Mineral Development on Federal Lands:

Bureau of Land Management

Joan Gabelman, Geologist

R. David Williams, Geologist

406 533 7600, joan_gabelman@blm.gov

david_r_williams@blm.gov

Develop understanding of the foundations of mining law,

and the relationship to environmental laws

• Basic need for resources – Food shelter protection (metals)

• Development of societies throughout time– Government who subjugates its people to

work (mines fields) gain royalty– Government who promotes individual

ingenuity for development (Explorers could move freely even own lands)

WHAT BEGAN AS CUSTOM WHAT BEGAN AS CUSTOM BECAME LAWBECAME LAW

Mining has occurred since the beginning of civilization 7000 BC Rudna Galva (Belgrade) Cu mine, 3000-6000 BC Vinca (Danube/Serbia) Cu mining Casting axesBronze Age 1st use of copper – smelted Cu Sn from outcrops, alloyed the metal into bronze

First Mining CodeFirst Mining Code483 BC Athens silver lodes – prospector finds

discovery, registers mine, board of magistrates - sets boundaries and lease terms, leases to company to mine

Spanish Kingdom (developed from ruins of Roman Empire) – minerals belonged to crown, but could be worked under special license - established first private rights to minerals

1550 - Mendoza - Spain's first viceroy issued a mining code adopting Saxon and English concepts of discovery, maintenance work

These concepts absorbed into law by

1584 - Philip II prepared 1st comprehensive mining code

Location procedures, performance work, royalty rate

NORTH AMERICANORTH AMERICA

• Time of expansion

• 1795 - First gold strike North Carolina

Thomas Jefferson/ Albert Gallatin Thomas Jefferson/ Albert Gallatin (2(2ndnd Secretary of State) Secretary of State)

1803 Louisiana Purchase – Pb resources

1807 First Leasing Act/ created land office (Indianan / Illinois)

Government would lease lands for private citizens to be able to mine Pb – BEGINNING OF PRIVATE VS. FEDERAL MINERALS

California Gold RushCalifornia Gold Rush

• 1848 CA under military rule, migration to the west, US paid $15M for Ca, NM, AZ, NV

• 1849 Au discovered 9 days before peace treaty between US & Mexico was signed

• Colonel Masons abolished Mexican mining code, people were extracting minerals without authority = trespass

Government debating mineral lawGovernment debating mineral law

• Senator Benton (supporter of western expansion) – miners were taking possession based on laws they instigated based on practices from England, Germany and Mexico (from Spain/Rome)

• Right to property in mine is dependant on discovery and development….

Passage of Federal Mining LawPassage of Federal Mining Law

• 1865 – Act Granting Right-of-Way to Ditch and Canal Owners over Public Lands and for Other Purposes – Committees on Mines and Mining in House and

Senate– Mineral lands open to exploration to all citizens and

those who declare the intention to become citizens– Expend $1000 in labor and improvements on claims– Could obtain patent

• 1870 – Amended to address placer deposits

• 1872 General Mining Law – – surrendering title to patent would stimulate

production and eliminate conflicts– Extralateral rights– Established qualitative basis for validity of

mining claims (law applies to valuable mineral deposits instead of “mineral lands”

– Limited size of claim

Major Provisions of the 1872 Mining Law:

•Self initiation

•Lands free and open (Excludes withdrawn lands)

•Based on “Prudent Man Rule”

•Assessment work required

•Several different types of claims

•Claims can be purchased

(patented)

• 1872 Mining Law is based in historic trial and error of developing mining practices.

• It establishes a logical fair progression of laws and management procedures to encourage people to find and develop resources for society, while providing revenue for the government (taxes on goods produced).

