documents associ-
                                       ated with the various reviews within Interior’s administrative review
                                       process for the Fox and Dreamer claims and with associated appeals for
                                       the Dreamer claims. We reviewed the legal documents prepared as part
                                       of both proceedings in which the validity of the claims was challenged
                                       and interviewed thr, attorney who represented the Forest Service in both
                                       proceedings. We also reviewed the key administrative and court deci-
                                       sions that comprise the case law on common variety minerals.

                                       To determine whether the required legal and administrative steps
                                       leading to patenting were followed, we identified the required steps
                                       from appropriate laws and regulations and reviewed agency documents
                                       to assesscomplianccl with each. Specifically, we took the following
                                       measures:

                                        1) To determine that, the mining claims had been properly located and
                                        recorded, we reviewed the copies of the Notice of Location of Mining
                                        Claims that had been f’ilcd with the Douglas County, Oregon recorder’s


                                        Page 12                             GAO/RCEDSl-8 Patenting of Oregon Dunes Mining Claims
                         Chapter 1
                         Introduction




                         content, M r. Duval believed that it was suitable for making some
                         types of glass as well as for use in the foundry industry.”

                         Because of increasing recreation on the dunes, RLM withdrew about
                         18,000 acres in the Siuslaw National Forest from mineral entry in
                         1961--thus prohibiting exploration and the filing of new claims. Claim
                         holders prior to the date of withdrawal, however, maintain valid
                         existing rights to their claims. In March 1972 Public Law 92-260 estab-
                         lished the Oregon Dunes National Recreation Area, setting aside a 40-
                         mile strip between the Siuslaw River and Coos Bay for recreation pur-
                         poses. The area became a part of the Forest Service’s system of national
                         recreation areas. The map in figure 1.1 shows the location of the two
                         sets of mining claims in the Oregon Dunes National Recreation Area.

                         The extensive sand dunes just inland from the beaches are the recrea-
                         tion area’s most important feature and, according to the Forest Service,
                         helped attract over 2 million visitors in 1989. The Forest Service man-
                         ages the recreation area to provide for public recreation and to conserve
                         scenic values, while maintaining the integrity of the environment. It
                         manages the dunes area in which the patented Fox claims are located as
                         a roadless, isolated area. The area is noted for its quiet and scenic
                         beauty and is also used by much wildlife, including migrating water-
                         fowl. Figure 1.2 provides a view of the recreation area.

                          The Chairman of the Subcommittee on Mining and Natural Resources,
Objectives, Scope, and    House Committee on Interior and Insular Affairs, expressed concern
Methodology               about the issuance of a patent for mining claims for sand within the
                          Oregon Dunes National Recreation Area. Specifically, he asked that we
                          (1) examine the government’s determination that the sand on the claims
                          is an “uncommon variety” and therefore covered under the patenting
                          provision of the Mining Law of 1872 and (2) determine whether the fed-
                          eral agencies involved and the claim holder followed the legal and
                          administrative requirements for patenting. As part of our review of the
                          legal and administrative requirements, the Chairman’s office asked us to
                          address two specific procedural questions: (1) whether the patent appli-
                          cation contained proof of a valuable mineral deposit at the critical dates
                          during the process and (2) whether HLM was required by the CZMA to
                          notify the state of Oregon that it was issuing the subject patent. He also


                          %.nd which can be used tu make glass has specific properties that distinguish It from sand that can
                          only be used for constructmn purposes. These properties are (1) very high silica content, (2) only a
                          trace of unwanted minerals and no orgamc materials, (3) even sand grain size, and (4) no clay in the
                          sand




                          Page 10                                GAO/RCED-91-O Patenting of Oregon Dunes Mii            Claims
Chapter 1

Introduction


               On October 10, 1989, the Department of the Interior’s Bureau of Land
               Management (RLM) transferred ownership of 780 acres of federal land in
               the Oregon Dunes National Recreation Area to private ownership under
               authority of the Mining Law of 1872. The Chairman of the Subcom-
               mittee on Mining and Natural Resources, House Committee on Interior
               and Insular Affairs, asked us to determine whether, in making this
               transfer, the claim holder and the federal government followed legal and
               administrative requirements.


