Lesson 2.2: Mining Law

Lesson 2.2: Mining Law

The body of law governing access to minerals, the rights to mine, and the conditions under which mining is conducted and concluded is vast. Some laws apply primarily to the earliest part of the cycle, i.e., prospecting and exploration, whereas others are more relevant to the end stage of the cycle, i.e., reclamation. The majority will apply through all stages. In total, the number of laws that impact a mining operation number in the hundreds, and fortunately there are many lawyers who choose to specialize and practice in mining law! Still, there are some laws that directly impact the work of the engineers and scientists who are working in the various stages of the mine’s life cycle; and further, some of these laws are very technical in nature, and the mining engineer and other professionals will require sufficient knowledge of them to complete their work. Accordingly, a goal of this lesson is to build a foundation of knowledge for your future work.

Laws can be national (federal) or regional (state or local) in origin. Certain aspects of a mining operation could be subject to international agreement, as well; although this topic is beyond the scope of this lesson. It should be noted that the multinational mining companies typically adhere to the most rigorous set of laws and standardize their operations to be in compliance with those. The “home” country of the multinational may have laws that govern the activity of the corporation even when those activities are in another country. Again, this is a topic well beyond the scope of this course.

It is important to remember the laws and regulations are not the same, even though in many cases the outcome is indistinguishable. Congress or committees of Congress, develop bills, and upon passage by both the Senate and the House of Representatives, the act, as it is then known, goes to the President for signature. If the president signs the bill, it becomes law. The law may have specific provisions with which the mining company must comply, or face civil or criminal proceedings. Often the law also directs an administrative agency, such as MSHA or the EPA, to develop regulations that will accomplish Congress’ intent in passing the legislation. The agency will write specific and often very prescriptive regulations. The mine operators are then legally bound to comply with those regulations, or face a range of civil or possibly criminal actions. Typically, a violation of mandatory regulation results in a fine of tens of dollars up to hundreds-of-thousands of dollars depending on defined criteria, which include the severity of the violation. It can also result in a closure of the mine until the violation is corrected, and in a few cases, criminal charges may be pressed.

Here is an example of an Act. If you note the last sentence on the page, you'll see the language directing the agencies to develop and promulgate regulations.

The regulations developed by an administrative agency are compiled in the Code of Federal Regulations (CFR), which consists of 50 Titles. The list of Titles can be found on the website of the U.S. Government Publishing Office or other sites including Wikipedia. For completeness, we can note that laws are codified in the United States Code (USC), which is also organized by Titles.

Regulations relating to mineral resources are found in Title 30 “Mineral Resources” and many of the regulations affecting the environment are found in Title 40 “Protection of Environment.” Looking more closely at Title 30, you will see that it is divided into volumes, chapters, and parts. Within Title 30, the most applicable content for us is found in Chapter I, which contains the regulations on mine safety and health promulgated by the MSHA. You can download a pdf file of any of these Titles, and I recommend that you download Title 30 Volume 1.

Here is an example from Title 30 to illustrate specific regulations.

If we wanted to cite a specific regulation, for example the one on the separation of stored explosive material, we would write it 30CFR 57.6100.

The regulatory environment has become so complex and pervasive, that even entry-level engineers and scientists will be drawn into conversations regarding requirements of the Mine Act (a law) and regulations. Consequently, it is helpful to understand these terms and where you can go to read them.

With the distinction between laws and regulations behind us, let’s return to our overview of mining law.

First, we can categorize the body of law into five groups for our purposes, as follows:

• access to the land, including the right to mine
• taxes, leasing fees, royalties
• employment, work conditions, and compensation
• environmental protection
• cultural and social issues

Let’s examine each of these in more detail.

Access to the Land, including the Right to Mine

We need access to the land to conduct prospecting and exploration activities, and if we decide to mine, we will need to obtain permission to extract the commodity. Acquisition of these rights is obtained differently on private versus public land. I think we all have an understanding of private land, i.e., land owned by an individual or legal entity such as a company or a trust. Rights to access and mine private property are conveyed simply by an agreement, such as a contract, a lease, or a deed.

