Comparative Value Test Expounded by Recent DOI Secretarial Decision

July 10, 2000

Summary
On May 15, 2000, Department of the Interior ("DOI") Secretary Bruce Babbitt issued a much anticipated decision upon review of United States v. United Mining Corp., 142 IBLA 339 (1998). In United Mining, a case decided under the Building Stone Act of 1892 ("BSA"), the Interior Board of Land Appeals ("IBLA") had held that in determining whether ornamental boulders were "chiefly valuable" as building stone under the terms of the BSA, non-quantified values (such as aesthetic, conservation and geological uniqueness) were not to be considered. Id., discussed in S. Butzier, Federal Mining Law Update, 45th Annual Rocky Mountain Mineral Law Institute Proceedings (Monterey, CA, 1999). Secretary Babbitt's May 15, 2000 decision upon review of United Mining reversed the IBLA on that point, and, more significantly, strongly hinted that the same comparative value test under the BSA of 1892 may hereafter be recognized and used in determinations of whether lands are "valuable for minerals" under the even older (and more controversial) General Mining Law of 1872. The General Mining Law of 1872 is Congress' venerable scheme that encourages the pursuit and perfection of private claims to locatable minerals on public domain lands which are "valuable for minerals" or which are non-mineral in character and eligible for use as mill sites associated with private mining claims. In the early years after passage of the General Mining Law of 1872, the DOI had held that building stone was not a "mineral" subject to the 1872 law's location and discovery opportunities. Twenty years after the 1872 law, Congress passed the BSA in response to DOI's early decisions and thereby "direct[ed] that building stone be included within the term mineral." House Report No. 1204, April 26, 1892.

On May 15, 2000, Department of the Interior ("DOI") Secretary Bruce Babbitt issued a much anticipated decision upon review of United States v. United Mining Corp., 142 IBLA 339 (1998). In United Mining, a case decided under the Building Stone Act of 1892 ("BSA"), the Interior Board of Land Appeals ("IBLA") had held that in determining whether ornamental boulders were "chiefly valuable" as building stone under the terms of the BSA, non-quantified values (such as aesthetic, conservation and geological uniqueness) were not to be considered. Id., discussed in S. Butzier, Federal Mining Law Update, 45th Annual Rocky Mountain Mineral Law Institute Proceedings (Monterey, CA, 1999). Secretary Babbitt's May 15, 2000 decision upon review of United Mining reversed the IBLA on that point, and, more significantly, strongly hinted that the same comparative value test under the BSA of 1892 may hereafter be recognized and used in determinations of whether lands are "valuable for minerals" under the even older (and more controversial) General Mining Law of 1872.

The General Mining Law of 1872 is Congress' venerable scheme that encourages the pursuit and perfection of private claims to locatable minerals on public domain lands which are "valuable for minerals" or which are non-mineral in character and eligible for use as mill sites associated with private mining claims. In the early years after passage of the General Mining Law of 1872, the DOI had held that building stone was not a "mineral" subject to the 1872 law's location and discovery opportunities. Twenty years after the 1872 law, Congress passed the BSA in response to DOI's early decisions and thereby "direct[ed] that building stone be included within the term mineral." House Report No. 1204, April 26, 1892.

In relevant part, the BSA provides:

Any person authorized to enter lands under the mining laws of the United States may enter lands that are chiefly valuable for building stone under the provisions of the law in relation to placer mineral claims.

30 U.S.C. § 161. By 1973, the IBLA recognized that when Congress employed the "chiefly valuable" language of the BSA, it "expressly mandated a comparison of values approach." United States v. Kosanke Sand Corp., 12 IBLA 282, 301 (1973). The question presented in United Mining, and the primary issue addressed in the Secretary's May 15, 2000 decision upon review of United Mining, was what all should be considered in performing this comparison of values beyond making a comparison of the land's value for mining versus agricultural uses. See House Report No. 1204, April 26, 1892 (describing the comparison as "whether or not the land containing [mineral] substances is more valuable therefor than for agricultural purposes").

More specifically, the question under the facts of United Mining was whether unquantified values, such as inherent aesthetic and geological values, should have a part in the values comparison. The United Mining case involved naturally sculpted basalt boulders located in and along the Big Wood River channel in Idaho. The public domain lands containing the water-sculpted boulders (known as Holystone boulders) were managed by the Bureau of Land Management ("BLM"). In 1991, United Mining applied to purchase 180 tons of the Holystone boulders, prompting the BLM to perform an Environmental Assessment ("EA") under the National Environmental Policy Act. In February 1992 United Mining located placer claims covering the ornamental boulders. Based on its April 1992 EA, the BLM made a Finding of Significant Impact and proposed to withdraw the land along the Big Wood River in order to protect "several unique geologic sites." The BLM rejected United Mining's application to purchase the Holystone boulders in January 1993, and filed a March 1993 contest to the placer claims shortly after United Mining filed a notice of intent to engage in mining operations.

