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Clams court finds mining claim subject to a 'taking.'(Assays from the Legal Vein)(Column)

Cook, et al, v. U.S. [37 Fed.Cl. 435 (1997)] is a "takings" action for an unpatented mining claim in which Cook sought compensation from the United States under the Constitution's Fifth Amendment prohibition against a government taking of private property for public use without paying the owner just compensation.

Cook contended that the enactment of the Jemez National Recreation Area Act (JNRAA) prohibited the Bureau of Land Management (BLM) from granting any new patents on public lands located within the JNRAA in Sandoval County, N.M., and that such act constituted a taking of their property. Plaintiffs argued that at the time of passage of the JNRAA by Congress, they possessed "equitable title" to land located within the recreation area of JNRAA and the act eliminated their title without providing just compensation. Both parties sought Summary Judgment.

Background Facts. Cook (and others) located pumice on public lands formerly located within the present recreation area and fully complied with the statutory and regulatory requirements for a discovery of a valuable mineral deposit. In September 1989, they filed an application for a patent for 23 placer mining claims covering 16,922.2 acres and published notice of their application. Without adverse claims, about 15 months after filing the BLM accepted their payment of the statutory purchase price in the amount of $4,232.50 for a patent. On Jan. 16, 1991, the BLM then sent a Mineral Entry Final Certificate consisting of two parts, or halves, to the claimants covering the land for which application was filed. The first half of the certificate was signed by a BLM officer and stated that a "patent may issue if all is found regular and upon demonstration and verification of a valid discovery of a valuable mineral deposit. ..." The second half of the certificate was never completed. During the period between receipt of the first half-certificate and the enactment of the JNRAA on Oct. 12, 1993, the BLM never examined the property to verify whether the applicants had discovered the described "valuable mineral deposit."

As enacted, the JNRAA [16 U.S. Code [section]460jjj-(2)(b),(d)] left intact any existing lawful mining claims. However, [section]3(a) of the JNRAA bars the BLM from issuing any new patents on the land within the act. This latter section was the cause of the plaintiffs' claim for the taking of private property.

The case issues follow:

* Does the right to receive a patent vest as equitable title in the applicant before issuance of the patent?

* If such a right vests in the applicant, is divestment of that right tantamount to a divestment of the patent itself for purposes of a takings claim?

The Court's Analysis. The court stated, "It is well established that the right to receive a patent with respect to public lands can vest prior to the issuance of the patent, and that where such a right to a patent has vested, the divestment of that right is tantamount to divestment of the patent itself, i.e., a divestment of property [citing Freese, 226 Ct.Cl.252, and Benson 12 S.Ct. at 878-9]. The vesting of the right to a patent for public land has been the subject of extensive litigation with frequent consideration by the Supreme Court. Hence, if the plaintiffs can demonstrate they had a vested right to a patent covered by their application prior to the enactment of JNRAA, its enactment would constitute a divestment of property in violation of the Fifth Amendment."

The Claims Court relied on, among others, the Benson case [Benson, 145 U.S. at 431-432 (1939)]. In settling a disputed mining claim between two claimants for the same land in Benson, the U.S. Supreme Court relied on the concepts of equitable title and of the vesting of a property interest in a patent prior to the actual issuance of the patent. The court concluded that before the patent actually issued, the original locator had acquired equitable title or a vested right to receive a patent for the land. In other words, the court treated the original locator as though the patent had issued even though legal title had not yet passed. In explaining its conclusion that such a vested right to a patent existed, the Supreme Court, in Benson, said, "When the price is paid, the right to a patent immediately rises." The Benson decision clearly explained that a party who has complied with all the terms and conditions that entitle him or her to a patent for a particular tract of public land acquires a vested interest therein and is to be regarded as the equitable owner thereof [citing 145 U.S. at 433 quoting Wirth v. Branson, 98 U.S. 118 (1878)].