               The Mining Law of 1872, as amended, (30 U.S.C. 22 et seq.) was enacted
Background     to Dromote the exploration and development of domestic mineral
               resources. It allows citizens and businesses to prospect for and mine cer-
               tain valuable mineral deposits on federal lands not closed or withdrawn
               from mining. The law contains several provisions that make it attractive
               to prospectors and claim holders. First, citizens do not have to have the
               government’s permission t,o locate mining claims or to prospect for min-
               erals so long as they do not cause any significant disturbance to the sur-
               face of federal lands. Second, claim holders can preserve the rights to
               their claims by certifying annually that at least $100 worth of drilling,
               excavation, or other development-related work has been done for each
               claim. Third, valuable minerals can be extracted without paying the fed-
               eral government any fees or royalty.] And fourth, claim holders have
                the option of obtaining fee simple title’ to both the land and the minerals
                by patenting the claims for either $2.50 or $5.00 an acre-an amount
                that approximated the fair market value for western grazing and farm
                land in 1872.

               Patenting a claim requires proof that a valuable mineral deposit has
               been found (called discovery), and that at least $500 has been spent to
               develop the claim. The Department of Agriculture’s Forest Service and
               Interior’s HLMcan question the validity of mining claims on their respec-
               tive lands. However, I3I.M is responsible for maintaining the records asso-
               ciated with mining claims on all public lands, conducting the
               administrative processes for determining the validity of these claims,
               and issuing patents.

               Over the decades legislation has reduced the number of minerals cov-
               ered by the mining law. For example, section 3 of the Act of July 23,

               ‘A royalty is an amount braid by B lessee for minerals produced, usually calculated as a percentage of
               WlW.

                “Fee simple title means ac,qulring the ownership rights and interests wsoclated with a propaty.




                Page 9                                 GAO/RCEDBl-8      Patenting   of Oregon Dunes Mining       Claims
Contents


Executive Summary                                                                                2

Chapter 1                                                                                        8
Introduction        Background
                    History of the Oregon Dunes National Recreation Area
                                                                                                 8
                                                                                                 9
                    Objectives, Scope, and Methodology                                          10

Chapter 2                                                                                       15
Patenting Process   Sand in the Patented Mining Claims Was Determined to Be                     15
                        an Uncommon Variety
Meets Legal and     The Legal and Administrative Requirements of the Mining                     17
Administrative          Law of 1872 Were Met
Requirements        The CZMA and the Patent Process                                             18
                    Forest Service Seeks to Restore Patented Lands to Federal                   19
                        Ownership
                    Patenting Is Not Consistent With More Recent National                       20
                        Natural Resource Policies
                    Conclusions                                                                 21
                    Agency Comments and Our Evaluation                                          21
                                        _~-.
Appendixes          Appendix I: Time Line of Key Events in the Oregon Dunes                     24
                        Mining Claims and Patent Application Process
                    Appendix II: Comments From the Department of the                            28
                        Interior
                    Appendix III: Comments From the Forest Service                              36
                    Appendix IV: Major Contributors to This Report                              39

Figures             Figure 1.1: Duval Claims in the Oregon Dunes National                       11
                         Recreation Arca
                    Figure 1.2: View of the Oregon Dunes National Recreation                    12
                         Area


                    Abbreviations

                    BLM       Bureau of Land Management
                    GAO       General Accounting Office
                    IBLA      Interior Board of Land Appeals
                    FLPMA     Federal Land Policy and Management Act
                    CZMA      Coastal Zone Management Act


                    page 6                     GAO/RCED91-8 Patenting of Oregon Dunes Mining Claims
                            Executive   Summary




Principal Findings

Sand on Fox Claims Is       In 1977, the government reviewed the Fox claims to determine if they
                            could be invalidated. Determining whether the sand in the claims was
Subject to Mining Law of    subject to the mining law and thus patentable was a key factor in the
1872                        determination. An earlier court decision had held that deposits of
                            common variety minerals, as identified in the Multiple USCMining Act of
                             1955, can be determined to be uncommon if they have unique properties
                            that give them distinct and special value. The federal minerals examiner
                            who evaluated the claims concluded that the sand in the claims had such
                            unique properties, and thus the sand was subject to the mining law.
                            Although GAOdid not examine the original geologic data in det,ail, it
                            reviewed the minerals examiner’s report and concluded that the proper
                            steps were taken and t,he report’s conclusions seemed appropriate.


