determination is incorrect. If a claim, or part of it, is invalid for reasons appearing on the face of the record, the manager can declare it invalid to that extent without referring the question to a hearing. Clear Gravel Enterprises, Inc., 64 I.D. 210 (1957). Accordingly the manager correctly refused to refer parts of claims Brown Dyke Nos. 3, 28, 29, and 30 to the hearing examiner and properly declared them null and void. There is only one claim in the second group, Brown Dyke No. 43, which was held invalid in its entirety by the manager because on the date it was located, February 21, 1953, the land it covered was included in an outstanding oil and gas lease, Utah 08096, and there is no evidence that the mineral claimant had complied with the provisions of the act of August 12, 1953 (30 U.S.C., 1958 ed., sec. 501), or the act of August 13, 1954 (30 U.S.C., 1958 ed., sec. 521). In a recent decision the Department held: *** when the attempted locations were made, the lands were not open to mining entry since all of the lands were included in oil and gas leases issued under the Mineral Leasing Act, and such lands were not subject to location under the United States mining laws (United States v. U.S. Borax Co., 58 I.D. 426 (1943); Monolith Portland Cement Company et al., 61 I.D. 43 (1952)). Although these claims might have been validated under the act of August 13, 1954 (30 U.S.C., 1958 ed., secs. 521-523), if the requirements in that act as to posting notices and filing amended location notices had been met, the record indicates that there has been no attempt to so validate the claims. Accordingly, the decisions holding the claims null and void appear to be correct (see R. L. Greene et al., A-27181 (May 11, 1955); Clear Gravel Enterprises, Inc., A-27287 (March 27, 1956); United States v. R. B. Borders, et al., A-27493 (May 16, 1958)). Mesilla Valley Construction Company et al., A-28102 (November 20, 1959). Therefore the manager properly held Brown Dyke No. 43 null and void.' The third group of claims (Brown Dyke Nos. 1, 2, 7, and 8 and parts of 3, 4, and 28) are those which were located on September 1, 1939 (or, as the appellant claims, in 1925). The manager held that the land covered by these claims was part of oil and gas prospecting permit Salt Lake 050390 and invalid for lack of compliance with the act of August 12, 1953 (supra). If the claims were validly located in 1925, a permit or lease issued later would not make them null and void. Union Oil Company of California, Ramon P. Colvert, 65 I.D. 245 (1958). The appellees, however, point out that in its verified statement Alumina said these claims were located in 1939 and contend that it is bound by that state 7 Alumina alleges that Brown Dyke No. 43 is in conflict with lease Utah 08096 only in part. However, an examination of the records indicated that the conflict is total. The mining claim covered the SW4 sec. 18, T. 17 S., R. 14 E., S. L. M., and the lease covers, among other lands, lots 3, 4, E1⁄2SW of the same section-which is all of the SW since lots 3 and 4 constitute the WSW 4. February 29, 1960 ment. Alumina argues that in 1939 it only relocated the 1925 locations and that it may rely upon them. Since, for reasons set out below, I feel that the land was open to mineral location in 1939, it is not necessary to determine this question. Oil and gas permit Salt Lake 050390 was issued to Clarence I. Justheim on October 17, 1932, for a term of 2 years. Although there is no indication in the record of any action taken to extend the permit, it was presumably extended pursuant to several acts which either authorized the Secretary to extend such permits or extended them by statute. See Jebson et al. v. Spencer et al., 61 I.D. 161, 164, 165 (1953). In any event the record contains a memorandum from the Commissioner of the General Land Office (now the Director, Bureau of Land Management) dated June 9, 1938, stating that the permit was unconditionally extended to December 31, 1938, pursuant to the Secretary's Order of December 23, 1937 (Order No. 1240; 43 CFR, 1940 ed., 192.7); that the permit could not be extended beyond December 31, 1938, but that the right to prospect the land could be continued under lease by the filing on or before December 31, 1958, of an application to exchange the permit for a lease under the provisions of the act of August 21, 1935 (49 Stat. 674). There is no indication that an application to exchange the permit was filed before December 31, 1938. The next notation in the record refers to a letter "N" of March 26, 1940, terminating the permit as of April 25, 1940. In the Jebson case (supra), the Department considered whether under identical facts the land covered by the permit was open to mineral location between December 31, 1938, and the