[Audit Report on Processing of Mineral Patent Applications by the Bureau of Land Management and the Office of the Solicitor]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 01-I-356

Title: Audit Report on Processing of Mineral Patent Applications
       by the Bureau of Land Management and the Office of the
       Solicitor 

 
Date: May 23, 2001

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U.S. Department of the Interior   Office of Inspector General
  
                              
EXECUTIVE SUMMARY
                              
Processing of  Mineral Patent Applications
by the Bureau of Land Management and
the Office of the Solicitor
Report No. 01-I-356
May 2001
  
The General Mining Law of 1872, as amended, opened public lands to the exploration and
extraction of valuable minerals, such as gold, silver, and copper.  The General Mining Law
allows miners to prospect for minerals and file mining claims for the right to use public land for
mineral development and extraction. A mining claimant may apply for a mineral patent, which
conveys a fee simple title to the claim if the claimant has discovered a valuable mineral deposit
and meets all of the patenting requirements of the General Mining Law.   The Secretary of the
Interior makes the final determination as to whether a patent applicant has met all of the
requirements and has discovered a valuable mineral deposit. 
  
The Interior and Related Agencies Appropriations Act of 1995 imposed a moratorium on
accepting and processing mineral patent applications, with some exceptions.  Section 113 of the
Act excepted from the moratorium those patent applications (1) that were filed with the
Secretary on or before the date of enactment of the Act and (2) for which all the patenting
requirements under the Mining Law were met.  These patent applications were considered
"grandfathered," and the Interior and Related Agencies Appropriations Act of 1996 required the
Department to file a plan that details how the Department will make a final determination on
patent entitlement on at least 90 percent, or 352, of 392 grandfathered patent applications by
April 26, 2001.  The Congress extended the time frame for processing these mineral patent
applications to September 30, 2001 in the Interior and Related Agencies Appropriations Act of
1997.   
  
We concluded that the Department of the Interior will not meet the September 30, 2001 date
mandated by the Congress for processing the grandfathered mineral patent applications
generally because the Bureau of Land Management did not initiate and complete a sufficient
number of mineral examinations to enable the Office of the Solicitor to complete its review of
mineral patent applications by the due date.   According to Bureau figures as of June 30, 2000,
180 patent applications remained that required processing or that were expected to be contested
(subject to  a hearing on the validity of the mining claim) or withdrawn.  We recommended that
the Bureau of Land Management and the Office of the Solicitor develop a time frame for
completing the processing of all remaining grandfathered mineral patent applications and provide
this time frame to the Congress by September 30, 2001. 
  
       
  
       
AUDITEE COMMENTS AND OFFICE OF INSPECTOR GENERAL EVALUATION
  
The Bureau of Land Management and the Office of the Solicitor concurred with the report's two
recommendations and agreed to take the recommended corrective actions.  Based on the
response, the recommendations were considered resolved but not implemented. In addition, in
the Bureau of Land Management's February 14, 2001 response (Appendix 2) to the draft report,
Bureau officials provided updated mineral patent figures as of December 29, 2000. The Bureau
reported 398 total applications, which was an increase of 6 from June 30, 2000 attributable to
judicial and administrative actions. The Bureau also reported total cases of 197 requiring final
determination, or 177 cases at the Congressionally required 90 percent completion level. The
response from the Office of the Solicitor noted that 10 patent applications had been approved
and signed by the Secretary since the issuance of our draft report and that the Office had gained
two new attorneys to assist in patent application review. 
   C-IN-BLM-001-00-R
  
  
  
United States Department of the Interior
                              
OFFICE OF INSPECTOR GENERAL
Washington, D.C. 20240
  
  
  
  
May 23, 2001
  
AUDIT REPORT
  
 Memorandum
  
To:  Director, Bureau of Land Management
Solicitor
  
From:  Roger La Rouche
Assistant Inspector General for Audits
  
Subject:  Audit Report on Processing of Mineral Patent Applications by the Bureau of
Land Management and the Office of the Solicitor  (No. 01-I-356)
  
  INTRODUCTION
  
This report presents the results of our review of the processing of mineral patent applications by
the Bureau of Land Management (BLM) and the Office of the Solicitor (SOL).  The objective
of the audit was to determine whether BLM and SOL are processing mineral patent applications
in accordance with the plan the Secretary of the Interior was required to file under the Interior
and Related Agencies Appropriations Act of 1996.  We conducted the review based on
Congressional inquiries about the timeliness of the Department of the Interior's processing of the
mineral patent applications.
  
  BACKGROUND
  
The General Mining Law of 1872, as amended, opened public lands to the exploration and
extraction of valuable minerals, such as gold, silver, and copper.  Approximately 400 million
acres of public land are open to location of mining claims under the General Mining Law,
including BLM, U.S. Forest Service, and National Park Service lands.  BLM administers the
mineral estate under the General Mining Law on all of these lands.  The General Mining Law
allows miners to prospect for minerals and file mining claims for the right to use public land for
mineral development and extraction. A mining claimant may apply for a mineral patent, which
conveys a fee simple title to the claim if the claimant has discovered a valuable mineral deposit
and meets all of the patenting requirements of the General Mining Law.  
  
