Knowledge

Mineral rights

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property dispute between a father and son involving ownership of coal veins in Pennsylvania is cited stating; “One who has the exclusive right to mine coal upon a tract of land has the right of possession even as against the owner of the soil, so far as it is necessary to carry on mining operations.” (Turner v. Reynolds, 1854). A later case in Texas in 1862 set precedent by stating “it is a well-established doctrine from the earliest days of the common law, that the right to the minerals thus reserved carries with it the right to enter, dig and carry them away." (Cowan v. Hardeman, 1862). Some may argue that the U.S. justice system's enabling of this precedent is further exacerbated by industry lobbying that enables the status quo of favoring oil and gas development vs other innovations.
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have been severed from the surface rights (or property rights), it is referred to as a "split estate." In a split estate, the owner of the mineral rights has the right to develop those minerals, regardless of who owns the surface rights. This is because in United States law, mineral rights trump surface rights. The U.S. historical precedent for this severance roots from western expansion and The Land Ordinance Act of 1785 and The Northwest Ordinance Act of 1789 at the cost of dispossessed Natives. Severability was further reinforced by the
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those minerals are to be extracted. For instance, a mineral rights owner might request that the company minimize any noise and light pollution when extracting the minerals. Leases are usually term-limited, meaning the company has a limited amount of time to develop the resources; if they do not begin development within that time-frame they forfeit their right to extract those minerals.
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legal right to extract those minerals regardless. However, companies will often enter into voluntary negotiations with the surface rights owner to ensure that the operations all go smoothly. In such cases, the company will offer a SUA, in which property owners may ask for financial compensation or other concessions regarding how the minerals are extracted. See sample.
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mineral revenues are divided up between the oil company, the owners of the mineral rights (royalty owners) and the overriding royalty interest owners. The division order needs a signature, a current address and social security number for individual royalty owners or tax identification number for companies.
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Mineral owners may receive a monthly royalty check if oil, gas, or any other substances of value are extracted from below the surface and either sold or used by an oil and gas operating company. Royalty statements include the production and revenue figures for both the individual owner and the entire
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To bring oil and gas reserves to market, minerals are conveyed for a specified time to oil companies through a legally binding contract known as a lease. This arrangement between individual mineral owners and oil companies began prior to 1900 and still thrives today. Before exploration can begin, the
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Although there are numerous other important details, the basic structure of the lease is straightforward: in exchange for an up-front lease bonus payment, plus a royalty percentage of the value of any production, the mineral owner grants the oil company the right to drill for a period of time, known
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Mineral estates can be severed, or separated, from surface estates. There are two main avenues to mineral rights severance: the surface property may be sold and the minerals retained, or the minerals may be sold and the surface property retained, though the former is more common. When mineral rights
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A surface use agreement (SUA) is a contract between a property owner and a mineral rights holder that dictates how the mineral rights are to be developed. Meaning, when mineral rights are extracted by a company that does not own the property above where the minerals are located, the company has the
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A major issue involving fluid mineral rights is the "rule of capture" whereby minerals capable of migrating beneath the Earth's surface can be extracted, even if the original source was another person's mineral property. Such claims typically are protected by various states' oil and gas regulatory
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of 1848 began placing lands that were mineral abundant into private hands and furthered the precedent of mineral rights outweighing surface rights. This was a crucial step in the development of an economic system based largely on private incentives and market transactions. An early case involving a
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can refer to oil, gas, coal, metal ores, stones, sands, or salts. An owner of mineral rights may sell, lease, or donate those minerals to any person or company as they see fit. Mineral interests can be owned by private landowners, private companies, or federal, state or local governments. Sorting
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It is common for royalty checks to fluctuate between pay periods due to monthly changes in oil or gas prices, or changes in the volumes produced by the associated oil or gas wells. Additionally, royalties may cease altogether if the associated wells quit producing marketable quantities of oil or
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those mineral rights to a company for development at any point. Signing a lease signals that both parties agree to the terms laid out in the lease. Lease terms typically include a price to be paid to the mineral rights owner for the minerals to be extracted, and a set of circumstances under which
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This type of estate occurs when mineral and surface ownership are separated. This can occur from prior ownership of mineral rights or is commonly performed when land is passed between family generations. Today corporations own a significant portion of mineral rights beneath private individuals.
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A division order is not a contract. It is a stipulation, derived from the lease agreement and other agreements, as to what the operator of a well or an oil and/or gas purchaser will disburse in terms of revenue to the mineral owner and others. The purpose of the division order is to show how the
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as the primary term. If the term of the oil or gas lease extends beyond the primary term, and a well was not drilled, then the Lessee is required to pay the lessor a delay rental. This delay rental could be $ 1 or more per acre. In some cases, no drilling occurs and the lease simply expires.