What about public land?

All land that was part of the original 13 colonies that became the United States was privately owned. After the birth of the Nation, the U.S. government acquired blocks of land, and that land belonged to the government, i.e., the “public.” Over the years and through different programs, some of that land became privately owned, although vast tracts of public land still exist to this day. In the American West, the government owns nearly half of the land; and in Nevada, for example, the U.S. government owns about 80%. In total, the government owns a third of America! Thus, acquisition of the rights to prospect, explore, and mine on public lands must be completed in compliance with the applicable laws.

The Mining Law of 1872, as amended, governs access to public land for the purpose of prospecting, exploration, and mining. The Bureau of Land Management administers this law within the Department of the Interior. Due to its importance, we are going to discuss this law as a separate topic later in this lesson.

Before moving on to the next category of mining law, I want to make a few more comments regarding the rights acquired on private land. There are many rights that may or may not be transferred in the agreement. For example, if you acquire the right to mine a salt deposit deep below the surface of the Earth, are you entitled to cut and sell the timber on the surface above your underground mine? Likely the answer is: only if you acquired the timber rights as well. What about surface rights above your mine? Can you build a warehouse, shop, or mineral processing plant on the surface? Likely, the answer is: only if you acquired the surface rights for that tract of land. What about the mineral rights themselves? Did you, through your agreement with the private owner acquire the right to mine all minerals or only one?

Suppose that you have obtained the right to surface mine coal. In the process of removing the overlying materials to access the coal bed, you encounter a bed of limestone, for which there is a strong local market. Can you remove the limestone to access the coal? Absolutely. Can you sell the limestone? Maybe not! It depends on how the deed or contract transferred the mineral rights. Let’s look at one last example, which has been the subject of litigation over the years.

You’ve acquired the right to deep (underground) mine a coal seam. The coal has several hundred cubic feet of methane adsorbed for each ton of in-place coal. Modern mining practice would be to “drain” much of this gas prior to mining to lessen the likelihood of a gas explosion during mining. Can you vent the gas to the atmosphere as part of your pre-mining of the seam? Yes. Can you capture and sell the gas? Again, only if you also acquired the rights to the gas!

Over the years, landowners may have sold off some or all of their mineral rights. A company looking at their future interests may go into an area and buy-up the rights to particular minerals. Subsequently, when the landowner sells the land, the deed may exclude certain commodities. Oil and gas rights are commonly split off from the other mineral rights.

Thus, in the acquisition of rights on private land, it is important to know fully which mineral rights are being acquired, e.g. all those to a certain depth, all minerals, or only named minerals; and whether or not the land owner still owns the specific rights that are the subject of the acquisition.

Taxes, Bonds, Leasing Fees, and Royalties

There are several applicable laws and it's well beyond the mining engineer’s responsibility to know and apply them. Notwithstanding, it is important to be aware that the resulting costs are significant, and the mining engineer will include these in feasibility studies. For example, the following costs must be computed and included in analysis of feasibility, i.e., whether or not an economic mining operation can be developed:

• Federal, state, local income taxes, and severance taxes
• Royalties and leasing fees – upfront or as incurred, or both
• Depletion allowance
• Bonds

Typically, the engineering team estimates these values during the feasibility phase of project development. Once the mine is operational, the calculation of these, among others, will be turned over to the accountants and lawyers.

Employment, work conditions, compensation

There are a few hundred applicable laws ranging from Equal Employment Opportunity (EEO) to the Fair Labor Standards Act (FLSA) to the Family Medical Leave Act (FMLA), and most are beyond the scope of the mining engineer’s core activities. The mining company will typically have a human resources specialist or department, and will have standard operating policies to ensure that you do not run afoul of the law in your hiring, firing, and management of employees. If your mine site is unionized or there is interest in organizing, you will need to become knowledgeable on the current labor contract, or certain allowed and disallowed practices related to organizing activities. Workplace safety and health is treated as a condition of employment, and primarily this aligns with the Mine Act and MSHA regulations. These will affect significantly your mine design, planning, and operation.

