The Mining Law Millsite Debate

The Mining Law Millsite Debate

Order Code RL30310
CRS Report for Congress
Received through the CRS Web
The Mining Law Millsite Debate
September 14, 1999
(name redacted)
Energy Research Analyst
Resources, Science, and Industry Division
Congressional Research Service ˜ The Library of Congress

ABSTRACT
This report provides background and analysis on the debate over whether the millsite language
(30 USC 42) in the Mining Law of 1872 allows only one five-acre millsite per mining claim.
In practice, the Bureau of Land Management (BLM) has allowed for as many millsites as can
be justified for developing the orebody. Language in the BLM’s Mineral Examiners handbook
allows for this practice even though it has no explicit statutory basis. The Solicitor of the
Department of the Interior ruled in November 1997 that the millsite provision does indeed
mean only one millsite per mining claim. Based on this interpretation the Department of the
Interior disapproved a plan of operations for the Battle Mountain Gold Company’s Crown
Jewel Gold Mine in the state of Washington. Subsequently, the Solicitor’s ruling on the Crown
Jewel Mine was overturned by Congress via the FY1999 Emergency Supplemental Bill (P.L.
106-31). Both the House and the Senate have addressed the millsite issue in the context of the
Interior Appropriations bill for FY2000. The Senate Appropriations Committee agreed to an
amendment to permanently prohibit placing limits on acreage or millsites based on the number
of mining claims (S. 1292 Sec. 336). The House adopted an amendment to its version of the
appropriation bill (H.R. 2466, Sec. 332) to support the Opinion of the Solicitor.

The Mining Law Millsite Debate
Summary
Under the General Mining Law of 1872, the holder of a mining claim has the
right to claim and patent nonmineral, noncontiguous lands for millsites to mill and
process ore from mining claims on federal lands. At issue is whether language in the
statute that states, “ ... no location made on and after May 10, 1872 of such
nonadjacent land shall exceed five acres,” limits the claimant to a maximum of five
acres per mining claim. An Opinion by the Solicitor of the Department of the
Interior, John Leshy, in November 1997 concluded that the Mining Law provides
only one millsite of no more than five acres per mining claim. Critics argue that
nowhere in the statute (30 USC 42), does it state that there can be only one millsite
per mining claim. Based on the November 1997 Opinion, the Solicitor ruled in March
1999 that the Battle Mountain Gold Company’s plan of operation could not be
approved for the Crown Jewel Mine in the state of Washington because the number
and acreage of millsites exceeded the five acre limit per mining claim. As part of the
Emergency Supplemental Bill (P.L. 106-31), Congress overturned the Solicitor’s
decision at least for the remainder of FY1999.
Two opposing views have been staked out within the context of the Interior
Appropriations bill for FY2000. The Senate Appropriations Committee approved
language that would permanently prohibit limits on the number and acreage of
millsites per mining claim. The House passed language that supports the Solicitor’s
view. Some would like the issue resolved in the context of broader revisions of the
General Mining Law of 1872.
The House language supporting the Solicitor’s Opinion is considered far too
restrictive by the industry. According to the National Mining Association (NMA),
many operations would not survive. The NMA contends that modern mining
operations typically require much larger tracts of land for waste disposal. Miners also
believe that a one-to-one claim to millsite ratio would make it necessary to go outside
the federal domain to obtain sufficient area to locate milling facilities.
An alliance of environmental groups known as the Okanogan Highlands Alliance
has opposed the Crown Jewel mine and contends that overall tougher environmental
provisions are needed in the Mining Law. Specifically, the Alliance has expressed
concern over how the “excess” acreage for waste disposal would affect water quality.
The Alliance argues that the mine waste would have significant impact on the
headwaters of several creeks that flow into the Kettle and Columbia rivers.
Solicitor Leshy had stated that the millsite provision is a “hopelessly
anachronistic or ambiguous provision of the General Mining Law because of
Congress’s inability to confront head-on the need for new laws better suited for
modern conditions.”