After a formal hearing in April 1994, Administrative Law Judge Ramon Child within the DOI declared United Mining's claims null and void since the land was more valuable for aesthetic and geological purposes than for the purpose of mining building stone. That portion of the decision was reversed on appeal by the IBLA, however. United States v. United Mining Corp., 142 IBLA 339 (1998). According to the IBLA, although comparisons between quantifiable values were contemplated by the "chiefly valuable" language of the BSA, comparisons with subjective values such as aesthetic and geological values were not. Four dissenters disagreed. (1)

On October 2, 1998, DOI announced that Secretary Babbitt would review the IBLA's decision under a seldom used procedure for secretarial review in 43 C.F.R. § 4.5. According to the announcement, Secretary Babbitt planned to consider the possible use of a comparative value test not only under the BSA, but also under the General Mining Law of 1872. Concerned that DOI was about to replace the long-standing prudent man/marketability test for determining the validity of mining claims, the National Mining Association and a number of state mining associations submitted procedural and substantive arguments to ward off adoption of a comparative value test for use under the General Mining Law of 1872.

Secretary Babbitt's May 15, 2000 decision - rendered in express reliance on advice from the Deputy Solicitor and Division of General Law in the Solicitor's Office - espouses the comparative value test and holds that aesthetic and geological values, whether quantified or not, are properly considered in determining whether lands are chiefly valuable for building stone under the BSA:

As the Federal agency charged with the stewardship over the nation's resources, the Department of the Interior is particularly suited to make fair and rational comparisons between natural resource values and marketplace. *** Where quantifiable amounts may be presented for such things as conservation, geologic or aesthetic values of land, such factors should be included in the "chiefly valuable" comparison. *** However, the lack of such a quantifiable valuation would not preclude a valid comparison of values from being made under the BSA.

The BSA does not limit the uses of land which may be considered under its comparative values test, but calls for a determination of the best or chief use of the land. The language of the statute permits determinations to be made in a manner that recognizes changing societal needs and values. At the time of enactment, Congress was concerned with the development of the nation and its resources. Now the conservation and preservation of resources are also valued. The requirement that land be "chiefly valuable," with nothing more in the way of explanation, indicates that Congress developed a flexible test that permits for a contemporaneous determination of what is the chief value.

Decision Upon Review of United States v. United Mining Corp. (May 15, 2000), at pages 4-5. Accordingly, Secretary Babbitt reversed the IBLA and remanded for a determination as to whether the land in question along Idaho's Big Wood River channel subject to United Mining's unpatented placer claims are "chiefly valuable" for building stone taking into account aesthetic and geological values. Id. at 5-6. It appears likely the IBLA will invalidate the claims.

At least on its face, Secretary Babbitt's decision only reaches as far as the BSA. Indeed, the Secretary stated that "I need not consider here whether the comparative value test also applies to the General Mining Law of 1872." Id. at 5. The Secretary goes on to note, however, that the term "valuable for minerals" under the 1872 law "may imply the need to consider the term 'valuable' relative to other quantifiable and non-quantifiable values." Id. Moreover, some of the authorities relied upon by the Secretary for the proposition that Congress intended a broad comparison to be performed under the "the mining laws," Id. at 3, actually predate the BSA and its "chiefly valuable" statutory language. See, e.g., Davis Administrator v. Weibbold, 139 U.S. 507, 523-24 (1891) ("mineral patents will not be issued unless the mineral exist in sufficient quantity to render the land more valuable for mining than for other purposes")). Secretary Babbitt, and in turn the Deputy Solicitor, thus may have foreshadowed the decision "left for another day." Id. at 5.

1. A passionate, decidedly literary objection was lodged by two of the four dissenters, and may explain, at least in part, Secretary Babbitt's subsequent decision to review the IBLA's holding:



When it has been possible to compare quantified values of the lands for building stone with quantified values for other uses, we have done so. But those decisions do not mean we cannot . . . compare . . . the value of the land for other purposes, especially in a case such as this when the record strongly supports the existence of extraordinary aesthetic and geologic values. *** In A Lost Lady Willa Cather wrote of the loss of vision in the depression era when the Building Stone Act was passed:

By draining the marsh, Ivy had obliterated a few acres . . . and had asserted his power over the people who had loved those unproductive meadows for their idleness and silvery beauty . . . . All the way from the Missouri to the mountains this generation of shrewd young men, trained to petty economies by hard times, would do exactly what Ivy Peters had done when he drained the Forrester marsh.

Removing the boulders from the Big Wood River channel would be like draining the Forrester Marsh. Petty economies. In my view, we should conserve such an unusual example of the forces that created our tiny place in the universe. Thomas Fairchild Sherman has written:

The land - its rocks and waters, people, plants, and animals - are joined in a continually unfolding pagaent through time. The scenes are changed by forces as tangible and immense as those that tore Pangaea asunder, or by energies as subtle and mysterious as the migration of butterflies or the passions of human adventure. We participate in only a few moments of the pagaent, yet each moment has the whole eternity within it. If we see the eternal, we will honor the moment and cherish the earth and all its wildernesses of life.

I dissent.

142 IBLA at 381 (citations omitted) (Irwin, A.J., dissenting).