An out-of-state corporation wants to build a pilot mining plant in South Dakota that mines about 5,000 tons of ore and affects one acre, just to test whether a full-scale operation makes economic sense. Should the pilot be permitted under SDCL 45-6B (the Mined Land Reclamation Act) or SDCL 45-6C (exploration)? And does the answer change if the pilot is larger?
Plain-English summary
An out-of-state corporation wanted to test whether mining a particular ore body in South Dakota would be economically viable. The plan was a pilot plant: 5,000 tons of ore mined from a one-acre area, possibly with on-site milling or possibly not. The regulatory question was which permit framework controlled. Two candidates: SDCL 45-6B (the Mined Land Reclamation Act, governing actual mining) and SDCL 45-6C (governing exploration). The two frameworks had different permit requirements, different reclamation obligations, and different fees.
AG Mark Meierhenry walked through four discrete questions. Each turned on how the statutes defined the terms.
First, was the pilot plant "exploration" or "mining"? The exploration chapter defined exploration as searching for or investigating a mineral deposit, expressly excluding development. The mining chapter defined a mining operation to include development. And the development definition (SDCL 45-6B-3(5)) said development includes "conducting pilot plant operations." So pilot plants are mining, by direct statutory text.
Second, which permit procedure applied to a small (5,000-ton, one-acre) pilot? SDCL 45-6B-53 set a small-scale carve-out at less than 10 acres and less than 25,000 tons of ore or overburden per calendar year, with a streamlined permit process at SDCL 45-6B-54 to 45-6B-63. The 5,000-ton pilot fit within the small-scale carve-out. It would get the simpler permit.
Third, what if the pilot were larger (over 25,000 tons or over 10 acres)? Then the full large-scale permit requirements (SDCL 45-6B-5 to 7, 45-6B-10, 45-6B-14, 45-6B-36) applied. The thresholds were not optional.
Fourth, did the absence of a mill change anything? No. The mining permit framework contemplated operations with or without on-site milling. SDCL 45-6B-6(7) and (8) required identification of milling "if applicable," implicitly recognizing that some mining operations do not include milling. So whether the pilot included a mill was irrelevant to which permit chapter applied.
The opinion's structural takeaway: in South Dakota, anything that crosses from "looking for ore" into "actually extracting ore to test economic feasibility" is mining, period.
Currency note
This opinion was issued during AG Mark Meierhenry's tenure in the early 1980s. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SDCL 45-6B and 45-6C have been amended multiple times since 1982; the small-scale thresholds, permit fees, and reclamation requirements may differ. Modern mining permit applications should be analyzed under the current statutes and SD Department of Agriculture and Natural Resources rules.
What the opinion meant at the time
For mining companies exploring potential SD ore bodies, the opinion ruled out a popular shortcut. Some companies had argued that pilot operations should fall under the lighter exploration framework, since the pilot was just feasibility-testing. The AG closed that path. Pilots required mining permits, with the full reclamation bond, milestones, and inspection regime.
For SD environmental regulators, the opinion was useful. It gave a clean line that did not depend on case-by-case judgment about whether a particular pilot was "really" exploration or "really" mining. If you are mining ore from a pilot plant, you have a mining operation. Period.
For Black Hills-area mining (the prime SD mining context, with multiple gold operations in the area), the opinion reinforced South Dakota's relatively strict permitting framework. The state was not going to allow lightweight pilots to substitute for full mining permits even where the operator was just trying to figure out feasibility.
Common questions
Q: What is the difference between exploration and mining in plain terms?
A: Exploration means looking for the ore (drilling test holes, digging pits, taking samples). Once you start mining the ore at any scale, even just for feasibility-testing, you are in development, which is part of mining.
Q: Could a company avoid the small-scale threshold by spreading 24,000 tons across multiple years?
A: The threshold is annual: less than 25,000 tons of ore or overburden per calendar year, and less than 10 acres affected. A multi-year operation that stayed under both numbers each year would qualify. But artificial fragmentation to evade the threshold would likely be challenged.
Q: Does the small-scale carve-out apply to in situ mining?
A: No. SDCL 45-6B-53 specifically excluded "in situ mining operation" from the small-scale carve-out. In situ mining always requires the large-scale permit.
Q: Does the company need an exploration permit before the mining permit?
