Mining rights and title in USA

Mining rights and title

To what extent does the state control mining rights in your jurisdiction? Can those rights be granted to private parties and to what extent will they have title to minerals in the ground? Are there large areas where the mining rights are held privately or which belong to the owner of the surface rights? Is there a separate legal regime or process for third parties to obtain mining rights in those areas?

Government control of mining rights varies depending on ownership of the minerals underlying a property. Virtually all minerals (or mineral rights) in the United States were originally owned by the federal government. Over the course of the past 150 years, mineral rights in many locations (particularly in the eastern half of the United States) have been transferred through myriad federal land grants and other mechanisms to both the states and private parties. With respect to federally owned minerals (other than mineral rights pertaining to leasable minerals, such as coal and oil shale, or saleable minerals, such as sand and gravel, the General Mining Law provides a system by which private US citizens (including US companies) can ‘locate’ mining claims. The process does not transfer ownership of the minerals themselves (such ownership passes only after the minerals have been severed from the land), but rather gives the claim holder a right to develop and extract the minerals. Other systems exist at the state level enabling private parties to acquire mining rights for state-owned minerals. These systems vary from state to state, but often involve some form of leasing. For privately owned minerals, mining rights (or even the mineral rights themselves) may be acquired like any other private property right, leased, bought and sold according to contract and property law.

What information and data are publicly available to private parties that wish to engage in exploration and other mining activities? Is there an agency which collects mineral assessment reports from private parties? Must private parties file mineral assessment reports? Does the agency or the government conduct geoscience surveys, which become part of the database? Is the database available online?

Some limited information and data are publicly available to private parties that wish to engage in mining activities. For example, the BLM keeps federal land conveyance records in its offices around the country, and it maintains several online records systems (LR2000 and GeoCommunicator) that contain information on topics such as land and mineral title, federal mining claims and federal land parcel mapping (including Public Land Survey System data). Additionally, the US Geological Survey manages a data system that contains a collection of reports describing metallic and non-metallic mineral resources. However, there is little if any technical data in any of these records.

No single regulatory agency is responsible for collecting mineral assessment reports or other technical data from private parties. The BLM, the US Forest Service and various state agencies do collect such information from time to time as required by the mining regulations they are charged to enforce. As a general rule, however, any such information that contains or constitutes trade secrets or proprietary and confidential business information, including geological and geophysical information, is not made available to the public. Such information usually must be purchased from the party that owns it.

What mining rights may private parties acquire? How are these acquired? What obligations does the rights holder have? If exploration or reconnaissance licences are granted, does such tenure give the holder an automatic or preferential right to acquire a mining licence? What are the requirements to convert to a mining licence?

The General Mining Law allows private parties free access to open public lands to prospect for minerals. Upon making a discovery of a valuable mineral deposit, the prospector may ‘locate’ (or stake) a mining claim on the deposit according to a specific location procedure; provided, a mining claim may be located only by US citizens or those who have declared their intent to become US citizens. The holder of a valid mining claim (sometimes referred to as an ‘unpatented mining claim’) is entitled to develop and extract the mineral deposit associated with the claim, and is protected against challenges by the United States and other private parties to the claim holder’s rights.

The General Mining Law also provides a process to ‘patent’ mining claims, through which the federal government grants the claim holder fee title (full private ownership) to the mineral property. In 1994, however, the US Congress imposed a moratorium on any new mineral patent applications. This leaves unpatented mining claims as the primary method by which new mining rights may be acquired on federal lands.

A valid mining claim cannot be established in the absence of a discovery of a valuable mineral deposit. The General Mining Law does not specify the meaning of ‘valuable mineral deposit’, but two definitional rules have evolved through administrative agency (US Department of Interior) and judicial decisions, as follows:

• the ‘prudent man rule’, which determines value based on whether, ‘a person of ordinary prudence would be justified in the further expenditure of his labour and means, with a reasonable prospect of success in developing a valuable mine’; and
• the ‘marketability rule’, which requires a claimant to demonstrate a reasonable prospect of making a profit from the sale of minerals from the claim or group of contiguous claims.

The marketability rule was developed and nearly always applied by the Department of Interior within the context of disputes between a mining claimant and the United States (as opposed to a dispute between a mining claimant and a competing claimant), but US courts have not strictly adhered to this distinction and have applied both tests in deciding controversies between rival claimants.

After a mining claim has been located, the claimant must record a notice or certificate of location with the proper BLM office within 90 days of the date of location. A similar filing must also be made at the local county recorder’s office within a time frame specified under state law (usually 90 days from the date of location, although shorter periods may apply in some states).

In certain circumstances annual assessment work may be performed to maintain an unpatented mining claim. In most cases, however, mining claims are maintained by payment of annual maintenance fees to the BLM.

The process of acquiring mining rights to state-owned minerals varies from state to state, but mineral leasing systems are commonly used. The acquisition of privately owned mining rights (whether acquiring the minerals themselves or the right to exploit them) is a matter of contract with the mineral owner with issues of surface ownership always to be considered.