notation of the termination of the permit. It held that the permit terminated by operation of law on December 31, 1938, that the lands it covered became available to mineral location upon the expiration of the permit, and that the notation was made only to determine the date on which the lands became subject to application for oil and gas. It concluded: It is a well-established rule of the Department that no application will be received and no rights will be recognized as initiated by the tender of an application for a tract of land embraced in an entry of record until such entry has been canceled and the cancellation noted on the records of the local land office. Circular, 29 L.D. 29 (1890). However, a mining claim is not initiated by application made at the local land office. A right in a mining claim is established by a series of acts including discovery of valuable mineral deposits within the limits of the claim, marking the boundaries of the claim, posting notice on the claim, and recording the claim in the manner required by the regulations of the mining district. 30 U.S.C., 1946 ed., secs. 22-28. There is no requirement under the mining laws that application for the land must be made at the local land office or that notice of the claim must be filed with the United States, either at the local land office or else where. Thus, this rule is not applicable to the initiation of rights under the mining laws on lands subject to such laws. It follows that the action of the General Land Office in declaring that the cancellation of the permit was not to be effective until March 25, 1940, did not preclude the initiation of a mining claim on the land on February 2, 1940. Cf. Griffith et al. v. Noonan et al., 133 P. 2d 375 (Wyo., 1943). Accordingly, it was error to hold that the land was not open to mining location on February 2, 1940. (Pp. 166–167.) Thus it follows that the land formerly in Salt Lake 050390 was open to mining location on September 1, 1939, and that, all else being regular, it was error to reject Alumina's verified statement as to the claims in the third group and to hold them null and void. These claims are to be held for hearing before the hearing examiner along with the other claims which the manager determined qualified for that proceeding. Therefore, pursuant to the authority delegated to the Solicitor by the Secretary of the Interior (sec. 210.2.2A (4) (a), Departmental Manual; 24 F.R. 1348), the decision of the Acting Director is reversed and the case is remanded for further proceedings consistent herewith. EDMUND T. FRITZ, IA-1077 LEWISTON LIME COMPANY Decided March 1, 1960 Indian Lands: Leases and Permits: Minerals A provision in a tribal limestone lease permitting the lessee to deduct costs of "transportation and treatment" in determining the net value of its production is limited to those items and does not give operator of the lease the right to deduct all of its general mining or quarrying costs. Indian Lands: Leases and Permits: Generally The fact that the Government over a long period of time accepted without objection lesser royalties than it later finds are due under the terms of a tribal mineral lease does not estop it from asserting a claim for additional royalties. APPEAL FROM THE BUREAU OF INDIAN AFFAIRS The Lewiston Lime Company of Seattle, Washington, has appealed to the Secretary of the Interior from a decision of the Acting Commissioner of Indian Affairs dated July 17, 1958, holding that the Company is indebted to the Nez Perce Indian Tribe of Idaho in the amount of $42,586.13 for back royalties under Nez Perce Tribe Limestone Lease No. 724, Contract I-18-Ind. 3130. March 1, 1960 Appellant is operating the lease on which Bert H. Richardson is lessee. By its terms the lease, originally executed in 1938, expires March 31, 1960. Its royalty provision reads: The lessee hereby agree to pay or cause to be paid to the officer in charge for the lessor as royalty 10 per cent of the net value of the output of rock or stone at the mine, which is to be ascertained by deducting from the gross value of the rock or stone the cost of transportation and treatment necessary for the sale of such rock or stone; said royalty to be not less than 5 cents a ton for the output of rock or stone at the mine, or not less than 5 cents a cubic foot for cut stone. The claim for back royalties is for the years 1951 to 1956, inclusive, and was arrived at through an audit conducted by the Bureau of Indian Affairs. It is based on the fact that appellant, in determining the net value of its production on which royalties were to be paid, deducted its general mining costs whereas the Indian Bureau claims that the only costs allowable under the terms of the lease are those of "transportation and treatment." In so interpreting