Congress adopted the pre-emption model' and the principle of "free" mining, rejecting proposals that the mines and their products be treated as property of the sovereign (seignorage) or that a tax be laid on the net product of the mines. Act of July 26, 1866, 14 Stat. 251. In many respects, this bill recognized and blessed the customary practices the miners themselves had developed while working in a Federal legal vacuum for 15 years. Indeed, the courts subsequently filled in the voids in the 1866 lode law with the customary practices as they existed prior to passage of the law. See, Mining Co. v. Tarbet, 98 U.S. 463 (1878). thus set the policy of not retaining a royalty or other financial interest in the production of the mineral lands." Applying to lodes or veins bearing a limited group of intrinsically valuable metals--gold, silver, cinnabar [mercury] and copper--the Congressional debate did not focus on proof of value at time of patent. However, in the debate on whether a tax should be imposed

Congress

at once promoted their own welfare, the real prosperity of the country, and the financial interest of the government.

H. Rep. No. 66 supra at 4.

Pre-emption was the preferential right of a settler on public lands to buy the lands he occupied. Generally, the settler was required to show actual occupation and improvements to the land in order to exercise his pre-emption right of purchase. Gates, History of Public Land Law Development 219 (1968).

While not retaining a financial interest, Congress and the Executive Branch did retain significant powers and interests through the reserved powers associated with the classification of lands, withdrawals and other regulatory powers. Scope of those powers have been defined in the ensuing years. The nature and is doubtful in 1866 or 1872 Congress was cognizant of the interests and powers retained.

It

Congressman Rahall
June 27, 1991
Page 5

maintenance program. This program will ensure that appropriate procedures are implemented to protect the environment and reclaim areas disturbed by operations.

This letter supplements my oral testimony at the June 18, 1991 hearing on the Mineral Exploration and Development Act of 1991 (H.R. 918). At the conclusion of my testimony, you requested a citation to the United States Supreme Court case that I referred to for the proposition that a valid mining claim is *property in the fullest sense of the word.*

The leading case is Wilbur y. United States ex rel Krushnic. 280 U.S. 306, 316-17 (1930). In that case, the Supreme Court stated:

The rule is established by innumerable decisions of this Court, and of state and lower federal courts, that, when the location of a mining claim is perfected under the law, it has the effect of a grant by the United States of the right of present and exclusive possession. The claim is property in the fullest sense of that term; and may be sold, transferred, mortgaged, and inherited without infringing any right or title of the United States. The right of the owner is taxable by the state; and is real property, subject to

VAN COTT, BAGLEY, CORNWALL & MCCARTHY

Honorable Nick J. Rahall, II
June 24, 1991
Page 2

The

the lien of a judgment recovered against the
owner in a state or territorial court.
owner is not required to purchase the claim
or secure patent from the United States; but,
so long as he complies with the provisions of
the mining laws, his possessory right, for
all practical purposes of ownership, is as
(Citations
good as though secured by patent.
omitted.)

In Krushnic, the Court followed a line of cases which
have long recognized that valid unpatented mining claims are
vested property rights which are enforceable against both third
One of the earliest cases is
parties and the United States.
Forbes v. Gracey, 94 U.S. 762, 767 (1876), in which the Court
stated in reference to unpatented mining claims:

They are property in the fullest sense of the
word, and their ownership, transfer, and use
are governed by a well-defined code or codes
of law, and are recognized by the States and
the Federal government. This claim may be
sold, transferred, mortgaged, and inherited,
without infringing the title of the United
States.

Similarly, in Belk v. Meagher, 104 U.S. 279, 283 (1881), the Supreme Court stated:

A mining claim perfected under the law is property in the highest sense of that term, which may be bought, sold, and conveyed, and will pass by descent.

In Union Oil Company of California v. Smith, 249 U.S. 337, 349 (1919), the Court declared:

But, even without patent, the possessory
right of a qualified locator after discovery
of minerals upon the claim is a property
right in the full sense, unaffected by the
fact that the paramount title to the land is
in the United States (Rev. Stats., § 910),
and it is capable of transfer by conveyance,
inheritance, or devise.

Later, in Cole v. Ralph, 252 U.S. 286, 295 (1920), the

Court stated:

VAN COTT, BAGLEY, CORNWALL & MCCARTHY

The Honorable Nick J. Rahall, II
June 24, 1991
Page 3

A location based upon discovery gives an
exclusive right of possession and enjoyment,
is property in the fullest sense, is subject
to sale and other forms of disposal, and so
long as it is kept alive by performance of
the required annual assessment work prevents
any adverse location of the land.

In a more recent case, the Supreme Court observed that property rights held under the Mining Law of 1872 are "unique." Specifically, in Best v. Humboldt Placer Mining Co., 371 U.S. 334, 335 (1963), the Court stated:

We deal here with a unique form of
property. A mining claim on public lands is
a possessory interest in land that is
"mineral in character" and as respects which
discovery "within the limits of the claim"
has been made. The discovery must be 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." A locator who does not
carry his claim to patent does not lose his
mineral claim, though he does take the risk
that his claim will no longer support the
issuance of a patent. It must be shown
before a patent issues that at the time of
the application for patent "the claim is
valuable for minerals," worked-out claims not
qualifying.

Respondents' mining claims are

unpatented, the title to the lands in
controversy still being in the United States.
The claims are, however, valid against the
United States if there has been a discovery
of mineral within the limits of the claim, if
the lands are still mineral, and if other
statutory requirements have been met.

(Citations omitted.)

I trust that this letter responds to your request for citations to Supreme Court cases in support of my oral testimony that valid mining claims are real property in the fullest sense of that term and are therefore entitled to constitutional