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Update: CA Supreme Court hearing on People v. Rinehart

June 7, 2016

by Scott Harn
Editor/Publisher
ICMJ's Prospecting and Mining Journal
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This is the case involving suction gold dredging in California. Rinehart was cited on June 16, 2012, for operating a suction gold dredge without a permit -- a permit the State of California was refusing to issue because of a "temporary" moratorium on dredging that had been in place for over three years by that time and is still in place.

Brandon Rinehart was represented by attorney James Buchal at the hearing. Buchal covered just about all the necessary details and successfully argued -- in our opinion -- why the moratorium is illegal and conflicts with federal law, while the attorney representing California seemed a bit lost when it came to arguing his side. The justices asked some direct questions, including how a "temporary" moratorium could be labeled "temporary" when it's been ongoing for so many years. The State's attorney did not have an answer.

The main issue involves whether or not California law can preempt federal law. The Mining and Minerals Policy Act of 1970 included a mandate that the federal government "foster and encourage" mining and there is plenty of case precedence for the California Supreme Court to rule in favor of Rinehart, but we continue to see judges ignore the rule of law in this regard.

The latest such case involved a miner in Oregon who was dealing with a similar issue. In the Third Circuit Court of Appeals, Judge Mark Clarke ruled the miner could be prevented from using motorized equipment in a stream because he could still mine using hand tools. Of course this is a practical impossibility because a miner is obligated to show that he can make a profit under the "prudent man" test when undergoing a validity exam or patent exam on his mining claim.

I've had some good conversations with a couple of miners regarding this point, and I want to thank Ken McMaster and Clark Pearson for providing some of the specific court cases and background on this subject.

As Ken recently reminded me -- and he's been through three validity examinations with the Forest Service and two patent exams with the Bureau of Land Management -- mining has to eventually be profitable in order to hold a mining claim. The 1872 Mining Law specifcally states, "Except as otherwise provided, all valuable mineral deposits in lands belonging to the United States, both surveyed and unsurveyed, shall be free and open to exploration and purchase..."

If a miner is prohibited from utilizing the only economically feasible method to extract the gold from his claim, that deposit is no longer "valuable." 

The courts have chosen to completely ignore case law in this regard. In US v. Coleman (290 US 602-603 (1968)), the US Supreme Court dealt specifically with this topic:

"Under the mining laws Congress has made public lands available to people for the purpose of mining valuable mineral deposits and not for other purposes. The obvious intent was to reward and encourage the discovery of minerals that are valuable in an economic sense. Minerals which no prudent man will extract because there is no demand for them at a price higher than the cost of extraction and transportation are hardly economically valuable. Thus, profitability is an important consideration in applying the prudent-man test, and the marketability test which the Secretary has used here merely recognizes this fact…"

Ken McMaster also had this to say:

The Oregon case and thus the Rinehart case materially interferes with mining. In Robert E. Shoemaker (110 IBLA 39 (1989)), the Board made a determination “materially interfere” is equivalent to “substantially hinder, impede or clash” and that the “[f]ederal surface management activities must yield to mining as the ‘dominant and primary use’.” The Surface Act of 1955 also backs this up. Title 36 USC Part 228 states that the right of mineral production may not be unreasonably restricted! FLPMA [the Federal Land Policy and Management Act] directs that rights shall not be impaired, subject to existing mining uses.

So now we sit and wait for the California Supreme Court to deliberate and rule in the Rinehart case. The law is on our side, but we've seen some crazy rulings coming out of courtrooms lately. I believe Rinehart will win his case, but then we move on to the State Water Resources Control Board (SWRCB).

SWRCB is an unelected board filled with appointees of Governor Jerry Brown. Senate Bill 637 was passed and signed by Governor Brown in late 2015, and it transferred the suction dredge permit responsibilities to SWRCB as of January 1, 2016. You can rest assured the Board has no intention of making it easy or affordable to obtain a suction gold dredging permit.

The major issue, in my opinion, is applying for a permit in the first place. Clark Pearson of PLP and I agree on this point -- there does not appear any compelling need to apply for such a permit if you are suction gold dredging on your own mining claim. Both state and federal Clean Water Act rules are only triggered when there is the addition of a pollutant. The end result of using a suction gold dredge is a "net withdrawal," not an "addition."

Clark covered this in his article titled "What is Incidental Fallback?" which we published in our December 2015 issue: 

“Incidental fallback” represents a net withdrawal, not an addition of material. Incidental fallback cannot be a discharge within the meaning of any state or federal Clean Water Act (CWA) as the CWA only permits and regulates additions. All gold mining suction dredges are designed to withdraw heavy metal (based on their specific gravity) from gravels and soils; it cannot be said that suction dredges add anything within the meaning of the CWA.
 
It is simple math—the difference between addition and subtraction. Those activities that add can require a 401, 402, or 404 permit; those that subtract do not require a permit at all. That is the intent of Congress. The EPA and the Army Corp has for the past 30 years tried to redefine “incidental fallback” under a regulated and permitted “redeposit” category, but the courts have found this agency practice invalid on numerous occasions and instructed the EPA and Army Corp to remove their offending regulatory expansion.

(You can read the entire article "What is Incidental Fallback?" on our website.)

At this point, you need to decide what action to take after the Rinehart ruling is issued. You can wait for the SWRCB to come up with a suction dredging permitting scheme that will likely be extremely cumbersome and expensive and choose to subject yourself to those regulations; or you can file a Direct and Constructive Notice with the enforcement agencies to spell out your rights and let them know you are prepared to sue them personally for violating those rights.

If you utilize Direct and Constructive Notice, you must be prepared to follow it through and sue them if necessary. The regulatory agencies will not stop unless each miner who utilizes this method is committed to follow through.

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