Legal and Administrative    The mining law contains various requirements governing locating,
                            recording, maintaining. and patenting mining claims. GAO found docu-
Requirements Were Met       mentation that tht, claim holder and the federal government met these
                            requirements. GAOspecifically focused on whether the claim holder
                            established that a valuable mineral deposit-a key requirement for pat-
                            enting-had been discovered. The question of whether a valuable min-
                            eral deposit has been discovered can arise (1) when the government
                            challenges the validity of a claim, (2) when a claim holder files a patent
                            application, and (3) M hen land is withdrawn from mineral entry. For the
                            Fox claims, discovery was established at all three points. GAO also
                            believes that the federal government’s position that it was not required
                            under the Coastal Zone Management Act to notify the state of the pro-
                            posed patenting is legally supportable. The transfer of property title, of
                            itself, does not changtb th<i way the land is being used.


Patenting Is Inconsistent    Although the claim holder and the federal government met the require-
With More Recent National    ments for patenting. transferring these lands to private ownership illus-
                             trates why GAOconcluded in a March 1989 report’ that the mining law’s
Natural Resource Policies    patent provision runs counter to more recent national natural resource
                             policies relating to federal stewardship. Patenting is not essential for
                             minerals exploration and development becnauseother provisions of the




                             Page 4                      GAO/RCED-91-S   Patenting   of Oregon Dunes Mining   (Iaims
Executive SUmmary


             The Mining Law of 1872 allows U.S. citizens and businesses to locate
Purpose      mining claims on most federal lands and then to obtain full title to these
             lands through a process called patenting. In 1969, mining claims were
             filed for silica sand along the Oregon coast. In 1961, the Department of
             the Interior’s Bureau of Land Management removed about 18,000 acres
             of national forest lands, including the mining claims, from further min-
             eral entry. In 1972, the Congress established the Oregon Dunes National
             Kecreation Area which included those withdrawn lands. On October 10,
              1989, at the request of the claim holder, the federal government trans-
             ferred title through the patent process to 780 acres of mining claims in
             this scenic and valuabltt area.

             Concerned over the transfer of land within the recreation area to pri-
             vate ownership, the Chairman, Subcommittee on Mining and Natural
             Resources, House Committee on Interior and Insular Affairs, asked GAO
             to (1) examine the federal government’s determination that the sand on
             the claims is an “uncommon variety,” which brings the claims under the
             Mining Law of 1872 and therefore allows patenting and (2) determine
             whether federal agencies and the claim holder followed the legal and
             administrative requirements for patenting and whether the government
             was required by the Coastal Zone Management Act to notify the state of
             Oregon that it intended t.o patent the claims.


             The Mining Law of 1872 was enacted to promote exploration and devel-
Background   opment of domestic mineral resources. Over the decades legislation has
             reduced the number of minerals covered by the mining law and provided
             protections to keep federal lands in public ownership. For example, the
             Multiple IJse Mining Act of 1956 removed common varieties of sand,
             stone, gravel, pumice, pumicite, clay, and cinders from the mining law’s
             patent provision and required instead that the land containing such
             materials remain in public ownership. The act also gave federal agencies
             the authority to sell the mineral materials on the lands. However, the
             1955 act allows deposits of these materials, if they have unique proper-
             ties that give them special and distinct value, to remain under the
             mining law, giving claim holders the right to seek a patent to both the
             land and the materials. In addition, while not reducing claim holder’s
             rights under the Mining Law of 1872, the Federal Land Policy and Man-
             agement Act of 197G established a broad national policy that calls for
             the federal government to maintain ownership of public lands and
             obtain fair market \ alum,for its resources.




             Page 2                       GAO/RCED-913   Patenting   of Oregon Dunes Mining Claim