U.S. DEPARTMENT OF THE INTERIORBUREAU OF LAND MANAGEMENT
|Explanation of "Discovery"|
Uncommon varieties of salable-type minerals may be locatable if the deposits meet certain tests created by various judicial and administrative decisions. See McClarty v. Secretary of the Interior, 408 F. 2d 907 (9th Cir., 1969). Federal certified mineral examiners determine uncommon variety on a case-by-case basis. (See 43 CFR Part 3830, Subpart C, for further information concerning the locatability of minerals.)
Since 1920, the Federal Government has leased fuels and certain other minerals (see 43 CFR 3000-3590). Today, minerals that are subject to lease include oil and gas, oil shale, geothermal resources, potash, sodium, native asphalt, solid and semisolid bitumen, bituminous rock, phosphate, and coal. In Louisiana and New Mexico, sulphur is also subject to lease.
Discovery of a Valuable Mineral Deposit
Federal statute does not describe what constitutes a valuable mineral deposit, therefore the government has adopted the "prudent man rule." This rule determines value based on whether or not a person will consider investing time and money to develop a potentially viable mineral deposit. This rule was first stated by the DOI in 1894, in the adjudication of Castle v. Womble, 19 L.D. 455 (1894), the holding of which states:
"...where minerals have been found and the evidence is of such a character that a person of ordinary prudence would be justified in the further expenditure of his labor and means, with a reasonable prospect of success in developing a valuable mine, the requirements of the statute have been met."
The U.S. Supreme Court approved this definition in Chrisman v. Miller, 197 U.S. 313 (1905).
The DOI's Solicitor issued an opinion in 1933 on the issue of widespread nonmetallic minerals with questionable marketability. The Solicitor noted a need for a distinct showing that the mineral could be mined, removed, and marketed at a profit. In 1968, the U.S. Supreme Court approved the opinion in U.S. v. Coleman, 390 U.S. 602-603 (1968). The marketability test is supplemental to the prudent man rule and considers deposit economics and market entry. The claimant is required to show a reasonable prospect of making a profit from the sale of minerals from a claim or a group of contiguous claims.
DOI decisions require a discovery on each claim based on an actual physical exposure of the mineral deposit within the claim boundaries. The DOI's holding in Jefferson-Montana Copper Mines Co., 41 L.D. 321 (1912), established the full test for a lode claim:
"To constitute a valid discovery upon a lode claim, three elements are necessary:
For traditional placer claims, in addition to proof of a discovery of a pay streak, each 10 acres must be shown to be mineral-in-character (there is a reasonable expectation of further economic mineral under these lands). Mineral-in-character may be based on geologic inference from adjoining lands and a reasonable opportunity for profitable extraction. An actual exposure of the valuable mineral deposit is not necessary. Mineral-in-character may be used to show the potential extent of the valuable mineral deposit on the claim(s), but cannot be used alone for such purposes.
Under the holding in Schlosser v. Pierce, 93 I.D. 211 (1986), contiguous mining claims on the same mineral deposit may be grouped togehter into a logical mining unit and evaluated as an economic unit. Each claim must still contain a physical exposure of the ore-bearing mineral deposit whose value meets or exceeds the cutoff grade for the mining of the mineral deposit as a whole.