Contents
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Solicitor’s Interpretation and Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Crown Jewel Mine . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Issues and Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Industry Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Environmental Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Broader Mining Law Reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
List of Figures
Figure 1. Location of the Crown Jewel Mine . . . . . . . . . . . . . . . . . . . . . . . . . 4

The Mining Law Millsite Debate
Background
The General Mining Law of 1872 grants free access to individuals and
corporations to prospect for minerals on federal public domain lands and allows
prospectors, upon discovery, to stake a claim on land believed to contain a valuable
mineral. Once a deposit is determined to be economically recoverable and at least
$500 worth of development has taken place, the claim holder may obtain a patent or
title to surface and mineral rights. The minerals within a properly located claim can
be developed even without a patent.
To support the development of a mining claim, the claimant has the right to use
and patent nonmineral, noncontiguous lands for the purposes of setting up ancillary
facilities or millsites to mill and process ore. More specifically, the Mining Law states
that, “where nonmineral land not contiguous to the vein or lode is used or occupied
by the proprietor of such vein or lode for mining or milling purposes, such
nonadjacent surface ground may be embraced and included in an application for a
patent for such vein or lode and the same may be patented therewith ... but no
location made on and after May 10, 1872 of such nonadjacent land shall exceed 5
acres” (30 USC 42). In 1960 this law was amended (P.L. 86-390, 74 Stat. 7.) to apply
to placer claim holders. The patent fees for millsites are the same as the fees for lode
and placer mineral claims: $2.50 per acre for placer claims or $5 per acre for lode
claims. Over the years the millsites have also been used to dispose of waste rock
1
.
There are two types of millsites, dependent and independent. The current millsite
debate revolves around dependent millsites associated with a lode or placer deposit.
(For more details on the General Mining Law of 1872 see CRS Issue Brief 89130
Mining Law of 1872: Time for Reform?).
Solicitor’s Interpretation and Decision
At issue is whether the five-acre-per-millsite language in the statute limits a
claimant to a maximum of 5 acres per mining claim, (a one-to-one millsite to mining
claim ratio). After a review of patent applications, the Solicitor of the Department of
the Interior in a November 7, 1997, opinion concluded that a one-to-one ratio is the
correct interpretation. Solicitor John Leshy states: “My office has closely examined
these questions. The Mining Law of 1872 provides that only one millsite of no more
than five acres may be patented in association with each mining claim.”However,
multiple millsites may be patented with a lode or placer claim if the total area covered
A
1
placer deposit is an alluvial deposit of sand or gravel containing valuable minerals derived
from rocks or veins; a lode or vein deposit is of a valuable mineral consisting of quartz or
other rock in place with definite boundaries. Source: Dictionary of Mining, Mineral and
Related Terms, Bureau of Mines, 1968.

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by these millsite claims does not exceed five acres. The Solicitor further asserts that
because the statute does not support issuing patents for millsite claims totaling more
than five acres per placer or lode claim, the Department should “reject those portions
of millsite patent applications that exceed this acreage limitation.” The ruling could
invalidate a number of millsite claims and call into question operating plans for other
mines if it were determined that millsite claims exceeded the five-acre-limit per mining
claim. However, the Solicitor’s ruling does not affect those plans of operations on
BLM land that have already been approved.2
The Solicitor noted that the plain meaning of the statute, its legislative history
and past departmental rulings support his decision. Although some Departmental
rulings have indicated that only one millsite per claim could be allowed, other rulings
have held that more than one millsite may be patented with a lode claim, provided
that the aggregate land is no more than five acres (J.B. Hoggin 2 LD 755). The
Secretary ruled in 1891 that the Mining Law “evidently intends to give to each
operator of a lode claim, a tract of land not exceeding five acres in extent for the
purposes of conducting mining milling operations thereon” (Mint Lode and Millsite,
12 LD, 624). “The Department has never held, however, that a claimant may patent
more than five acres of land for a millsite in connection with one mining claim,”
according to the 1997 ruling.
However, at least in recent years the Bureau of Land Management’s (BLM)3
Mineral Examiners Handbook has containe
4
d language that appears to contradict the
Solicitor’s conclusion, and which the Solicitor has characterized as “ad hoc” changes
that did not result from formal changes to the Bureau’s or the Department’s rules and
regulations and were not subject to the Solicitor’s Office review. It states that “each
5
millsite is limited to a maximum of five acres in size and must be located on
nonmineral lands. Any number of millsites may be located but each must be used in
connection with the mining or milling operation” (H 3890-1). Also, in every case
there must be proof that the land claimed as a millsite is not mineral in character (43
CFR) 3864.1-4). The BLM Manual has similar language: “a millsite cannot exceed
five acres in size. There is no limit to the number of millsites that can be held by a
single claimant.” Neither the handbook nor the Manual are binding on th
6
e
Department.
Critics of the Solicitor’s opinion argue that the statute (30 USC 42) does not
state that there can only be one millsite per mining claim. Opponents of the ruling
dispute many of the cases cited by the Solicitor to support his decision. One of the
U.S.
2
Department of the Interior, Memorandum to the BLM from the Solicitor, John Leshy,
Limitations on Patenting Millsites under the Mining Law of 1872, November 7, 1997 (M-
36988).
3The BLM administers the mineral resources, both surface and subsurface, of the onshore
federal estate available for development.
Handbook for Minerals Examiners, Rel. 3-234, H-3890-1 3/17/89.
4
O
5
ffice of the Solicitor, U.S. Department of the Interior, Limitations on Patenting Millsites
under the Mining Law of 1872. November 7, 1997, P. 15.
BLM Manual, Rel. 3-270, 3864-Mill Site Patent Applications, 7/9/91.
6

