The Development of First-Possession Rules in Us Mining, 1872-1920: Theory, Evidence, and Policy Implications

Abstract

Between 1872 and 1920 rights to hardrock mineral stocks and petroleum reservoirs on public lands in the western United States were assigned using essentially the same system. In 1920, however, Congress enacted a leasing system for petroleum, leaving the 1872 Mining Law intact for hardrock minerals. This paper uses a property rights framework to examine these divergent paths of the institutional development, and draws two major conclusions. First, the Mining Law appears to have been an effective means for assigning rights to hardrock mineral stocks on federal lands through 1920. Second, although it is a common belief that the Mineral Leasing Act was enacted in response to different physical characteristics of hardrock minerals and petroleum (i.e., stock v. flow), the benefits stemming from restrictions imposed by the 1920 legislation could have been accomplished through modifications of the Mining Law.

Note: This is a description of the paper and not the actual abstract.

JEL Classification: Q38, N51