Contents

Brief History of Oil Shale

Mineral Leasing Act

By 1920, as "oil fever" gripped the nation, enough citizens recognized the shortcomings of the 1897 Petroleum Placer Act that Congress took note. In an effort to impose some order on the chaos of the boom and tailor the law more effectively to the requirements of the resource it regulated, Congress replaced the Petroleum Placer Act with the Mineral Leasing Act of 1920 (MLA). The new law made fossil fuel-bearing lands in the public domain available for development only under specific federally-set conditions that included a minimum royalty payment on production. The law also included a "savings" clause that allowed claimants who had filed their claims before the passage of the MLA to secure private ownership of the oil shale lands. This exception gave the energy industry a foothold on the Western Slope's public lands that it maintains to this day, but all other oil shale lands reverted back to federal control and were subject to the new law.

Looking north down Piceance Creek in Rio Blanco County, Colorado, over land...

The MLA, which (with minor revisions) is still the law governing fossil-fuel development on federal land today, differs from the 1872 Hardrock Mining Law in several significant ways. First and foremost, there is no "right to mine" on the public lands. Unlike the 1872 law, which declares the public domain open to mineral development and ranks mining preeminent among competing uses of the land, the MLA requires would-be developers to obtain permission from the federal government through a competitive bidding process before prospecting or mining operations commence. The government, moreover, retains the discretion to determine which, if any, bid to accept.

When federal land managers do award a lease under the MLA, the lessee must compensate the public for the depletion of nonrenewable energy resources through royalties, rents, and bonus payments, as opposed to the flat $5 per acre purchase fee in the 1872 law. The Secretary of the Interior may reduce, waive, or suspend these royalties in order to encourage development (a provision of the statute that specifically references the promise of oil shale), but in cases when the government does collect royalties, it returns a portion (set at 50% in a 1976 amendment) to the state that hosts the operation. The government offers each lease for a fixed term (usually 5 years for oil and gas), with the option of renewal if the operator is profitably producing resources, as well as an option for the government to compel timely development or cancel the lease if the operator does not proceed with due diligence. When the law was passed, oil shale leases were limited to 5120 acres (8 square miles) and each company or individual miner was allowed only one lease.

The MLA also includes provisions meant to protect the environment, a consideration not likely to have even entered the thoughts of the legislators who authored the 1872 law. Throughout the leasing process, federal land managers have the authority to impose conditions and regulate the extraction process to protect competing resources and the environment. These environmental considerations extend beyond the life of the mine, discouraging the "get rich and get out" mindset displayed by many miners during earlier mineral booms. Those miners fortunate enough to be awarded a lease must promise to reclaim the area - typically by posting a bond up front designated for the purpose - once mining operations have ceased. ⁹