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cases mentioned is Smelting v. Kemp, 104 U.S. 636, 651 (1881). According to
industry attorneys, that case states that it has long been recognized that, consistent
with the Mining Law’s purpose of promoting mining, “limitations are not put upon
the number of locations which may be acquired by purchase, nor upon the number
which may be included in a patent.” Attor
7
neys representing the industry’s view place
many of the historical court decisions and Interior Department positions in the context
of the central issue at the time, which in most cases was whether the mine operator
was using the land for milling purposes or whether the amount of land in question was
needed for the mine operation, and not whether it violated a one-to-one millsite-to-
mine claim ratio.
If the correct interpretation of the law is a one-to-one ratio, the Department
could not lawfully allow patenting of additional lands. However, Congress might wish
to consider the issues in order to address the practical problems that might have
resulted from agency practices.
The Crown Jewel Mine
Based on the Nov. 7, 1997, decision, the Solicitor ruled on March 26, 1999, that
the Battle Mountain Gold (BMG) Company’s plan of operation for the Crown Jewel
gold mine in Washington State could not be approved. The denial of the operating
plan cited noncompliance with the General Mining Law of 1872. Specifically, 15
claims were located for mining but over 500 acres had been located for millsites.
When applying the one-to-one rule, BMG would be entitled to only as much as 75
acres for millsites. Thus, a number of millsites were deemed invalid. The 1999
decision reversed an earlier record of decision by BLM and the Forest Service (FS)
and denied the company’s plan of operations.

BMG, based in Houston, TX, began the permitting process for the Crown Jewel
Gold Mine in 1992. After expenses of about $80 million and an environmental impact
statement, a positive record of decision was made by the BLM and the FS in January
1997. At this point 50 permits had been granted, including a water quality certification
from the state Department of Ecology, and the company had posted $50 million in
environmental securities. A total of 70 county, state and federal permits are needed
for operation, closure and reclamation.
The Crown Jewel Mine is located on Forest Service land near Chesaw,
Washington (Okanogan County, see Figure 1 on page 4). The Forest Service has
responsibility for surface management and the BLM has responsibility for mineral
management. The mine is expected to yield 1.45 million ounces of gold over an 8.5
year life. About 97 million tons of non-orebearing rock will be removed in the
process and disposed of in nearby waste-rock disposal areas. The gold will be
processed using a heap-leach sodium cyanide solution technique to separate the gold
from the ore. The tailings slurry, containing residual amounts of cyanide, would be
routed to a tailings disposal facility for neutralization on adjacent federal lands. The
company intends to use the INCO (Inco Nickel Co.) cyanide destruction process
7Statement of R. Timothy McCrum, Esq., Crowell & Moring, LLP. Oversight Hearings,
Subcommittee on Energy and Mineral Resources, August 3, 1999.

