Changes to Alaska’s Mining Laws – Qualification Statutes

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Senate Bill 155, amending Alaska’s mineral tenure statutes, took effect April 30, but also addresses certain historical events affecting state mining claims. As previously reported, the amendments clarify who can hold state mining rights. But maybe more importantly, the law now addresses the effect of past qualification issues on the validity of the mineral interests.

Alaska law has long required that a corporation could hold state mining rights only if it is organized under U.S. law (including the laws of any state or territory) and qualified to do business in the State of Alaska. But in some instances, a mining claim’s history includes a time when a foreign entity held the mining claims or the business qualifications had lapsed in some manner and then been cured. The effect of these historical events on the current validity of the claims was unclear.

Two provisions in the amended law address these issues. First, “qualified to do business in this state” is defined as “holding a certificate issued by the commissioner of commerce, community, and economic development necessary to conduct business in the state.” This means that minor flaws in organizational filings do not mean that the entity is no longer qualified to do business in the state. For example, Alaska requires that corporations file a biennial report. When the report is filed late, the entity is designated as “delinquent,” but its certificate to conduct business in the state is not withdrawn. Thus, the entity would not lose its status as qualified to do business in the state for the purpose of holding state mining claims.

But that does not address the effect of an entity that has its certificate withdrawn but later reinstated. That situation is addressed by the notice and cure provisions in the new qualification statutes. Under the amended law, a lapse in qualification does not affect the validity of a mining claim until the state Department of Natural Resources (“DNR”) sends a notice to the entity and provides 90 days in which to cure the defect. Once a defect is cured, DNR cannot declare the claim invalid based upon the prior defect. A third party cannot locate new mining claims on the affected land, or challenge the validity of existing claims, until after the 90-day cure period has expired.

Two other significant changes to the qualification statutes are the provisions expressly recognizing that: (1) a limited liability company, or LLC, qualified to do business in the state can hold mining claims, and (2) a trust can be qualified if the trustee is qualified and the trust is registered under AS 13.36. Up to this time, it has not been clear that either a limited liability company or a trust could legally hold a mining claim. The qualification statute had not been amended since Alaska recognized limited liability companies and provided for them in state law. Although many considered an LLC to be an “association” for purposes of qualification, few miners were willing to rely on this interpretation and hold their state mining claims through an LLC. This change in the law also facilitates the industry trend toward using an LLC structure in most mining ventures.

Because it is expected to be several months before the next codified Alaska Statutes is available, Stoel Rives has created an unofficial compilation of the amended statute that can be accessed here. While we are providing the compilation for your convenience, we do not warrant or represent its accuracy and advise you to rely on the official statutes and session laws available on the state legislature website.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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