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Mineral Leasing Act (1920)

Mineral Leasing Act (1920)


The Mineral Leasing Act of 1920 regulates the exploitation of fuel and fertilizer minerals on the public lands. The act resulted from the perceived failure of existing federal laws dealing with coal and oil resources. Coal lands had been managed under an 1873 law, allowing the coal to be mined for either $10 or $20 per ton on tracts of 160 or 320 acres (64.8 or 129.6 ha). These acreage limitations led to abuse of the law, and in 1906 over 65 million acres (26.3 million ha) of land were withdrawn from coverage under of the coal lands law. These lands were then reclassified according to whether they contained coal or not, and the price for lands containing coal was increased. The withdrawal and reclassification process slowed development and led many to argue for a new approach. The fate of these coal lands was soon tied to the fate of oil lands.

Oil resources were being managed based on the Mining Law of 1870 and the Oil Placer Act of 1897. Neither law, however, sufficiently recognized the difference between petroleum and other minerals this in turn resulted in major problems in the exploitation of petroleum. These problems included overproduction, market instability, claim jumping, and national security concerns. In 1909, President William Howard Taft withdrew over three million acres of public land from oil development in California and Wyoming, thereby initiating a policy debate over how to manage petroleum resources on the public lands.

The first leasing bill, supported by the Taft administration, was introduced in Congress in 1913, but because it was so controversial in the western states, the Mineral Leasing Act was not passed until 1920. The law, which applies to deposits of coal, oil, gas, oil shale , phosphate, potash, sodium, and sulfur on the public lands, has two main features: federal regulatory authority and conditional access to the public lands. Controversy centered on the oil provisions of the Act. These gave the Secretary of the Interior the authority to issue permits for prospecting on land that was not known to have any oil. If oil were discovered, the prospector acquired lease rights for 20 years and paid a royalty fee of five percent. For proven oil-producing lands, tracts were offered under a system of competitive bidding based on royalty payments. The minimum area covered was 640 acres (259.2 ha), and the minimum royalty accepted was 12.5%. These royalties were to be divided among the Reclamation Fund (for western water projects), the states in which the land is located (for education and roads), and the federal government.

Amendments to the act have done away with prospecting permits, increased the size of tracts that can be leased, and changed the bidding procedures for leases. Most lands that are not known to contain oil are leased through a lottery conducted by the U. S. Department of the Interior. For known oil lands, a competitive bidding procedure is used. In addition to the bid fee, a 12.5% royalty and an annual rental fee of $2.00 per acre is also required.

The Mineral Leasing Act was a significant departure from past mining policy, based on the Mining Law of 1872, which granted free access to the public lands, the potential for inexpensive purchase of mineral lands, and included no royalty payments to the government.

[Christopher McGrory Klyza ]

RESOURCES

BOOKS

Hays, S. P. Conservation and the Gospel of Efficiency: The Progressive Conservation Movement, 18901920. New York: Atheneum, 1975.

Mayer, C. J., and G. A. Riley. Public Domain, Private Dominion: A History of Public Mineral Policy in America. San Francisco: Sierra Club Books, 1985.

Swenson, R. W. "Legal Aspects of Mineral Resources Exploitation." In History of Public Land Law Development, by Paul W. Gates. Washington, DC: U.S. Government Printing Office, 1968.

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