Mineral Leasing Act of 1920


Mineral Leasing Act of 1920

The Mineral Leasing Act of 1920 30 U.S.C. § 181 et seq. is a United States federal law that authorizes and governs leasing of public lands for developing deposits of coal, petroleum, natural gas and other hydrocarbons, in addition to phosphates, sodium, sulphur, and potassium in the United States. Previous to the act, these materials were subject to mining claims under the General Mining Act of 1872.

Contents

Background

Previous to the Mineral Leasing Act of 1920, the General Mining Act of 1872 authorized citizens to freely prospect for minerals on public lands and allowed a discoverer to stake claims to both minerals and surrounding lands for development. This open-access policy enabled a major oil rush in the West, in 1909 prompting U.S. Geological Survey Director George Otis Smith to warn Secretary of the Interior Ballinger that oil lands were being claimed so quickly they would be unavailable within a few months.[1] Ballinger notified President Taft who promptly created the first American oil reserve by executive order on September 27, 1909, withdrawing 3,041,000 acres (12,310 km2) of public lands in California and Wyoming from further claims, and reserving the oil for use by the United States Navy.[2] Congress ratified the president's authority to set aside federally owned lands with the passing of the Pickett Act (36 Stat. 847) in 1910. The Supreme Court further affirmed the president's constitutional power to withdraw public land from use in United States v. Midwest Oil Co., 236 U.S. 459 (1915). . Following these events, Congress enacted the Mineral Leasing Act of 1920 which dictated a system of leasing and development for mining interests on federally owned lands.

Mineral Leasing Act of 1920

Provisions in the act provide a number of functions:[3]

  • Enables entrance onto public lands to explore for minerals with permission of the government.
  • Enables drilling and extraction of minerals with authority granted by the government.
  • Enables the government to manage the exploitation of leasable minerals.
  • Enables the government to receive compensation from the lessee for the privilege of extracting minerals on federal public lands.

The Bureau of Land Management (BLM), a division of the Department of the Interior (DOI), is the principal administrator of the Mineral Leasing Act. BLM evaluates areas for potential development and awards leases based on whoever pays the highest bonus during a competitive bidding period.

Leasing

The Mineral Leasing Act "establishes qualifications for leases, sets out maximum limits on the number of acres of a particular mineral that can be held by a lessee, and prohibits alien ownership of leases except though stock ownership in a corporation." Conditions of a lease under the Mineral Leasing Act vary based on the type of mineral being extracted. Phosphate and potassium leases have terms and conditions subject to readjustment at the end of each 20 year period. Sodium and sulphur lessee's have the right to renew the lease terms at the end of the first 20 year period and every 10 year period after that.[4] Coal and oil shale leases are generally for 20 year periods, while oil and natural gas leases are generally for 10 year periods.[5]

Royalties

Royalties are payments made from one party to another based on usage of an asset, often in the form of a percentage. The Mineral Leasing Act required monetary gains from the leasing of public lands to be divided three ways, except for Alaska:[6]

  • 50 percent of gross revenues to states other than Alaska.
  • 40 percent of gross revenues to Reclamation Fund.
  • 10 percent of gross revenues to Federal Treasury.
  • 90 percent of gross revenues to Alaska.

Petroleum

Under the Mineral Leasing Act and later amendments, the right to produce federally-owned petroleum (oil and natural gas) is secured for ten-year periods by competitive bidding, and goes to the party paying the highest bonus. There are three forms of payment to the government: bonus (an initial payment to the government), rental (an annual payment of $2 per acre), and royalty ( a payment of 1/8 or 12.5% of the gross value of the oil and gas produced).[7]

Coal

Under the Mineral Leasing Act as amended and the Mineral Leasing Act for Acquired Lands of 1947 as amended, coal leases are initially obtained for a 20 year period but can be terminated in 10 years if the resources are not sufficiently developed. As with petroleum, an initial bonus must be paid to the government at the time the lease is awarded. Annual rental fees for coal are $3 per acre. Royalties are 12.5% of the gross value for surface mined coal and 8% for coal produced from underground mines.[8]

References

  1. ^ Hayes, Samuel. Conservation and the Gospel of Efficiency: The Progressive Conservation Movement, 1890–1920 (University of Pittsburgh Press, 1999), pp 89–90
  2. ^ Lita Epstein, C.D. Jaco, and Julianne C. Iwersen-Niemann, The Complete Idiot's Guide to the Politics of Oil (Alpha Books, 2003), pp 131–132
  3. ^ Mineral Leasing Act of 1920 30 U.S.C. § 181 et seq.
  4. ^ Feriancek, Jeanine. Minerals & Mining Law. Holland and Hart LLP. <http://library.findlaw.com/1999/Jan/1/241491.html>.
  5. ^ Gray, Brian. Mineral Leasing Act (1920). <http://www.enotes.com/major-acts-congress/mineral-leasing-act>.
  6. ^ Sally K. Fairfax, Carolyn E. Yale, Council of State Governments. Federal lands: a guide to planning, management, and state revenues (Island Press, 1987), pp 60.
  7. ^ American Petroleum Institute. Oil and Natural Gas Development on Public Lands are an Important Revenue Source for Government. <http://www.api.org/policy/exploration/development.cfm>.
  8. ^ Bureau of Land Management. Coal. <http://www.blm.gov/wo/st/en/prog/energy/coal_and_non-energy.print.html>.

External links


Wikimedia Foundation. 2010.

Look at other dictionaries:

  • Leasing Act — A federal statute enacted in 1920, which, as amended, regulates the exploration and development of gas, oil, and mineral lands included within the public domain. 24 Am J1st Gas & O § 46; 36 Am J1st Min & M § 65 …   Ballentine's law dictionary

  • General Mining Act of 1872 — The General Mining Act of 1872 is a United States federal law that authorizes and governs prospecting and mining for economic minerals, such as gold, platinum, and silver, on federal public lands. This law, approved on May 10, 1872, codified the… …   Wikipedia

  • Teapot Dome scandal — overlooking the field. In 1921, by executive order of President Harding, control of naval oil reserves at Teapot Dome in Wyoming and at Elk Hills, California, was transferred from the Navy Department to the Department of the Interior. The oil… …   Wikipedia

  • BP America Production Co. v. Burton — Infobox SCOTUS case Litigants=BP America Production Co. v. Burton ArgueDate=October 4 ArgueYear=2006 DecideDate=December 11 DecideYear=2006 FullName=BP America Production Co., successor in interest to Amoco Production Co., et al. v. Rejane Burton …   Wikipedia

  • Bureau of Land Management — The Bureau of Land Management (BLM) is an agency within the United States Department of the Interior which administers America s public lands, totaling approximately 264 million acres (1,070,000 km²) or one eighth of the landmass of the country.… …   Wikipedia

  • Bureau of Land Management — BLM Staatliche Ebene Bund Aufsichtsbehörde(n) …   Deutsch Wikipedia

  • Commonwealth Edison Co. v. Montana — Commonwealth Edison Company v. Montana Supreme Court of the United States Argued March 30, 1981 Decid …   Wikipedia

  • List of United States federal legislation — NoTOC This is a partial list of notable United States federal legislation, in chronological order. At the federal level in the United States, legislation (a.k.a. statutes or statutory law ) consists exclusively of Acts passed by the Congress of… …   Wikipedia

  • international relations — a branch of political science dealing with the relations between nations. [1970 75] * * * Study of the relations of states with each other and with international organizations and certain subnational entities (e.g., bureaucracies and political… …   Universalium

  • United States Department of Energy — For the education department, see United States Department of Education. United States Department of Energy Seal of the Department of Energy …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.