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Figure 1. Location of the Crown Jewel Mine
approved by the state of Washington. The company has 15 mining claims and 100
millsite claims. According to BMG, without the necessary millsites, development of
the mine as it is presently conceived could not take place. If the Interior
Department’s decision is upheld, then the Crown Jewel Mine would have to review
other options for locating the desired number of millsites in excess of the 5 acres per
claim. Such options include land exchanges, leases, or a government buyout, which
could require congressional action.
Legislation
The denial of the plan of operations for the Crown Jewel Mine was overturned
in Congress as part of the Emergency Supplemental Appropriations Bill for FY1999
(P.L. 106-31, Section 3006). This law removed the millsite limitations for the Crown
Jewel Mine, notwithstanding the Opinion of the Interior Solicitor. More specifically
the law states that “in accordance with millsite provisions of the BLM Handbook for
mineral examiners ... the statute shall not limit the number or acreage of millsites

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based on the ratio between the number or acreage of millsites and the number or
acreage of associated lode or placer claims with respect to the Crown Jewel project
for any fiscal year. The Department of Agriculture and the Department of the Interior
shall approve the plan of operations and reinstate the record of decision for the Crown
Jewel Mine.” Further, it states that patent applications and plans of operations
submitted prior to this law not be denied based on the Nov. 7, 1997, Opinion, thereby
giving the Solicitor’s Opinion only prospective application.
Additionally, Both the House and Senate have addressed the millsite issue
(taking opposing views) in the context of the FY2000 appropriations for the DOI:
The Senate Appropriations Committee agreed to an amendment to permanently
prohibit placing limits on acreage or millsites based on the number of mining claims
(S. 1292, Sec. 336). This proposal is based on the BLM Handbook for Minerals
Examiners and the BLM Manual. Supporters of this view maintain that nowhere in
the statute is there expressly stated a fixed number of millsites per claim and that
current practice allows for millsites to exceed a one-to-one ratio. The Senate defeated
a floor amendment on July 27, 1999, that sought to delete the millsite language
reported by the Appropriations Committee. DOI’s reaction to this amendment was
to call for the millsite limitation issue to be discussed in the context of broader
Mining Law reforms.
The House, on the other hand, adopted an amendment to its version of the
appropriation bill (H.R. 2466, Sec. 332) that supported the opinion of the Interior
Solicitor on the millsite issue. The language bars funds “appropriated by this Act”
from being used to process applications for approval of patents, plans or operations,
or amendments to plans that conflict with the opinion of the Solicitor. Following the
completion of the Senate floor action it appears likely that the issue will be addressed
at a conference on the appropriation bill. In a related matter, the House Resources
Subcommittee on Energy and Mineral Resources held hearings on August 3, 1999,
to discuss, among other issues, the possible impact of the Solicitor’s millsite opinion
on the mining industry.
Issues and Analysis
Industry Concerns. The House language backing the Interior Solicitor’s
opinion is considered far too restrictive by the industry. According to the National
Mining Association (NMA), many operations would not survive, especially if
grandfathered patent applicants (which can still receive patents under the current
patent moratorium) are not permitted.8 The Department of the Interior reports that
seventeen patent applications that have received their first-half final certificate to be
processed for patent approval have been subsequently rejected or modified because
8The patent moratorium allows those patent applications that have received their first-half
final certificates to be processed for patent approval. The first-half final certificate is given
to patent applicants that are awaiting the mineral examiner’s verification of the validity of the
claim for final approval.