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gas, if the operating company has changed hands and the new operator has not yet established a new payment account for the owner, or if the operating company or product purchaser is missing appropriate paperwork or proper documentation of changes in ownership or contact information.
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It is possible for a mineral right owner to sever and sell an oil and gas royalty interest, while keeping the other mineral rights. In such case, if the oil lease expires, the royalty interest is extinguished, its purchaser has nothing, and the mineral owner still owns the minerals.
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This severability can create tension between mineral rights owners and surface rights owners if the surface rights owners do not want to allow the mineral rights owners to use their property to access their minerals. This is becoming ever more present in the light of recent
132:). Mineral rights can refer to sedentary minerals that do not move below the Earth's surface or fluid minerals such as oil or natural gas. There are three major types of mineral property: unified estate, severed or split estate, and fractional ownership of minerals. 2699: 358:
Many other line items can be negotiated by the time the contract is complete. The rights of all parties are defined in agreements; and, when mineral production begins, the division order states how much revenue goes to each party involved.
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well. The royalty paid is a function of the net value of the proceeds from the sale of the oil, gas, or other substance, multiplied by the owner's revenue interest decimal, less any amounts deducted for taxes or other deductions.
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The duration of the lease may be extended when drilling or production starts. This enters into the period of time known as the secondary term, which applies for as long as oil and gas is produced in paying quantities.
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mineral owner (lessor) and the oil company (lessee) must agree to certain terms regarding the rights, privileges and obligations of the respective parties during the exploration and possible production stages.
251:, which does not permit a person to sell them, but merely that they own the minerals so long as they live. After this, the rights revert to a predesignated entity, such as a specific organization or person. 668:
Ryder, Stacia S.; Hall, Peter M. (2017). "This land is your land, maybe: A historical institutionalist analysis for contextualizing split estate conflicts in U.S. unconventional oil and gas development".
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If there is a delay rental agreement—any delay in production by the lessee for a negotiated period, the lessee can pay the lessor a negotiated amount of money per year to keep the contract active
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Here a percentage of the mineral property is owned by two or more entities. This can occur when owners leave fractions of the rights to multiple children or grandchildren.
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Collins, A. R.; Nkansah, K. (2015-10-07). "Divided Rights, Expanded Conflict: Split Estate Impacts on Surface Owner Perceptions of Shale Gas Drilling".
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The term of the lease. Usually there is a primary term and a secondary term. Each term has conditions set up either by the lessor or lessee to fulfill.
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these rights are a large part of mineral exploration. A brief outline of rights and responsibilities of parties involved can be found here.
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If there is a "shut-in royalty" agreement—royalties are paid at a negotiated rate per acre, only while the well is not producing oil or gas
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Unified estates, sometimes referred to as "fee simple" or "unified tenure" mean that the surface and mineral rights are not severed.
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The royalty rate. This is how the rates are divided and how it is calculated from the revenues produced from the mineral rights.
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The owner of a mineral interest may separately convey any or all of the above-listed interests. Minerals may be possessed as a
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The revenue decimal used to calculate the amount of an owner's royalty check is calculated with the following equation:
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An oil and gas lease is a contract because it contains consideration, consent, legal tangible items and competency.
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Libecap, Gary D. (1978). "Economic Variables and the Development of the Law: The Case of Western Mineral Rights".
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Y = Additional ownership factor assigned to the owner's mineral rights by any other arrangement or agreement
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P = Participation factor assigned to the tracts owned by the mineral owner as described in a unit agreement
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agencies whose broader mandate is to promote conservation and minimize conflicts between mineral owners.
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R = The royalty assigned to the mineral rights owner by the oil and gas lease covering the minerals
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Environmental Quality Council, The brochure reflects Montana law as ofOctober 1, 2013. (2013).