What is the regime for the renewal and transfer of mineral licences?

Mining claims on federal lands are maintained on an annual basis by payment of maintenance fees to the BLM (or, in some cases, performing a certain amount of assessment work each year). Such claims are freely transferable without the requirement of government approval, although transfer documents must be filed with the proper county and BLM offices within 90 days of transfer.

The regime for renewal and transfer of mining rights to state-owned minerals varies from state to state, but notice and approval requirements often apply. Mining rights in respect of privately owned minerals may be transferred according to applicable state contract and property laws.

What is the typical duration of mining rights?

A mining claim on federal lands may continue indefinitely if it is supported by a discovery of a valuable mineral deposit and is properly maintained through required annual maintenance fees or assessment work. A claim is subject to forfeiture to the United States for failure to follow claim location requirements, failure to prove a valid discovery or failure to pay annual maintenance fees or perform annual assessment work.

The duration of mining rights to state-owned minerals varies from state to state. Mining rights are commonly granted by lease for a finite term (eg, five years), subject to renewal for additional terms or to continuation for the duration of mineral production. State mining rights may be subject to termination for a variety of reasons, such as failure to make lease payments, violation of state laws or regulations or lease requirements or failure to commence or to continue diligent exploration or mining operations.

Mining rights in respect of privately owned minerals, including those acquired by patent from the federal government, continue indefinitely as the property of their owner, and may be freely leased, traded or sold.

Is there any distinction in law or practice between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties?

Mining claims on federal lands may be located and held only by US citizens or those who have declared their intent to become US citizens. For this requirement, a business entity organised under the laws of any state is considered a US citizen. Otherwise, there is generally no distinction between the mining rights that may be acquired by domestic parties and those that may be acquired by foreign parties.

How are mining rights protected? Are foreign arbitration awards in respect of domestic mining disputes freely enforceable in your jurisdiction?

Mining rights are protected under US law, including the requirements of due process. Mining rights holders may seek protection of their interests in the independent judicial system of the United States, either in federal or state courts (and sometimes after required administrative proceedings at the regulatory agency level) depending on the identity of the parties and the nature of the dispute. Foreign arbitration awards are freely enforceable in the United States by virtue of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, incorporated into US law under Chapter 2 of the Federal Arbitration Act.

What types of surface rights may mining rights holders request and acquire? How are these rights acquired? Can surface rights holders oppose these requests?

The holder of a valid mining claim has the ‘exclusive right of possession and enjoyment’ of the surface area within the boundaries of the claim, subject to a number of important qualifications. First, the claimholder’s uses of the surface are limited to exploration, mining and processing and uses reasonably incident thereto. In addition, the claimholder’s surface rights are subject to the federal government’s right to manage and dispose of vegetative resources and other surface resources not reasonably required for mining as well as other uses by the United States and persons authorised by the United States that do not materially interfere with the claimholder’s mineral operations. Finally, the claimholder’s use of the surface is subject to compliance with federal surface management regulations that emphasise advance planning for surface resource protection and surface reclamation.

The nature and extent of surface rights on state lands varies from state to state, but requirements for multiple use accommodation, surface resource protection and surface reclamation akin to those on federal lands may be expected in most jurisdictions. Privately owned surface rights are a matter of private contract (surface use agreement), but typically involve surface damage payments, environmental indemnities and reclamation guarantees in favour of the surface owner.

Does the government or do state agencies have the right to participate in mining projects? Is there a local listing requirement for the project company?

No government or state agency in the United States has a right to participate in mining projects. There is no specific local listing requirement, though mining claims on federal lands may be located and held only by US citizens (including business entities organised under the laws of any state) or those who have declared their intent to become US citizens.

Are there provisions in law dealing with government expropriation of licences? What are the compensation provisions?

There is no provision in US law dealing specifically with government expropriation of mineral rights. Federal, state and local governments in general may take private property for a public purpose through their power of eminent domain, but the property owner must be afforded due process of law and paid just compensation.

Are any areas designated as protected areas within your jurisdiction and which are off-limits or specially regulated?

There are several categories of protected state and federal lands where mining may be heavily regulated if not entirely prohibited. On federal lands, mining claims may not be located in areas closed to mineral entry by a special act of Congress, regulation or public land order. These areas, ‘withdrawn’ from mineral entry, include without limitation national parks, national monuments, tribal reservations, military reservations, scientific testing areas, most reclamation project areas of the Bureau of Reclamation and most wildlife protection areas managed by the US Fish and Wildlife Service. Mining claims are also prohibited on land designated by Congress as part of the National Wilderness Preservation System or designated as a wild portion of a Wild and Scenic River. Federal land withdrawn for power development may be subject to mining claim location only under certain conditions. Categories of protected state lands must be determined on a state-by-state basis, but may include, for example, wildlife management areas, state parks, scientific and natural areas and recreation areas.