It is a general rule with respect to the sale of real estate that when a purchaser has paid the full purchase price his equitable rights are complete, and there is nothing left in the vendor but the naked legal title, which he holds in trust for the purchaser. And this general rule of real estate law has been repeatedly applied by this court to the administration of affairs of the Land Department of the government.

The Cook court noted that the BLM's argument against vestiture of equitable title for Cook was inconsistent with its own BLM Manual, wherein [section]3860, entitled "Mineral Patent Application Processing," describes the BLM's policy concerning the granting of patents states: "The date of issuance [date of entry] of the first half of the final certificate must be the date of acceptance of the purchase price. This is because the date of acceptance of the purchase price ... is the legal date of vesting of equitable title [a protected property right] in the applicant, and the final certificate is actually effective on that date." Further, the BLM Manual's Glossary F (under "final certificate") stated that "Issuance of the first half of the final certificate grants equitable title to the applicant ... and segregates the land from all forms of entry and appropriation under the public land and mineral laws."

The Cook court further cited Cameron v. United States [40 S.Ct 410 (1920)], which demonstrated this critical point: "Of the passing of equitable title is not coincident in time with the BLM making a final determination that a claim to a patent is valid. The government [held] the legal title in trust for the applicant, and he may not be dispossessed of his equitable rights without due process. That not withstanding this prior creation of equitable rights, until the patent issues and legal title passes, the BLM can assess the validity of the patent if the requirements for a patent have not been satisfied ... In other words, the power of the BLM to inquire into the extent and validity of the rights claimed against the government does not cease until the legal title has passed."

Regarding the claimed "taking" of the Cook property, the court stated that "it is not apparent that this case should be analyzed under the multi-factor analysis for a regulatory taking because ... the Supreme Court has determined that a right to receive a patent constitutes a vested property interest, and in Landgraf [114 S.Ct. at 1497] the Fifth Amendment's Taking Clause prevents the Legislature ... from depriving private persons of vested property rights except for a 'public use' and upon payment of 'just compensation.'"

The court decided to delay its analysis of the economic loss suffered by the plaintiffs until the damage phase of the investigation. As to Cook's motion for summary judgment, "for most of the land covered in their application for a patent, defendant has presented evidence supporting the conclusion that the mineral deposits on the land did not qualify as a 'valuable mineral deposit.' The evidence is sufficient to preclude summary judgment because it demonstrates a dispute as to a material issue of fact, i.e., plaintiffs' compliance with 'all terms and conditions' for the issuance of a patent." Cook's motion for summary judgment was denied. "As to the remaining land covered in the plaintiffs' patent application, "the court will grant the defendant an opportunity to present evidence to demonstrate that plaintiffs failed in other ways to comply with 'all terms and conditions' which entitle [them] to a patent." Supplemental briefs were ordered to be filed.

Because people have been known to file for patents on public lands under a mining claim without any intent to mine the land, the government must constantly be on guard to screen those applicants that have no intent to mine after the patent is received.

In this case, it should have been noted by the BLM that the application to mine pumice stone under a "placer claim" by placer mining methods raises suspicion due to the location of such a large acreage to mine. The mining of pumice stone by hardrock mining methods under a lode claim would appear more creditable than by placer mining. Additionally, the determination of whether Cook's pumice was an "uncommon variety" of pumice and qualified as a locatable mineral should have been made earlier in the application process. Common pumice/pumicite is not a locatable mineral under the Materials Act of 1955.

Although mining of pumice may be made by a claim, it is normally granted by competitive bidding (contract sale) unless the pumicite is determined to be of "an uncommon variety," in which case it is locatable.

R. Lee Aston is a mining engineer, geologist, and attorney. He is an adjunct professor of mining and environmental law at the University of Missouri-Rolla and a member of the Georgia, Virginia, Indiana, and Montana Bars. Contact: Aston Mineral Law & Engineering, P.O. Box 34, Elberton, Ga. 30635, USA.
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Publication:E&MJ - Engineering & Mining Journal
Article Type:Column
Date:Oct 1, 1998
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