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The right to use as much of the surface as is reasonably necessary to access the minerals
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of 1862 (OHA) and the 1862 Railroad Act. Agricultural patents and the California
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it harbors. Mineral rights can be separate from property ownership (see
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development (UOGD) made feasible by technological advancement such as
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There are three distinct but related aspects of ownership. They are:
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U = Number of mineral acres in the oil and gas drilling unit or pool
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The Origin of the Family, Private Property and the State
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Property rights to exploit an area for the minerals
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Roar Press. p. 31. 837:"Oil and Gas Lease Bonus" 718:10.1017/s0022050700105121 488:- mining rights in Europe 394:Revenue interest decimal 3131:The Great Transformation 2489:Labor theory of property 2700:Forest-dwelling (India) 2662:restraint on alienation 2442:Common good (economics) 877:infinityresourcesco.com 153:Types of mineral estate 3139:Pierre-Joseph Proudhon 2913:Primitive accumulation 2768:Right of way (transit) 2553:Tragedy of the commons 2435:fictitious commodities 896:Stafford, Jim (1981). 453: 3192:The Wealth of Nations 3172:Jean-Jacques Rousseau 3164:The Ethics of Liberty 898:Look Before You Lease 643:Fambrough, J., 2009. 466:Surface use agreement 454: 240:The right to receive 234:The right to receive 3055:Progress and Poverty 2389:Common-pool resource 2101:remnant natural area 1738:storage and recovery 1404:habitat conservation 1222:Deforestation (REDD) 1066:earthworksaction.org 1024:. PA Gas Lease Forum 917:Mineral Rights Coach 398: 207:hydraulic fracturing 183:Severed/split estate 175:Fractional ownership 166:Severed/split estate 43:improve this article 3178:The Social Contract 2866:population transfer 2783:prior-appropriation 2462:homestead principle 2055:Earth Overshoot Day 1629:Marine conservation 1610:non-timber products 764:10.3368/le.91.4.688 3158:Murray N. 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609: 569: 543: 542: 540: 537: 536: 535: 530: 524: 519: 514: 509: 504: 499: 494: 489: 483: 476: 473: 467: 464: 448: 445: 442: 439: 436: 433: 430: 427: 424: 421: 418: 415: 412: 409: 406: 403: 392: 391: 390:D = Deductions 388: 385: 382: 379: 376: 364: 361: 356: 355: 352: 349: 346: 343: 335: 332: 326: 325:Division order 323: 309: 306: 305: 304: 303:Ownership type 301: 298: 290: 287: 286: 285: 282: 279: 276: 260: 257: 245: 244: 238: 232: 229: 226: 218: 217:Major elements 215: 184: 181: 176: 173: 167: 164: 159: 158:Unified estate 156: 154: 151: 142:mineral rights 137: 136:Mineral estate 134: 122:Mineral rights 117: 116: 31: 29: 22: 15: 9: 6: 4: 3: 2: 3269: 3258: 3255: 3253: 3250: 3248: 3245: 3244: 3242: 3225: 3222: 3221: 3220: 3217: 3215: 3212:Categories: 3206: 3205: 3202: 3194: 3193: 3189: 3188: 3187: 3184: 3180: 3179: 3175: 3174: 3173: 3170: 3166: 3165: 3161: 3160: 3159: 3156: 3154: 3153:David Ricardo 3151: 3147: 3146: 3142: 3141: 3140: 3137: 3133: 3132: 3128: 3127: 3126: 3123: 3121: 3120:Elinor Ostrom 3118: 3116: 3113: 3109: 3108: 3104: 3103: 3102: 3099: 3095: 3094: 3090: 3089: 3088: 