A: Probably yes for the actual exploration phase. The exploration and mining permit frameworks are distinct. A company would typically explore under SDCL 45-6C first, then transition to a mining permit under SDCL 45-6B for the pilot and any subsequent extraction operation.
Q: What if the pilot includes only test boring and no actual extraction?
A: Then it is exploration under SDCL 45-6C-3(6). The opinion was specifically about a pilot that mines ore. If the activity is limited to drilling test holes and removing samples for analysis, it is exploration, not mining.
Background and statutory framework
South Dakota's mining regulation was structured around the Mined Land Reclamation Act in SDCL 45-6B and a separate exploration framework in SDCL 45-6C. The split reflected a policy choice to apply lighter regulation to pre-extraction information gathering while imposing full reclamation obligations on actual ore extraction.
The 1980s SD mining context included multiple gold operations in the Black Hills, particularly Homestake's mine at Lead and various smaller operations. The state had become more aggressive in requiring reclamation guarantees after seeing what unreclaimed pits and tailings did to landscape and water. The Mined Land Reclamation Act was a meaningful regulatory burden, with bond requirements, monitoring obligations, and end-of-operation reclamation milestones.
The small-scale permit carve-out at SDCL 45-6B-53 recognized that some legitimate mining was small enough that the full large-scale framework was overkill. But the AG's definition-driven analysis prevented operators from sliding into the lighter exploration framework just by calling their work "pilot."
The "if applicable" language in SDCL 45-6B-6(7) and (8) reflected the legislative recognition that not all mining included on-site milling. Sand, gravel, and some ore extraction operations sent the raw material off-site for processing. The statute accommodated both patterns.
Citations and references
Statutes:
- SDCL 45-6B (Mined Land Reclamation Act)
- SDCL 45-6B-3(5) (development includes pilot plants)
- SDCL 45-6B-3(9) (mining operation definition)
- SDCL 45-6B-5 to 45-6B-7, 45-6B-10, 45-6B-14, 45-6B-36 (large-scale permit requirements)
- SDCL 45-6B-6(7), (8) (application content)
- SDCL 45-6B-53 (small-scale threshold)
- SDCL 45-6B-54 to 45-6B-63 (small-scale permit procedure)
- SDCL 45-6C (exploration chapter)
- SDCL 45-6C-3(6) (exploration definition; excludes development)
- SDCL 45-6C-28, 45-6C-32 (limited exploration activities)
Source
Original opinion text
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Should the above described pilot plant operation, designed to test the feasibility of a full scale or large scale operation, be classified as a mining operation under SDCL 45-6B or as an exploration operation under SDCL 45-6C?
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Which permitting procedure applies to the pilot plant operation described above?
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Which permitting procedure would apply to a pilot plant operation as described above if the pilot plant operation were to mine in excess of twenty-five thousand (25,000) tons of ore or were to affect more than ten (10) acres of land, excluding access roads, in its operation?
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Where a pilot plant operation does not include a mill should it be permitted under SDCL 45-6B or SDCL 45-6C?
IN RE QUESTION NO. 1:
SDCL 45-6C-3(6) as found in SDCL 45-6C, defines an exploration operation as:
. . . the act of searching for or investigating a mineral deposit, including, but not limited to, sinking shafts, tunneling, drilling test holes, digging pits or cuts or other works for the purpose of extracting samples, including bulk samples, prior to commencement of development or extraction operations, and test facilities to prove the commercial grade of a mineralized deposit. The term does not include those activities which cause very little or no surface disturbance, such as airborne surveys and photographs, augered bentonite or augered construction aggregate test holes of less than fifty feet in depth when accomplished in conformance with §§ 45-6C-28 and 45-6C-32, use of instruments or devices which are hand carried or otherwise transported over the surface to make magnetic, radioactive or other tests and measurements, boundary or claim surveying, location work, annual assessment work required to maintain the validity of a mineral claim or any other work which causes no greater land disturbance than is caused by ordinary lawful use of the land by persons not exploring for mineral deposits; (Emphasis supplied.)
