CHAPTER 3 ANALYSIS OF EXISTING SYSTEMS FOR LEASING OR OTHER DISPOSAL

• Jurisdiction: United States

Federal Mineral Leasing
(Nov 1971)
CHAPTER 3
ANALYSIS OF EXISTING SYSTEMS FOR LEASING OR OTHER DISPOSAL
Casey W. Vlautin, Esq.
Woodburn, Forman, Wedge, Blakey, Folsom & Hug Attorneys at Law
One East First Street Reno, Nevada 89505

TABLE OF CONTENTS

SYNOPSIS
Page

Introduction

I. Mineral Leasing Under the Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands (1947)

A. Lands and Minerals subject to lease

B. Prospecting permits and preferential leases

C. Issuance of preferential right leases

D. Issuance of competitive leases

E. Phosphate and sodium use permits

II. Hardrock Mineral Leasing on Certain Acquired Lands

III. Special Leasing Legislation

1. Lease of gold, silver or quicksilver in confirmed private land grants

2. Asphalt in Oklahoma

3. Silica sands and other non-metalliferous minerals in certain Nevada lands

4. Leasing of sand and gravel in certain lands patented to the State of Nevada

5. Reserved Minerals in lands patented to the State of California for park or other public purposes

6. National Forest Lands in Minnesota

7. Lake Mead Recreation Area

8. National Forest Wilderness

9. Whiskeytown-Shasta-Trinity National Recreation Area

10. Leasing of lands by the Atomic Energy Commission

IV. Disposal of Materials on Public Lands

V. Leasing on the Outer Continental Shelf

VI. License to Mine Coal

VII. Geothermal Steam Leasing

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INTRODUCTION

The primary legislative authority for leasing of federal mineral lands is the Mineral Leasing Act of 1920,¹ which applies to public lands of the United States, excluding lands acquired subsequent to February 25, 1920, lands acquired under the Appalachian Forest Act, and those lands in incorporated cities, towns and villages and in national parks and monuments. Authority for leasing acquired lands is found in the Mineral Leasing Act for Acquired Lands of 1947,² which applies to all lands acquired by the United States to which the Mineral Leasing Act of 1920 had not been extended, excluding lands which have been acquired by the United States for development of mineral deposits, by foreclosure or otherwise, for resale, or reported as surplus pursuant to the provisions of the Surplus Property Act of 1944, and excluding submerged or tidal lands.

The practical operation of the two acts differs principally in that mineral leases of acquired lands may be granted by the Secretary of the Interior only with the consent of the head of the executive department having authority over the lands.

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Under the Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands of 1947, prospecting permits are authorized to be issued granting the exclusive right to the permittee to prospect a prescribed area. If the permittee is successful in discovering valuable deposits of the mineral, the permittee is entitled to issuance of a lease. Conversely, if the lands are previously known to contain valuable deposits of the mineral, the lands are subject to leasing through advertisement, competitive bidding, or such other methods the Secretary may adopt by regulation.

Both the Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands of 1947 are applicable only to coal, phosphate, sodium, potassium, native asphalt, solid and semisolid bitumen, bituminous rock and sulphur.

Locatable minerals are leaseable in certain instances on lands not open to mining location.³

The Geothermal Steam Act of 1970⁴ authorizes the Secretary of the Interior to issue leases for geothermal steam upon competitive bidding if the lands to be leased are in a known geothermal area. If the lands are not in a known geothermal resources area, the first qualified applicant is entitled to a lease.

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Lands on the Outer Continental Shelf are subject to lease by the Secretary of Interior.⁵ Leases are issued to qualified persons offering the highest cash bonuses on a basis of competitive bidding.

The Material Disposal Systems Act of 1947⁶ permits the Secretary of Interior to dispose of the common varieties of sand, stone, gravel, pumice, pumicite, cinders and clay. Disposal of materials may be by negotiated sales or by sales to the highest bidder. However, the Secretary may permit Federal, State or municipal governments or non-profit corporations to remove materials without charge.