3085: 3081: 3080: 3076: 3075: 3074: 3071: 3069: 3066: 3064: 3061: 3057: 3056: 3052: 3051: 3050: 3047: 3043: 3042: 3038: 3037: 3036: 3033: 3031: 3028: 3024: 3023: 3019: 3018: 3017: 3014: 3013: 3011: 3007: 2999: 2993: 2990: 2986: 2983: 2981: 2978: 2976: 2973: 2971: 2968: 2967: 2966: 2963: 2959: 2956: 2952: 2949: 2947: 2944: 2943: 2941: 2939: 2936: 2934: 2931: 2930: 2929: 2926: 2924: 2921: 2919: 2918:Privatization 2916: 2914: 2911: 2909: 2906: 2904: 2901: 2899: 2898:Legal plunder 2896: 2894: 2891: 2889: 2886: 2884: 2881: 2879: 2876: 2872: 2869: 2867: 2864: 2863: 2862: 2859: 2857: 2856: 2852: 2850: 2849:Expropriation 2847: 2845: 2842: 2840: 2837: 2835: 2832: 2830: 2827: 2823: 2820: 2819: 2818: 2815: 2814: 2812: 2810: 2805: 2801: 2789: 2786: 2784: 2781: 2780: 2779: 2776: 2774: 2771: 2769: 2766: 2762: 2761: 2757: 2756: 2755: 2752: 2750: 2747: 2743: 2740: 2738: 2735: 2733: 2730: 2729: 2728: 2725: 2723: 2720: 2716: 2713: 2712: 2711: 2708: 2706: 2703: 2701: 2698: 2696: 2693: 2691: 2688: 2687: 2685: 2681: 2673: 2670: 2668: 2665: 2663: 2660: 2658: 2655: 2653: 2650: 2649: 2648: 2645: 2643: 2640: 2636: 2633: 2632: 2631: 2628: 2626: 2625: 2621: 2619: 2616: 2612: 2609: 2607: 2604: 2602: 2599: 2598: 2597: 2594: 2592: 2590: 2586: 2584: 2583:(watercourse) 2582: 2578: 2577: 2574: 2571: 2567: 2559: 2556: 2555: 2554: 2551: 2549: 2546: 2544: 2541: 2537: 2534: 2532: 2529: 2527: 2526:primogeniture 2524: 2523: 2522: 2519: 2517: 2514: 2512: 2509: 2507: 2506:Legal plunder 2504: 2500: 2497: 2496: 2495: 2492: 2490: 2487: 2485: 2482: 2480: 2477: 2475: 2472: 2470: 2467: 2463: 2460: 2458: 2457:appropriation 2455: 2454: 2453: 2450: 2448: 2447:Excludability 2445: 2443: 2440: 2436: 2433: 2432: 2431: 2428: 2426: 2423: 2422: 2420: 2416: 2410: 2407: 2405: 2402: 2400: 2397: 2395: 2392: 2390: 2387: 2385: 2382: 2381: 2379: 2377: 2373: 2365: 2362: 2361: 2360: 2357: 2355: 2352: 2348: 2345: 2344: 2343: 2340: 2338: 2335: 2333: 2330: 2328: 2325: 2324: 2322: 2318: 2312: 2309: 2307: 2304: 2302: 2299: 2297: 2294: 2292: 2289: 2287: 2284: 2282: 2279: 2277: 2274: 2272: 2269: 2267: 2264: 2262: 2259: 2257: 2254: 2252: 2249: 2248: 2246: 2242: 2238: 2231: 2226: 2224: 2219: 2217: 2212: 2211: 2208: 2196: 2188: 2187: 2184: 2174: 2173:Non-renewable 2170: 2167: 2165: 2162: 2160: 2157: 2155: 2152: 2150: 2147: 2145: 2139: 2137: 2134: 2133: 2131: 2129: 2125: 2119: 2116: 2114: 2113:Urban ecology 2111: 2109: 2106: 2102: 2099: 2098: 2097: 2094: 2092: 2089: 2085: 2082: 2080: 2077: 2076: 2075: 2072: 2068: 2065: 2064: 2063: 2060: 2056: 2053: 2051: 2048: 2047: 2046: 2043: 2041: 2038: 2034: 2031: 2029: 2026: 2025: 2024: 2021: 2017: 2014: 2012: 2009: 2007: 2004: 2002: 1999: 1998: 1997: 1994: 1993: 1990: 1987: 1983: 1971: 1968: 1966: 1963: 1962: 1961: 1958: 1956: 1953: 1951: 1948: 1946: 1945:Privatization 1943: 1941: 1938: 1936: 1933: 1931: 1928: 1926: 1923: 1921: 1918: 1916: 1913: 1911: 1908: 1906: 1903: 1899: 1896: 1895: 1894: 1891: 1889: 1886: 1884: 1881: 1879: 1876: 1874: 1871: 1870: 1868: 1864: 1858: 1855: 1851: 1848: 1847: 1846: 1843: 1841: 1840:Surface water 1838: 1836: 1833: 1829: 1826: 1825: 1824: 1821: 1819: 1816: 1812: 1811: 1807: 1806: 1805: 1802: 1798: 1795: 1793: 1790: 1788: 1785: 1784: 1783: 1780: 1778: 1775: 1771: 1768: 1766: 1763: 1761: 1758: 1757: 1756: 1753: 1751: 1748: 1746: 1743: 1739: 1736: 1735: 1734: 1731: 1730: 1728: 1724: 1721: 1719: 1715: 1707: 1704: 1702: 1699: 1698: 1697: 1694: 1692: 1689: 1687: 1684: 1680: 1677: 1675: 1672: 1670: 1667: 1665: 1662: 1660: 1657: 1655: 1652: 