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of the November 1997 Opinion and another twenty application have excess millsites.
Another 27 out of a total of
9
338 pending plans of operations are reported to have
excess acreage. The industry argues that to uphold a one-to-one millsite-to-claim
ratio would not be in keeping with common practice by the BLM and the mining
industry. It is recognized throughout the mining and regulatory community that a five
acre millsite is inadequate for most modern commercial mining operations. Mining
operations typically require much larger tracts of land for waste disposal, particularly
open pit gold mining operations using heap leach technology, which allows lower
grades of ore to be mined. This process results in larger amounts of rock to be dug
and larger disposal ponds needed to contain the waste.
Miners also believe that enforcing a one-to-one claim to millsite ratio would
make it necessary to go outside the federal domain to obtain sufficient area to locate
milling facilities. A major question facing both industry and government is: Are other
public or private lands available and suitable? In an earlier article written by him,
Solicitor John Leshy stated that a five acre millsite is likely to be insufficient for most
modern mining operations. Thus, the “miner’s only remedy is to acquire the needed
land by exchange or purchase.” Often the only land available is federal land, which the
government is not required to sell.10

Solicitor Leshy also stated that the millsite provision is a “hopelessly
anachronistic or ambiguous provision of the Mining Law because of Congress’s
inability to confront head-on the need for new laws better suited to modern
conditions.” Many believe that the solution to the millsite and other issues is t
11
o
amend the entire Mining Law.
Environmental Concerns. An alliance of environmental groups known as the
Okanogan Highlands Alliance has opposed the Crown Jewel mine and contends that
tougher environmental provisions are needed in the Mining Law. Specifically, there
is concern over how the “excess” acreage for waste disposal purposes would affect
the environment, especially as to water quality. According to the Washington
Department of Ecology, the proposed project would directly affect 3.76 acres of
wetlands, and eight springs and seeps. Indirect impacts would occur on about 15 acres
of wetlands and nine springs and seeps. Discharges of leachate from the waste rock
to the groundwater are expected to exceed the state’s groundwater and surface water
9Report to Congress detailing by State: all past present and pending mining operations,
including all grandfathered mineral patent applications and plans of operations, that could be
impacted by the Solicitor’s Opinion of November 7, 1997. Prepared by the Bureau of Land
Management, August 11, 1999.
Under
10
the Federal Land Policy and Management Act (FLPMA, P.L. 94-579, 90 Stat. 2756),
“a tract of public land or interests therein may be disposed of by exchange by the Secretary
under this Act.” And, further in Section 302(a), “The Secretary shall manage the public lands
under principles of multiple use and sustained yield ..., (b) and ... regulate through easements,
permits, leases, licenses, rules , or other instruments as the Secretary deems appropriate for
the use, occupancy and development of public lands.”
Leshy,
11
John D., The Mining Law, A Study in Perpetual Motion, Resources for the Future,
1987, p. 181.

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standards. However, the Department accepted a mitigation plan from BMG and
issued a water right permit for the project. A coalition of environmental groups has
filed suit to halt the implementation of this “untested” plan. The Alliance argues that
the mine waste would have significant impact on the headwaters of several creeks that
flow into the Kettle and Columbia rivers and BMG’s water use would violate the
“senior rights” of downstream users. 12
Broader Mining Law Reforms
The millsite debate may place the General Mining Law of 1872 under more
scrutiny this Congress. This is partly because the debate raises many broad policy
issues. For instance, to grandfather all the patent applicants (under patent moratorium
provisions) that have received their first-half final certificate would appear to defeat
the Administration’s policy of limiting the number of patents issued. The millsite
ruling would assist the Administration’s efforts to slow down the patent process even
further by invalidating a number of mining claims. However, to settle the millsite
issue based on the current legislative proposals could either allow the mining industry
to use and patent as much public land as it needed for ancillary facilities associated
with a mining operation (S. 1292) or, on the other hand (H.R. 2466), possibly shut
down many mining operations. Both parties have developed versions of Mining Law
reform they would prefer to advance. The industry wants a mining law bill tha
13
t
would continue to allow patenting of federal lands and generally minimize the impact
of any royalty. The environmentalists are opposed to open pit heap leach mining using
cyanide to extract gold and would prefer comprehensive reform that includes
environmental provisions.
12The Battle Mountain Gold Company, Houston, TX., The Crown Jewel Mine: A Brief
Overview, 7/8/99. And, Washington State Gold Mine Under Fire From Conservationists,
Okanogan Highlands Alliance, Press Release, December 3, 1997.
See CRS Issue Brief 89130, The 1872 Mining Law: Time for Reform?
13

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