SDCL 45-6B-3(9) as found in SDCL 45-6B defines a mining operation as:
. . . the development or extraction of a mineral from its natural occurrence on affected land. The term includes, but is not limited to, surface mining and surface operation, in situ mining, the reprocessing of tailings piles, the disposal of refuse from underground mining, and milling and processing located on the land described in the application for a mining permit. The term does not include extraction of sand, gravel or rock to be crushed and used in construction, exploration activities, bulk sampling, the exploration and extraction of natural petroleum in a liquid or gaseous state by means of wells or pipe, borrow excavation for embankments, or the extraction of geothermal resources; (Emphasis supplied.)
SDCL 45-6B-3(5) also found in SDCL 45-6B, provides South Dakota's definition of development as:
. . . the work performed in relation to a deposit, following the exploration required to prove minerals are in existence in commercial quantities but prior to production activities, aimed at, but not limited to, preparing the site for mining, defining further the ore deposit by drilling or other means, conducting pilot plant operations, constructing roads or ancillary facilities; (Emphasis supplied.)
The foregoing definitions indicate that:
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An exploration operation does not include development as development is specifically excluded from an exploration operation by SDCL 45-6C-3(6).
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Development is part of a mining operation as defined by SDCL 45-6B-3(9).
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Development includes the conducting of pilot plant operations as is stated in SDCL 45-6B-3(5).
Since development (here a pilot plant) is included as part of a mining operation, SDCL 45-6B-3(9), and is not part of an exploration operation, SDCL 45-6C-3(6), the out-of-state corporation herein which desires to build and operate a pilot plant must obtain a mining permit pursuant to SDCL 45-6B, the South Dakota Mined Land Reclamation Act.
IN RE QUESTION NO. 2:
SDCL 45-6B-53 makes special provisions for mining operations seeking permits where those mining operations are considered small-scale operations. SDCL 45-6B-53 provides:
Any mining operation, other than an in situ mining operation, which affects less than ten acres, excluding access roads, and extracts less than twenty-five thousand tons of ore or overburden per calendar year shall be subject to the provisions of §§ 45-6B-54 to 45-6B-63, inclusive, and are not required to comply with the provisions of § 45-6B-5 to 45-6B-7, inclusive, § 45-6B-10, § 45-6B-14 or § 45-6B-36.
Since the out-of-state corporation you have described would be mining five thousand (5,000) tons of ore and would affect an area of one (1) acre, its pilot plant operation should be permitted pursuant to the provisions of 45-6B-54 through 63, inclusive, as a small-scale operation.
IN RE QUESTION NO. 3:
Where a mining operation mines more than twenty-five thousand (25,000) tons of ore in one (1) year or affects more than ten (10) acres it must comply with the requirements of 45-6B as to a large-scale operation. Therefore, a mining operation or pilot plan operation of this size would be required to obtain a large-scale permit pursuant to SDCL 45-6B.
IN RE QUESTION NO. 4:
As was discussed in Question No. 1 above, the operation of a pilot plant is part of the mining operation and is not part of the exploration operation. Therefore, a pilot plant operating without a mill is still a pilot plant for the purposes of development as defined in SDCL 45-6B-3(5) and (9) and must be permitted pursuant to SDCL 45-6B, the South Dakota Mined Land Reclamation Act.
The language of 45-6B indicates that on certain occasions mining operations may be permitted where they do not include on-site milling or where milling is not necessary. In setting out the information required in a permit application for a large-scale mine SDCL 45-6B-6(7) and (8) state:
The application form shall contain the following information:
(7) The mineral or minerals to be extracted and, if applicable, milled;
(8) A description of the method of mining and, if applicable, milling to be employed which shall include, if applicable;
(a) A contour basis for the mining operation;
(b) The depth to which and the direction in which the mining operations are proposed to be conducted;
(c) The proposed disposition of mine spoil and tailings; and
(d) The method of blasting and control thereof.
(Emphasis supplied.)
In using the words 'if applicable' SDCL 45-6B-6(7) and (8) implicitly recognizes that some mining operations will not have on-site milling or will not require milling at all. Although there is no comparable provision in SDCL 45-6B for the permitting of small-scale operations, the absence of provisions requiring the description of a milling operation 'if applicable' would appear to fit in with the relaxed standards SDCL 45-6B has set out for the permitting of small-scale operations.
A pilot plant operation which does not include a mill should be permitted according to SDCL 45-6B pursuant to the provisions set forth for the permitting of either small-scale or large-scale operations, once the scale of the operation has been determined according to SDCL 45-6B-53.
Respectfully submitted,
Mark V. Meierhenry
Attorney General