The Secretary of the Interior makes the final determination as to whether a patent applicant has
met all of the requirements and has discovered a valuable mineral deposit.  If the Secretary
determines that a miner could economically extract a mineral deposit and that a mining operation
could be potentially profitable, the claimant has a "discovery," which is a critical element for
obtaining a patent.  Processing a patent application involves two significant procedures: (1)
reviewing the patent application to ensure that it is complete and is in compliance with statutory
requirements of the General Mining Law and administrative requirements of the Department of
the Interior and (2) performing a mineral validity examination to ensure that the geologic and
economic evidence verifies the discovery.  The initial review of mineral patent applications is
accomplished at BLM's state office level with assistance from the Regional Solicitor's Office. 
The Regional Solicitor ensures that the title is in good order, adverse claims have been
addressed, and the application is complete.  If the application contains the required documents
under the General Mining Law and is sufficient to begin a mineral validity examination, a first
half final certificate is signed by the Secretary.  After receiving the first half final certificate,
BLM schedules a mineral validity examination.
 
A Certified Mineral Examiner conducts the mineral validity examination and prepares a mineral
report, which is then reviewed by the cognizant BLM state office.  The report is then sent to
BLM headquarters in Washington, D.C., where a technical review is conducted to ensure that
technical standards are applied consistently.  When a report is cleared by  headquarters, BLM
forwards the report to SOL for a legal review. If it clears legal review,  it is transmitted first to
the Assistant Secretary for Land and Minerals Management and then to the Secretary of the
Interior for signing the second half of the final certificate and for issuing a patent.
  
The Interior and Related Agencies Appropriations Act of 1995 imposed a moratorium on
accepting and processing mineral patent applications, with some exceptions.  Section 113 of the
Act excepted from the moratorium those patent applications (1) that were filed with the
Secretary on or before the date of enactment of the Act and (2) for which all the patenting
requirements under the Mining Law were met.  When the moratorium took effect, 383 patent
applications were in process and 9 more were added as a result of litigation, for a total of 392
patent applications that were "grandfathered."  The Interior and Related Agencies Appropriations
Act of 1996 required the Department to file a plan that details how the Department will make a
final determination on patent entitlement on at least 90 percent, or 352, of these grandfathered
patent applications by April 26, 2001.  The Congress extended the time frame for processing
these mineral patent applications to September 30, 2001 in the Interior and Related Agencies
Appropriations Act of 1997. 
  
  SCOPE OF AUDIT
  
To accomplish our objective, we interviewed officials from and reviewed records maintained by
BLM and SOL offices in Washington, D.C.  Also, we contacted 37 of the 70 total BLM
certified mineral examiners, 1 National Park Service certified mineral examiner, and 5 Forest
Service certified mineral examiners who conduct mineral examinations and reviews to obtain
estimated completion dates for the applicable mineral reports. 
  
We conducted our review in accordance with the "Government Auditing Standards," issued by
the Comptroller General of the United States.  Accordingly, we included such tests of records
and other auditing procedures that were considered necessary under the circumstances.  In
addition, we reviewed the Departmental Report on Accountability for fiscal year 1999, which
includes information required by the Federal Managers' Financial Integrity Act, and the annual
assurance statements on management controls for fiscal year 1999 and determined that there
were no reported material weaknesses regarding the timeliness of the mineral patent application
process.
  
PRIOR AUDIT COVERAGE
  
During the past 5 years, the General Accounting Office has not issued any audit reports on the
timeliness of the mineral patent application process.  In September 1997, the Office of Inspector
General issued the report "Issuance of Mineral Patents, Bureau of Land Management and Office
of the Solicitor" (No 97-I-1300), which addressed BLM's initial review of patent applications. 
The report stated that BLM did not generally meet its policy of initially processing patent
applications within 10 months.  The report contained six recommendations to improve the
quality and timeliness of the mineral patent process and one recommendation concerning cost
recovery for mineral validity examinations.  All of these recommendations were considered
resolved and implemented. 
  
  
RESULTS OF AUDIT
  
We concluded that the Department of the Interior will not meet the September 30, 2001 date
mandated by the Congress for processing at least 90 percent (352) of the grandfathered mineral
patent applications.  The process will not be completed generally  because BLM did not initiate
and complete a sufficient number of mineral examinations to enable SOL to complete its review
of mineral patent applications by the due date.  Based on its initial plan to complete processing
by September 30, 1999, BLM estimated that it would complete minerals examinations of 70
applications per year.  BLM, however, sent the SOL from 6 to 27 per year, with an average of
only 17 per year from September 30, 1994 through September 30, 1999.  At the conclusion of
our audit (June 30, 2000), 180 patent applications were pending action.  This consisted of 138
applications requiring BLM action and 42 applications that were awaiting completion of a legal
review.
  