Environmental Protection

There are many laws and resulting federal regulations to protect the environment. As with other categories of mining law, you as an engineer or scientist will not be practicing law in these areas, but you will be required to conduct engineering and scientific studies required by some of these laws, and you will need to be familiar with the compliance responsibilities in the mine design, operation, and closure phases. Here is a short list of laws that you are likely to encounter:

• Clean Air Act
• Clean Water Act
• Solid Waste Disposal Act
• Endangered Species Act

You may think of power plant or perhaps stack emissions, such as from a copper smelter when you hear about the Clean Air Act. And, you would be correct. What about the dust generated when a haul truck drives on a road within the surface mine, or what about the dust that the wind picks-up from storage pile of stone? These are examples of fugitive dust, and there are strict regulations governing these.

The Clean Water Act addresses not only such major pollutants as fertilizer runoff from agricultural activities, but virtually any other potential source. You will be required for example to prepare a storm water discharge management plan to address any water that may run off of your property during a rain storm and which may have sediment or any contaminant from your operation. Regulations from the same Act will require you to sample water discharges and install and maintain engineering controls to comply with the law.

The waste rock and minerals remaining after the ore has been processed to extract the valuable components are known as tailings. In some cases there may be few tailings, but in many cases, the tailings can account for 90% or more of the run-of-mine material that went into the plant. The Solid Waste Disposal Act will dictate not only the handling of municipal garbage, but also the handling of your tailings.

The Endangered Species Act aims to protect wildlife and their habitat, as well as to develop and administer plans to restore healthy populations of endangered species. Mine planning and operations must develop and execute plans to protect any endangered species that may be within their mine limit. Typically, this affects surface mines or the surface areas of underground mines. As an example, there may be a bird on the endangered species list that nests within the permit area of the mine. You would be required to propose and implement approved measures to ensure that ability of this bird to nest on your property would not be compromised to the detriment of the species. Depending on the area in which you intend to mine, the complexities could require that you retain a zoologist and perhaps other professionals to assist in preparing a plan to comply with the Endangered Species Act.

Sometimes needed and well-intended laws, like this Act, can be twisted for other purposes. I ran into a situation several years ago in which a citizens group was attempting to block a company from obtaining a permit to develop a surface mine, and their stated objection for blocking the permit was that a unique specie, found nowhere else, lived on the site; and that the mining activity would destroy that specie. The specie in question was a spider, and for some spiders, untold generations will live and die within an area of a few square meters. And over time, they will become genetically distinct – distinctions that require rigorous genetic study to identify. Ultimately it was determined that this spider did not qualify under the Act, and the U.S. Fish and Wildlife Commission signed off on the permit, but not without considerable delay to the project!

The Surface Mining Control and Reclamation Act of 1977 created the federal agency, Office of Surface Mining, Reclamation, and Enforcement (OSMRE) with a mandate to enforce reclamation activities at active coal mines, to operate a trust fund to reclaim abandoned mine lands. If you are operating a surface coal mine for example, you will have paid a bond to OSMRE, and your reclamation activities will be inspected to ensure they are consistent with the reclamation plan that you prepared for them. Commonly, the agency is referred to as OSM rather than the complete OSMRE.

Cultural and Social Issues

Two Acts of note in this category are the National Historic Preservation Act of 1966 and the Native American Graves Protection Act of 1990. Both are intended to protect and preserve historical and archeological sites. If there are any older structures on a proposed mine site, or if there is any suspicion that there could be items of archeological or cultural significance, a study will have to be completed; and if there are any, the structures, land, or items will have to be preserved. Often it is alleged that the proposed mining site falls under the protection of the aforementioned Acts. Typically, you would hire a consulting firm specializing in historical and cultural evaluation, and they would assign archaeologists to the project.

This concludes our overview of mining law as it intersects with the work of engineers on a mining project. In the next section, we’ll take a more detailed look at the General Mining Law of 1872 as amended.