The Mineral Leasing Act of 1920 et seq. is a

United States federal law The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as ...

that authorizes and governs

leasing A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...

public land In all modern states, a portion of land is held by central or local governments. This is called public land, state land, or Crown land (Australia, and Canada). The system of tenure of public land, and the terminology used, varies between countrie ...

s for developing deposits of

coal Coal is a combustible black or brownish-black sedimentary rock, formed as rock strata called coal seams. Coal is mostly carbon with variable amounts of other elements, chiefly hydrogen, sulfur, oxygen, and nitrogen. Coal is formed when ...

petroleum Petroleum, also known as crude oil, or simply oil, is a naturally occurring yellowish-black liquid mixture of mainly hydrocarbons, and is found in geological formations. The name ''petroleum'' covers both naturally occurring unprocessed crud ...

natural gas Natural gas (also called fossil gas or simply gas) is a naturally occurring mixture of gaseous hydrocarbons consisting primarily of methane in addition to various smaller amounts of other higher alkanes. Low levels of trace gases like carbon d ...

and other

hydrocarbons In organic chemistry, a hydrocarbon is an organic compound consisting entirely of hydrogen and carbon. Hydrocarbons are examples of group 14 hydrides. Hydrocarbons are generally colourless and hydrophobic, and their odors are usually weak or ...

, in addition to

phosphates In chemistry, a phosphate is an anion, salt, functional group or ester derived from a phosphoric acid. It most commonly means orthophosphate, a derivative of orthophosphoric acid . The phosphate or orthophosphate ion is derived from phosph ...

sodium Sodium is a chemical element with the symbol Na (from Latin ''natrium'') and atomic number 11. It is a soft, silvery-white, highly reactive metal. Sodium is an alkali metal, being in group 1 of the periodic table. Its only stable ...

sulfur Sulfur (or sulphur in British English) is a chemical element with the symbol S and atomic number 16. It is abundant, multivalent and nonmetallic. Under normal conditions, sulfur atoms form cyclic octatomic molecules with a chemical formul ...

, and

potassium Potassium is the chemical element with the symbol K (from Neo-Latin '' kalium'') and atomic number19. Potassium is a silvery-white metal that is soft enough to be cut with a knife with little force. Potassium metal reacts rapidly with atmos ...

in the United States. Previous to the act, these materials were subject to mining claims under the

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 ...

Background

Previous to the Mineral Leasing Act of 1920, the

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 George Otis Smith (February 22, 1871 – January 10, 1944) was an American geologist. Life and career Smith was born in Hodgdon, Maine. He graduated from Colby College in 1893 and earned a Ph.D. from Johns Hopkins University in 1896. He s ...

to warn Secretary of the Interior

Richard A. Ballinger Richard Achilles Ballinger (July 9, 1858June 6, 1922) was mayor of Seattle, Washington, from 1904–1906, Commissioner of the General Land Office from 1907–1908 and U.S. Secretary of the Interior from 1909–1911. Early life and Seattle caree ...

that oil lands were being claimed so quickly they would be unavailable within a few months. Ballinger notified

President Taft William Howard Taft (September 15, 1857March 8, 1930) was the 27th president of the United States (1909–1913) and the tenth chief justice of the United States (1921–1930), the only person to have held both offices. Taft was elected p ...

who promptly created the first American oil reserve by executive order on September 27, 1909, withdrawing of public lands in California and Wyoming from further claims, and reserving the oil for use by the United States Navy. Congress ratified the president's authority to set aside federally owned lands with the passing of the Pickett Act () in 1910. The Supreme Court further affirmed the president's constitutional power to withdraw public land from use in . 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: * 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 The Bureau of Land Management (BLM) is an agency within the United States Department of the Interior responsible for administering federal lands. Headquartered in Washington DC, and with oversight over , it governs one eighth of the country's ...

(BLM), a division of the

Department of the Interior The United States Department of the Interior (DOI) is one of the executive departments of the U.S. federal government headquartered at the Main Interior Building, located at 1849 C Street NW in Washington, D.C. It is responsible for the ma ...

(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

lease A lease is a contractual arrangement calling for the user (referred to as the ''lessee'') to pay the owner (referred to as the ''lessor'') for the use of an asset. Property, buildings and vehicles are common assets that are leased. Industrial ...

s, 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 through stock ownership in a

corporation A corporation is an organization—usually a group of people or a company—authorized by the state to act as a single entity (a legal entity recognized by private and public law "born out of statute"; a legal person in legal context) and ...

." 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. Coal and oil shale leases are generally for 20 year periods, while oil and natural gas leases are generally for 10 year periods.

Royalties

Royalties A royalty payment is a payment made by one party to another that owns a particular asset, for the right to ongoing use of that asset. Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset o ...

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: * 50 percent of gross revenues to state where the drilling takes place * 40 percent of gross revenues to

Reclamation Fund Reclaim, reclaimed, reclaimer, reclaiming or reclamation means "to get something back". It may refer to: * Land reclamation, creating new land from oceans, riverbeds, or lake beds * Dedesertification, reversing of the land degradation in arid a ...

* 10 percent of gross revenues to Federal Treasury. In Alaska, 90 percent of the revenue goes to the state and 10 percent goes to the Federal Treasury.

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).

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.Bureau of Land Management. ''Coal''. .

References

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External links

Full text of the actUS Bureau of Land Management: ''Oil and Gas''
1920 in American law United States federal public land legislation Mining law and governance 1920 in the environment 66th United States Congress United States federal energy legislation