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I MINERAL LEASING UNDER THE MINERAL LEASING ACT OF 1920 AND THE MINERAL LEASING ACT FOR ACQUIRED LANDS (1947)

A. Lands and minerals subject to lease.

The Mineral Leasing Act of 1920 was effective February 25, 1920. It is applicable to leasing deposits of coal, phosphate, sodium, potassium, native asphalt, solid and semisolid bitumen and bituminous rock on the public domain.¹ The Act is also applicable to the leasing of sulphur deposits on the public domain in Louisiana and Mexico.² Public lands disposed of under laws reserving to the United States deposits of leaseable minerals are subject to the Act.³

The Mineral Leasing Act of 1920 is applicable to land within national forests but excludes lands acquired under the Appalachian Forest Act and those lands in incorporated cities, towns, villages, lands in national parks and monuments, lands in naval petroleum and oil shale reserves, and these lands acquired subsequent to February 25, 1920.⁴

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The Mineral Leasing Act for Acquired Lands⁵ is applicable to the leasing of deposits of coal, phosphate, sodium, potassium and sulphur on lands acquired by the United States.⁶ "Lands acquired by the United States" includes all lands to which the Mineral Leasing Act of 1920 does not extend.⁷

The Act applies to sulphur deposits on acquired lands wherever situated.⁸ Excluded from the Act are deposits in acquired lands which are situated in incorporated cities, towns and villages, national parks and monuments, lands set apart for naval or military purposes, tidelands, or submerged lands.⁹ The Act generally provides that minerals on acquired Lands shall be leased by the Secretary under the same conditions as minerals are leased under the Mineral Leasing Act of 1920.¹⁰ However, the Mineral Leasing Act for Acquired Lands does provide that the Secretary of Interior shall not lease a mineral deposit except with the consent of the head of the department or instrumentality having jurisdiction over the lands.¹¹

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B. Prospecting permits and preferential leases.

1. Introduction. The Mineral Leasing Act of 1920 and the Mineral Leasing Act for Acquired Lands provide that where prospecting work is necessary to establish the existence or workability of a deposit of a leasing act mineral in an unclaimed, undeveloped area, the Secretary of Interior is authorized to issue a prospecting permit to a qualified applicant. The prospecting permit gives the permittee the exclusive right to prospect for the particular mineral deposit in the specified area covered by the permit. If a valuable mineral deposit is discovered prior to the expiration of the permit, the permittee is entitled to a lease embracing the land included in the permit. A more detailed explanation follows.

2. Applicant's qualifications. Mineral prospecting permits may be issued only to citizens of the United States over the age of majority, associations of such citizens organized under the laws of the United States or a state thereof, corporations organized under the laws of the United States or a state thereof, and municipalities.¹² Aliens may own or control stock in a corporation holding permits and leases if the laws of their country do not deny similar privileges to United States citizens.¹³

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All applicants must file statements of qualification in the proper land office¹⁴ unless previously filed, in which case the applicant may refer to the previously filed statement by serail number.¹⁵ If an applicant is an individual, he must submit with each application a statement over his signature setting forth his citizenship.¹⁶ Associations, including partnerships, must submit a certified copy of their articles of association or partnership.¹⁷ If the applicant is a partnership or association which is authorized to hold such interest by statute and by its articles, the application shall also be accompanied by a statement showing that it is authorized to held leases, that the member or partner executing the permit or lease is duly authorized, and the names, addresses and citizenship of all persons owning more than 10% of the association. The members of an association or partnership which is not authorized by statute and its articles to hold such interest must individually qualify.¹⁸

A corporation must submit statements of qualification showing the state of incorporation; that it is authorized to hold leases for mineral deposits;

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the names of officers authorized to act on behalf of the corporation; the names and addresses of persons owning or controlling more than 10% of the stock of the corporation; and the names, addresses and percentage of stock held by aliens.¹⁹

3. Applications and acreage limitations. Applications for a prospecting permit must be made on the form provided by the Bureau of Land Management.²⁰

The application must be filed in the proper land office. If a coal prospecting permit is sought, the permit must be accompanied by a proposed plan and method for conducting prospecting or exploratory operations.²¹

The lands in the permit application may be described by metes and bounds or approved protraction surveys.²² However, prior to issuance of a lease, the lands must be surveyed at the permittee's expense. The lands described shall be in a reasonably compact form within an area six miles square.²³ No person may hold permits or leases for more than the prescribed acreage.

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(c) Coal. A coal permit may not exceed 5,120 acres and total holdings in one state may not exceed 46,080 acres.²⁴ However, the Secretary, in his discretion, may issue permits for up...