## Facts

- Dredge Corporation located a 40-acre placer mining claim known as “Dredge No. 51” on federally owned land near Las Vegas, Nevada, asserting sand and gravel as the mineral deposit.
- In 1975, Dredge applied to purchase (patent) the federal land under the General Mining Law of 1872 based on its claimed discovery.
- The Bureau of Land Management (BLM) denied the application, contending Dredge had not established a valid discovery because it failed to show the sand and gravel could have been marketed at a profit before July 23, 1955.
- The dispute arose from the 1955 Surface Resources Act / “Common Varieties Act,” which removed most common-variety sand and gravel from location under the mining laws, while preserving only those claims supported by a valid discovery as of the Act’s effective date.
- In the administrative contest proceedings, an Administrative Law Judge ruled in Dredge’s favor, finding a valid discovery; the Interior Board of Land Appeals (IBLA) reversed, concluding Dredge did not prove profitable marketability as of the 1955 cutoff.
- Dredge challenged the IBLA decision in federal district court; the district court granted summary judgment for the government, and Dredge appealed.
- Dredge argued that nearby operations had sold sand and gravel profitably around the relevant period, so its deposit should be treated as marketable.
- The government responded that Dredge’s deposit was not comparable in quality and would have faced higher extraction costs (including difficulties associated with caliche), and that the Las Vegas-area market around 1955 reflected supply exceeding demand for sand and gravel.

## Issues

1. Whether Dredge proved that, before July 23, 1955, it had discovered a “valuable mineral deposit” on Dredge No. 51 by showing the sand and gravel could be extracted and sold at a profit.
2. Whether the IBLA could reject Dredge’s reliance on nearby profitable sand-and-gravel operations where the record supported differences in quality, cost, and market conditions.
3. Whether the IBLA’s finding of no pre-1955 profitable marketability was supported by substantial evidence under deferential judicial review.

## Decision

- The Ninth Circuit affirmed the district court’s summary judgment for the government.
- The court upheld the IBLA’s determination that Dredge failed to establish a valid pre-July 23, 1955 discovery because it did not prove the sand and gravel could have been marketed at a profit at that time.
- The court accepted the IBLA’s reliance on record evidence regarding market conditions (including evidence that supply exceeded demand around 1955) and claim-specific obstacles affecting profitability, such as quality differences and higher extraction costs.
- The court rejected the contention that profitability on nearby lands, without proof that Dredge No. 51’s material met demand and could be sold profitably under then-existing conditions, compelled a finding of marketability.
- Applying administrative-law review, the court held it would not reweigh conflicting technical and economic evidence where the agency’s decision was supported by substantial evidence and was not arbitrary or capricious.

## Legal Principles

- A mining claim is valid only upon discovery of a “valuable mineral deposit,” which for common-variety sand and gravel requires proof of profitable marketability—i.e., that the material could be extracted, removed, and sold at a profit under the conditions existing at the relevant time.
- Under the 1955 Common Varieties Act, a claimant asserting common-variety sand and gravel must prove a valid discovery existed as of July 23, 1955; later development or later profitability does not establish a preserved claim.
- Evidence that nearby deposits were sold profitably may be considered, but it does not establish validity by itself; the claimant must show its own deposit’s quality, costs, and market conditions support profitable sales at the critical date.
- Courts reviewing IBLA determinations in mining-claim contests apply deferential review and uphold the agency where its findings are supported by substantial evidence and its decision is not arbitrary or capricious.

## Conclusion

The Ninth Circuit affirmed the invalidation of Dredge’s sand-and-gravel claim because Dredge did not prove that, before the 1955 Common Varieties Act took effect, its deposit on Dredge No. 51 could be marketed at a profit; the IBLA’s claim-specific findings on quality, costs, and market conditions were supported by substantial evidence and therefore sustained on judicial review.


Dredge Corp. v. Conn, 733 F.2d 704 (1984)