1650: 1647: 1646: 1645: 1642: 1640: 1637: 1635: 1632: 1630: 1627: 1623: 1620: 1619: 1618: 1615: 1611: 1608: 1606: 1603: 1601: 1598: 1596: 1593: 1592: 1591: 1588: 1584: 1581: 1579: 1576: 1574: 1571: 1570: 1569: 1566: 1564: 1561: 1559: 1556: 1554: 1551: 1547: 1544: 1543: 1542: 1539: 1537: 1534: 1533: 1531: 1529: 1525: 1517: 1514: 1512: 1509: 1508: 1507: 1504: 1500: 1497: 1495: 1492: 1490: 1487: 1485: 1482: 1481: 1480: 1477: 1473: 1470: 1466: 1463: 1461: 1458: 1457: 1456: 1453: 1449: 1446: 1444: 1441: 1440: 1439: 1436: 1432: 1429: 1428: 1427: 1424: 1422: 1419: 1417: 1414: 1413: 1412: 1409: 1405: 1402: 1401: 1400: 1397: 1393: 1390: 1389: 1388: 1385: 1381: 1378: 1376: 1373: 1371: 1368: 1366: 1363: 1362: 1361: 1358: 1356: 1353: 1351: 1348: 1342: 1341:peak farmland 1339: 1338: 1337: 1334: 1333: 1332: 1329: 1328: 1326: 1324: 1320: 1314: 1311: 1307: 1304: 1302: 1299: 1298: 1297: 1294: 1292: 1289: 1287: 1284: 1282: 1279: 1276: 1272: 1268: 1264: 1260: 1257: 1255: 1252: 1250: 1247: 1245: 1242: 1241: 1239: 1237: 1233: 1223: 1220: 1218: 1215: 1213: 1210: 1209: 1207: 1203: 1197: 1194: 1190: 1184: 1183: 1182: 1179: 1177: 1174: 1172: 1169: 1167: 1161: 1160: 1158: 1156: 1152: 1149: 1147: 1143: 1139: 1132: 1127: 1125: 1120: 1118: 1113: 1112: 1109: 1103: 1100: 1098: 1095: 1093: 1091: 1086: 1084: 1081: 1080: 1067: 1063: 1057: 1049: 1045: 1039: 1023: 1017: 1001: 995: 980: 976: 970: 962: 958: 952: 944: 940: 934: 919:. Bret Wagner 918: 914: 907: 899: 892: 878: 874: 868: 860: 856: 850: 842: 838: 832: 824: 820: 814: 806: 799: 792: 790: 781: 777: 773: 769: 765: 761: 757: 753: 746: 744: 735: 731: 727: 723: 719: 715: 711: 707: 700: 692: 688: 684: 680: 676: 672: 664: 662: 660: 658: 656: 654: 646: 640: 632: 625: 618: 616: 614: 605: 601: 595: 587: 580: 573: 565: 558: 551: 549: 544: 534: 531: 528: 525: 523: 520: 518: 515: 513: 510: 508: 505: 503: 500: 498: 495: 493: 490: 487: 484: 482: 479: 478: 472: 463: 459: 443: 440: 437: 434: 431: 425: 422: 419: 413: 410: 407: 401: 389: 386: 383: 380: 377: 374: 373: 372: 369: 363:Royalty check 360: 353: 350: 347: 344: 341: 340: 339: 331: 322: 318: 314: 302: 299: 296: 295: 294: 283: 280: 277: 274: 273: 272: 269: 266: 256: 252: 250: 243: 239: 237: 236:delay rentals 233: 230: 227: 224: 223: 222: 214: 210: 208: 204: 198: 195: 191: 190:Homestead Act 180: 172: 163: 150: 147: 143: 133: 131: 127: 123: 113: 110: 102: 91: 88: 84: 81: 77: 74: 70: 67: 63: 60: â€“  59: 55: 54:Find sources: 48: 44: 38: 37: 32:This article 30: 26: 21: 20: 3219:Property law 3190: 3176: 3162: 3143: 3129: 3125:Karl Polanyi 3105: 3101:Marcel Mauss 3091: 3077: 3068:David Harvey 3053: 3049:Henry George 3039: 3030:Ronald Coase 3020: 3005: 2951:wife selling 2933:bride buying 2871:repatriation 2853: 2804:Disposession 2758: 2753: 2647:Property law 2622: 2618:Forest types 2588: 2580: 2569:Applications 2499:rent-seeking 2484:Gift economy 2342:Intellectual 2171: / 2045:Exploitation 1930:Conservation 1873:Desalination 1808: 1701:conservation 1536:Biodiversity 1484:conservation 1471: 1331:Agricultural 1259:Fossil fuels 1089: 1065: 1056: 1048:agrilife.org 1047: 1038: 1026:. 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minerals
Split estate
Minerals
Homestead Act
gold rush
unconventional oil and gas
hydraulic fracturing
delay rentals
royalties
life estate
lease
Air rights
Bergregal
Environmental impact assessment
Easement
General Mining Act of 1872
Land rights
Mining law
Oil and gas law in the United States

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