In July 1996, BLM prepared an initial report and action plan titled "Five Year Plan for Making
Final Determination on Ninety Percent of Grandfathered Patent Applications Pursuant to Public
Law 104-134 [The Interior and Related Agencies Appropriation Act of 1996]" and submitted it
to the Congress.  At that time, BLM had 71 applications in process and planned to process the
remaining 281 applications at the rate of about 70 per year over 4 years, with completion by
April 26, 2001.  In its budget justifications for fiscal year 1998, BLM revised its estimated
completion date for processing mineral patent applications to September 30, 2000.  As of June
30, 2000,
however, BLM officials stated that BLM had completed only 214 applications, leaving a
balance of 138 requiring BLM action.  
  
The 214 applications processed by BLM consisted of 109 applications forwarded to the SOL for
further processing, 61 withdrawn from processing by the applicant, and 44 contested to the
Interior Board of Land Appeals.  Of the 138 applications still in  BLM, 30 are expected to be
withdrawn and 30 contested.  BLM officials plan to submit the remaining 78 mineral patent
applications to the SOL by December 30, 2000.  A BLM Mining Law Adjudication Senior
Specialist  in the Washington office attributed the delays to the fact that some state directors did
not make processing mineral patent applications a high priority until fiscal year 1998. 
Consequently, mineral validity examination assignments were not given to field mineral
examiners in time for them to complete the work in accordance with BLM's schedule. 
  
According to BLM officials, as of June 30, 2000 the SOL had processed 67 of the
109 applications forwarded by BLM: 47 were signed for patent, 2 were contested, 1 was
withdrawn, and 17 were returned to BLM for further processing.  The remaining 42 applications
were pending the completion of a legal review.  Overall, the SOL will need to process the 78
applications expected from BLM  plus the 42 applications already in the office, for a total of
120 applications, with less than 15 months remaining in the Congressionally mandated period.  
  
Processing time for patent applications by the SOL ranged from less than 1 month to 41
months, with an average processing time of about 9 months for each application. The SOL used
an estimated equivalent of 5 full-time attorneys to process the 47 completed patent applications
over the 6 years, or an average of 7.8 patent applications annually.  Officials from the SOL said
that they had not developed formal plans for completing the patent application reviews because
they could not be certain when they would receive the patent applications from BLM.  In a May
2000 meeting with our office, a staff attorney in the SOL's Division of Mineral Resources said
that it is unlikely that the SOL would be able to complete the legal reviews of the remaining
patent applications by September 30, 2001 because of the large number of applications expected
to be submitted to the SOL during the final months of the 5-year time frame. The attorney also
said that the SOL would consider hiring new attorneys or reassigning attorneys to help process
the increased work  load.  In any event, BLM and the SOL need to coordinate their efforts to
expeditiously process the remaining applications.
  
   Recommendations
  
We recommend that the Director of BLM and the Solicitor jointly:  
  
1. Develop a time frame for completing the processing of all remaining grandfathered
mineral patent applications. 
  
2. Report to the Congress the expected progress on processing grandfathered patent
applications by September 30, 2001 and provide the time frame for completing the project.
  
BLM and SOL Responses and OIG Reply
  
In the January 19, 2001 response (Appendix 1) to our draft report from the Deputy Associate
Solicitor, Division of Mineral Resources, SOL agreed with the report's two recommendations. 
The response also noted that 10 additional patent applications had been approved and signed by
the Secretary since the issuance of our draft report and that the Branch of Onshore Minerals,
within the Solicitor's Office, has gained two new attorneys to assist in patent application review.  
  
In its February 14, 2001 response (Appendix 2) to the draft report from the Acting Director, 
BLM, BLM also agreed with the report's two recommendations.  In its response (Attachment 1
to Appendix 2), BLM also included some suggested changes to the report,  which we
considered and incorporated into the report as appropriate.  We did not, as requested by BLM,
change the information in our report related to the progress BLM was making in processing
applications reported since June 30, 2000, the end of our audit fieldwork.  We have included
information from BLM (Attachments 2 and 3 to Appendix 3) on the current status of its
processing of grandfathered mineral patent applications. 
  
BLM and SOL officials subsequently told us that BLM's Assistant Director, Minerals, Realty,
and Resource Protection, and the Solicitor are the officials responsible for implementation of the
recommendations in the respective offices.  The target date for implementation of both
recommendations is September 30, 2001.  Based on the responses and subsequent discussions,
we consider Recommendations 1 and 2 resolved but not implemented.  Accordingly the
unimplemented recommendations will be referred to the Assistant Secretary for Policy,
Management and Budget for tracking of implementation (see Appendix 3). 
  
Since the report's recommendations are considered resolved, no further response to the Office of
Inspector General is required.
  
Section 5(a) of the Inspector General Act (5 U.S.C app. 3) requires the Office of Inspector
General to list this report in its semiannual report to the Congress. In addition, the Office of
Inspector General provides audit reports to the Congress.