Clarification of Patented Lands vs. Clarification of Patented Lands vs. Mining ClaimMining Claim

• Confusing terminology used frequently– Patented “Claim” is land transferred

competently into private ownership, not administered by government – should be referred to as PATENTED LANDS

– Mining Claim – land staked for the mineral rights (claimant has “ownership” of minerals not surface land)

Can only stake claims on Lands Can only stake claims on Lands Open to Mineral EntryOpen to Mineral Entry

• Excludes – WITHDRAWN LANDS– National parks, Indian reservations, military

reservations, federal wildlife refuges, National Wilderness Preservation System Lands, Wild and Scenic River Designations or withdrawals, lands acquired (unless opened to mineral entry), and lands withdrawn by BLM for other reasons

MAJOR CHANGES TO THE MINING LAW• 1920 Mineral Leasing law (Leasable)• 1947 Mineral Material Sales (Salable)• 1955 Surface Use Issues (PL167 – claims for mineral use

only)

• 1976 Recordation of Claims Required • disposal to retention. manage them under multiple use/sustained

yield principles, protect valid existing rights, limit wilderness review and consider the needs and concerns of adjacent communities when formulating land use plans

• 1980 Surface Management Regulations• 1992 Maintenance Fee• 1994 Patent Moratorium • 1996 Occupancy Regulations• 2000 Mining Law Revisions

BUREAU OF LAND MANAGEMENT—BUREAU OF LAND MANAGEMENT—ENERGY AND NON-ENERGY MINERAL ENERGY AND NON-ENERGY MINERAL

POLICYPOLICY • The BLM recognizes that public lands are

an important source of the Nation’s energy and non-energy mineral resources, some of which are critical and strategic. The BLM is responsible for making public lands available for orderly and efficient development of these resources under principles of Multiple Use Management, and the concept of Sustainable Development.

• Domestic Minerals Program Extension Act of 1953

• Mining and Minerals Policy Act of 1970

• Federal Land Policy and Management Act of 1976

• National Materials and Minerals Policy, Research and Development Act of 1980

• Energy Policy Act of 2005

• The Domestic Minerals Program Extension Act of 1953 states that each department and agency of the Federal Government charged with responsibilities concerning the discovery, development, production, and acquisition of strategic or critical minerals and metals shall undertake to decrease further, and to eliminate where possible, the dependency of the United States on overseas sources of supply of each such material.

• The Mining and Minerals Policy Act of 1970 declares that it is the continuing policy of the Federal Government to foster and encourage private enterprise in the development of a stable domestic minerals industry and the orderly and economic development of domestic mineral resources. This act includes all minerals, including sand and gravel, geothermal, coal, and oil and gas.

• The Federal Land Policy and Management Act of 1976 reiterates that the 1970 Mining and Minerals Policy Act shall be implemented and directs that public lands be managed in a manner which recognizes the Nation’s need for domestic sources of minerals and other resources.

• The National Materials and Minerals Policy, Research and Development Act of 1980 requires the Secretary

• The Energy Policy Act of 2005 encourages energy efficiency and conservation; promotes alternative and renewable energy sources; reduces dependence on foreign sources of energy; increases domestic production; modernizes the electrical grid; and encourages the expansion of nuclear energy.

Location ProcessLocation Process• Find a locatable Mineral

• Post Discovery NoticeDate of Location, Name of Claim, Name of Locators, Approximate Legal Description

• Within 30 days monument corners

• Within 60 days record with County

• Within 90 days record with BLM

Maintaining a ClaimMaintaining a Claim• Assessment <= 10 claims

– Notice of Intent to Hold– File waiver of maintenance fees by 9/1– Record assessment with county by December 1– Affidavit of work by filed with BLM by December 30.

($100/year/claim)

• Maintenance fee >10 claims– $125 per claim– File by 9/1

Assessment WorkAssessment Work

• Drilling, excavations, driving shafts and tunnels, sampling, …..benefiting claim

• Geological and geochemical surveys

• Geophysical surveys

• Surveys must be recorded with BLM

• Failure to pay maintenance fee or do assessment work forfeits claim

3809 Use Levels3809 Use Levels• Casual Use: Negligible effects (sampling, hand tool,

panning, metal detectors, non-motorized sluicing, small portable suction dredges, drywashers, generally no mechanized equipment)

• Notice: Greater than casual use & < 5 acres, exploration or bulk sampling– 15 day turnaround from complete application (No NEPA)

• Plan of Operations: > 5 acres– 30 day turnaround, at least, from complete application (NEPA

required)

BondingBonding

• Required for all surface disturbance greater than Casual Use

• Actual cost to reclaim disturbance by 3rd party contractor (not BLM) + contractor profit + all overhead

• DEQ MOU – Joint bonds, reviewed jointly

• Bond Review – as projects change, every 3 yrs for plans, every 2 years for notices

Mining Law is NOT an environmental law, but is subject to ALL environmental laws!!

