The Rinehart Decision

California Court Rules You Have No Right to Mine

California Court Rules Against Miners

Dredge

On August 22, 2016 the California Supreme Court issued their decision in the long-running Rinehart case resolving the issue of federal preemption in California Courts.

The Court's decision is likely the most significant mining related ruling since the 1884 Sawyer Decision which effectively ended hydraulic mining. Environmentalists cheered the ruling as an important safeguard for the environment and endangered species.

The attorney for miner Brandon Rinehart summed up the ruling, "The Court over simplified Rinehart's position and generally ignored the careful balance Congress had struck which recognizes that some level of environmental impact is necessary and unavoidably associated with mining."

This new ruling establishes a new environmental threshold of no impact.

Basing their decision, in part, on the 1884 Sawyer Decision ruling the Court wrote, "Of note, the Woodruff court considered at length and rejected the mining industry's argument for preemption under the Mining Law of 1872.

NO RIGHT TO MINE

In a long string of cases miners had been protected in federal court against state overreach from attempts to prohibit mining on federal land. The California decision departs from the federal court rulings by holding that a state may not only impose their laws on a federal mining claim, but they may also entirely prohibit mining on federal mining claims for whatever reason they so choose.

Attorney James Buchal noted the expansive content of the ruling, "...the Court, having denied Rinehart any opportunity to present any evidence whatsoever, concluded the State prohibition is justified by Rinehart's asserted, and non-existent, impacts upon 'fish, water quality and the health of the state's inhabitants.' In substance, the Supreme Court decision grants the legislature the authority to ban mining on federal land for any reason, or no reason.

The California Supreme Court concluded "...while Congress sought to protect miners' real property interests, it did not go further and guarantee them a right to mine immunized from exercises of the states' police powers.

ENVIRONMENTAL LAWS TRUMP MINING LAWS

The California Supreme Court decision was founded on a court case known as California Coastal Commission versus Granite Rock (Granite Rock). If you want to understand the Rinehart Decision, and how future courts will rule you must read Granite Rock.

In the Granite Rock case a marble mining company located an open pit mine in the Big Sur area along the California coast which was within the jurisdiction of the newly formed California Coastal Commission (CCC). The CCC demanded the mine obtain a permit from them to operate.

The mine responded by suing the CCC in federal court challenging the authority of the State to even require a permit from them. The case went all the way to the U.S. Supreme Court who, in a split decision, found a state may require permits to protect the environment.

The State, in the Rinehart Case, argued Granite Rock gave them the authority to prohibit dredging, or any other such activity, they wished. In affirming the State's argument the Court wrote, "The police power of the State extends over the public domain at least when there is no legislation by Congress on the subject."

The core issue in Granite Rock, and again in Rinehart, is whether a state law may be imposed on federal lands within the state's boundaries. The U.S. Supreme Court answered that question in a case known as Kleppe, "Absent consent or cession a State undoubtedly retains jurisdiction over federal lands within its territory, but Congress equally surely retains the power to enact legislation respecting those lands pursuant to the Property Clause."

HOW FAR CAN THEY GO?

The only remaining issue remains how far can the State go? Can they go to the point of total prohibition? California believes so.

In the Granite Rock argument the State of California objected strongly to the assertion of Granite Rock that the State intended to prohibit mining, the U.S. Supreme Court believed California's reply, "In the present case, the Coastal Commission has consistently maintained that it does not seek to prohibit mining on the unpatented claim on national forest land. ("The Coastal Commission argues that the Mining Act does not preempt state environmental regulation of federal land unless the regulation prohibits mining altogether...") ("The Coastal Commission seeks not to prohibit or 'veto' but to regulate Granite Rock's mining activity...") "There is no reason to find that the Coastal Commission will apply the CCA's regulations as to deprive Granite Rock of its rights under the Mining Act...The State has not indicated that it would in fact ban such activity."

The California Supreme Court decision seems to renege on the assurances provided the U.S. Supreme Court they didn't intend to ban mining, when in fact they just did under the cover of the authority provided them in Granite Rock. It seems unlikely the outcome of Granite Rock would have been the same if the State would have argued their true intentions in front of the Nation's High Court.

Assurances from the State appear to be of little value.

Dredge

A MINING CLAIM IS MERELY REAL ESTATE

The conclusion the California Supreme Court reaches is that although Congress passed legislation which protected mining claims, there was no actual intent for those claims to be mined.

"We conclude the State's moratorium is not preempted. The federal laws Rineahrt relies upon reflect a Congressional intent to afford prospectors secure possession of the places they mine.

Perhaps the flaw in this line of logic is it centers on context. In 1867 it would have been absurd to believe a mining claim was for any other purpose than mining, and Congress didn't need to specify a mining claim should be mined, and mining was the primary purpose of the claim, not real estate. In fact the temporary nature of a mining claim indicates exactly the opposite. Without annual work or maintenance the prospector loses all rights to the mining claim offering a very poor assurance of a real estate holding.

The California Court sets up an interesting dilemma for suction dredge miners. If, as the Court contends, a mining claim is merely a real estate interest then what can you do with the mining claim? The 1872 Mining Act requires certain annual assessments to be performed, but these assessments are in anticipation of actually mining the claim and proving its worth. The Federal Land Management Policy Act states a mining claim can be used for no other purpose than mining, or uses reasonably incidental to the mining. If you can't use your equipment, as the State now asserts, then what is the value of the mining claim?

As the California Court concludes, "...the main inducement offered was the preservation, and endorsement going forward, of an existing system for the allocation of real property rights...the Act as a whole is devoted entirely to the the allocation of real proeprty interests among those who would exploit the mineral wealth of nation's lands, not regulation of the process of mining - itself.

Although the issue may be settled in California the miners contend it is far from settled at the federal level. Attorney James Buchal explained, "Fortunately, the question of federal preemption is presently before the Ninth Circuit Court of Appeals, concerning the somewhat broader Oregon ban on motorized mining. I continue to hope that the federal courts may someday correct the California Court's parochial and unsupportable interpretations of federal law in a future case."