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Present Marketability: A Proper Test of Mineral Value under the Mining Law?

Abstract

The mining law of the United States is governed by the Act of May 10, 1872 which evolved from acts of 1866 and 1870. The act provides for a system of private entry or "location" of public land and a right to purchase when proper requisites have been met. With a few exceptions where minerals have been made subject only to leasing provisions, or subject to public sale by the Government, this law governs the disposition of minerals on federal lands.

The basic requisite to mineral location, the traditional "mining clairn," is discovery of a "valuable mineral deposit." The mineral law, however, does not define "valuable mineral" and the matter has been left in the hands of the courts and the Department of the Interior which manages the public lands of the United States. Generally, the basis for this management under both legislative and administrative policy has evolved from an era of disposal of the federal lands to settle the western United States and raise revenue, toward an era of intensive federal management with an increasing emphasis on conservation.

Mining law has been controlled by this pattern in the definition of value in mineral. The early authorities, beginning in the 1890's, held that the test of value was whether a prudent man would be justified in developing the deposit. However, when dealing with widespread nonmetallic minerals such as sand and gravel, the Department of the Interior has been applying a test of "present marketability" as part of the traditional prudent man test since 1933. A variation of the test has also been recently held to include manganese, a metallic or "hard" mineral.

The broad scope of the mining law of 1872 invited abuses from nonmining elements who would locate claims for private hunting and fishing reserves and summer cabin sites. This was possible because proper location of a mining claim gave the locator an interest in the property that included an exclusive right to the surface. Congress recognized these abuses. By the Act of July 28, 1955, Congress specified that the United States retained the right to manage surface resources of mining claims prior to patent and defined "common varieties of sand, stone, gravel, pumice, pumicite, or cinders" as not being "valuable mineral" subject to location under the mining law of 1872. Common varieties, however, were defined not to include materials that had a "special and distinct value," and did not include "block pumice" which was defined as occurring in nature in pieces having one dimension of two inches or more.

Because of this definition, questions have arisen as to what mineral resources will be "common varieties" and what effect the remedial legislation has on the application of the Department's "present marketability" rule. This comment is written in an effort to define the limits of the application of the "present marketability" rule and to offer suggestions concerning existing problems.

How to Cite

9 Ariz. L. Rev.  70 (Summer 1967)

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