•National Environmental Policy Act 1969

•Clean Water Act 1972

•Endangered Species Act 1973

•Federal Land Policy and Management Act 1976

•Air quality Laws

Montana Laws:

•MEPA

•MMRA

State Law (MMRA) similar:

5 acres requires Plan of Operations

Exploration requires exploration license

Small miners (< 5 acres) can operate under Small Miner Exclusion Statement (SMES)

State law administered by Department of Environmental Quality. BLM and DEQ coordinate on surface disturbance through MOU.

Bonds Held for Major MinesBonds Held for Major Mines

• GSM $54,580,000 (under revision)

• Montana Tunnels - $17,618,053 (pending revision tied to EIS expansion)

• Graymont - $3,613,358 (pending revision tied to EIS expansion)

Example of Taxes Example of Taxes (GSM EIS)(GSM EIS)

Table 3 - 1. Economic Contributions of GSM

1985 1990 1995 2000 2002 Total Since 1983 Gold Ounces Produced 96,491 97,058 89,799 212,266 111,806 2,302,549 Number of Employees 146 259 301 92 83 193 (avg) Total Gross Payroll, Payroll Taxes, and Employee Benefits Paid

$5,872,556 $11,934,434 $15,157,626 $7,679,237 $6,296,899 $205,977,606

Total Property Taxes, Gross Proceeds Tax, and Metal Mines License Tax Paid

$838,632 $1,645,634 $1,229,379 $1,873,003 $1,623,460 $28,441,051

Total Purchases

n/a n/a $35,007,164 $21,232,000 $27,354,151 $337,226,454*

Total Employee Taxes $355,098 $722,281 $3,028,753 $1,649,999 $1,048,225 $32,416,552 * - Since 1991 only Source – GSM, personal communication, 2003

Examples of Taxes and BondsExamples of Taxes and Bonds

• Montana Tunnels Taxes (from Draft EIS)• 1999-2003 generated $1,180,000 annually in total taxes. Between 1999 and

2003, Montana Tunnels paid an average of $524,000 annually for the Metalliferous Mines License Tax and an average of $335,000 annually for the Metal Mines Gross Proceeds Taxes. Of the $1.18 million paid out in average annual taxes by Montana Tunnels from 1999 to 2003, about $505,000 on average was allocated to the Montana general fund and about $580,000 annually was allocated to local government in Jefferson County. Another $94,000 annually was allocated to various special accounts as designated by the Metal Mines Gross Proceeds Tax. Of the $580,000 allocated to local government each year, about $185,000 was allocated to local school districts, about $47,000 was allocated to the County Hard Rock Fund and the remaining $350,000 was allocated to county government. These amounts were estimated using the existing mills for Jefferson County during those years and assuming that all tax revenues were allocated as they should have been according to Montana law.

Example of TaxesExample of Taxes(Outside of Personal Income Tax(Outside of Personal Income Tax

• Tax and Fee Distributions (from Draft EIS)• In 2004, Graymont contributed $14,918 to the Resource Indemnity Trust

Tax fund. Extended tax distribution over the life-of-mine period would include nearly $750,000 to the Resource Indemnity Trust Tax fund in 2004 dollars. In addition, Graymont paid $146,379 in income tax to the state in 2004. Extended over the life-of-mine about $7.3 million in income tax would be paid to the state.

• In 2003, Graymont paid Broadwater County $195,808 in property taxes as well as $47,490 in annual net proceeds in 2004 (Brown 2005). This amount is derived from the taxable value of Graymont’s lime operations in the tax year (BCPB 2003). In 2006, Graymont paid over $77,200 in net proceeds tax to Broadwater County. In 2005, Graymont was the only contributor to net proceeds tax revenue for Broadwater County (BCPB 2003). The life-of-mine expansion would maintain the income source generated from net proceeds which could exceed $9.7 million in property taxes (2003 dollars) and over $3.8 million in net proceeds tax (2006 dollars). Streams of federal and state income tax revenues would be extended as derived from personal income tax paid by workers at the facility through out the life-of-mine.