the lease, the Bureau concedes that treatment costs included such post-mining items as crushing, washing, sizing, pulverizing, and bagging the material. It objects, however, to the inclusion of such costs as drilling, shooting, loading, hauling, "or any other operation connected with the operation of quarrying or mining." Appellant's position is that the royalty provision of the lease must be interpreted as it contends, or, at the very least, that the provision is ambiguous. In support of this position appellant points to acceptance by the Bureau of Indian Affairs until 1957 of royalty payments which were computed on the basis of the inclusion of mining costs. This practice, it claims, if the meaning of the royalty provision were doubtful, establishes the meaning of the provision, especially since it should be construed against the Bureau, which prepared the lease. Further, the Government, having accepted royalty payments for many years with general mining or quarrying costs deducted, the applicant contends, is now estopped from asserting claims for additional royalties. As indicated, much of the controversy is centered around the meaning of the word "treatment" and both appellant and counsel for the tribe cite numerous technical authorities in support of their respective viewpoints. We believe the phrase "cost of transportation and treatment" is a limiting one and cannot be enlarged to include all general operating costs of production.1 The case of State 1 The monthly royalty report forms which appellant submitted to the Bureau are said by the appellant to have included the following definition of "operating costs," which it computed as being its deductible costs: "Operating costs include the cost of producing and milling ore at the mine, but shall not include prospecting, buildings, machinery, foundations and other capital expenditures, nor transportation and railroad charges for disposal of the product." v. Northwest Magnesite Co., 182 P. 2d 643 (Washington, 1947), interpreting the identical phrase in a magnesite lease, we think disposes of the question. There the court said: We infer from these sources of information, and from the definitions previously quoted, that "treatment", generally, is distinct from extraction of ore from the earth * * *.” 182 P. 2d 643, 661. In applying this construction to the phrase "cost of transportation and treatment," the court ruled that costs of development were not covered. It continued: As to the expense of blasting, reblasting, and ore and waste handling at the quarry, we likewise have little doubt that it is not a part of the cost of transportation and treatment, but is rather a cost of mining, exploitation, or extraction. Mr. Sargent did testify that blasting was treatment, or “a type of treatment", because it was selective, but he conceded that, generally, separation of mineral from the earth was mining, and certainly his first statement was inconsistent with his definition of treatment." We conclude the Bureau of Indian Affairs is correct in its contention that such costs as drilling, shooting, loading, hauling, "or any other operation connected with the operation of quarrying or mining" may not be included as part of the "cost of transportation and treatment" allowed by Nez Perce Tribe Limestone Lease No. 724 under which appellant is operating. The fact that the Government for a long period of time accepted without objection the royalty payments made by appellant is unfortunate, but we are convinced that there is no estoppel against the United States in this situation, especially since it is acting as trustee for an Indian tribe. See Utah Power and Light Co. v. United States, 243 U.S. 389 (1917); American Security Co. of New York v. United States, 112 F. 2d 903 (10th Cir. 1940); and United States v. West, 232 F. 2d 694 (9th Cir. 1956) cert. denied 352 U.S. 834 (1956). Therefore, the decision of the Acting Commissioner of Indian Affairs, holding that the Government is entitled to collect $42,586.13 in additional royalties on behalf of the Nez Perce Indian Tribe, is affirmed and the appeal is dismissed. ROGER ERNST, Assistant Secretary. 2 Mining expert C. A. Sargent testifying at the trial for the defendant stated that, generally, "separation of mineral from the earth is mining"; "the removal of a mineral from its place of rest where nature put it, is termed mining"; "mining is a very broad term, and it takes in dredging, placer mining, any means by which you extract the mineral from its natural resting place * Mr. Sargent also testified that: placed in proper chemical and 2d 660. As such it includes quarrying." 182 P. 2d 643, 654. "Treatment is that process by which a mineral or ore is physical condition to be of marketable value." 182 P. U.S. GOVERNMENT PRINTING OFFICE: 1960 |