Mineral Leasing Act of 1920

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

[edit] 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 $1 per acre), and Royalty ( a payment of 1/8 of the gross value of the oil and gas produced).