Restrictions on Canadian Ownership of Federal Mineral

Leases Under the Mineral Leasing Act of 1920

The provisions of 30 U.S.C. § 181, which bar ownership of leases under the Mineral 

Leasing Act of 1920 by citizens of a foreign country whenever the laws of that country 

deny “similar or like privileges” to U.S. citizens, reflect a reciprocity principle under 

which the United States would be able to respond in kind when another country 

restricts American investment in its minerals. Accordingly, the United States may take 

responsive steps ‘‘mirroring” Canadian restrictions on foreign investment in its mineral 

resources, so as to restore “similar or like privileges” between U.S. and Canadian 

citizens for purposes of § 181.

August 11, 1981

MEMORANDUM OPINION FOR THE 

ASSISTANT ATTORNEY GENERAL, ANTITRUST DIVISION

You have informed us that the Administration is contemplating possible action responding to Canadian restrictions on foreign investment in 

its mineral resources. A principal legal question arising in this context is 

whether, consistent with 30 U.S.C. § 181, the United States may take 

responsive steps “mirroring” the Canadian restrictions on American 

investment in Canada by similarly restricting Canadian investment in 

American mineral resources, primarily by limiting Canadian ownership 

of federal mineral leases under the Mineral Leasing Act of 1920, 41 

Stat. 437 (Act). Section 181 provides in pertinent part:

Citizens of another country, the laws, customs, or regulations of which deny similar or like privileges to citizens or 

corporations of this country, shall not by stock ownership, stock holding, or stock control, own any interest in 

any lease acquired under the provisions of this chapter.

It might be argued that whenever another country like Canada places 

restrictions on foreign ownership of interests in its mineral resources, 

§181 permanently bars the citizens of the other country from owning 

any interest in any lease under the Act. Support for this inflexible 

interpretation might be sought in § 181’s prohibition on ownership of 

“any interest in any lease” by the citizens of another country whose 

laws deny Americans “similar or like privileges.”

We do not believe this to be the proper construction of § 181. Under 

that provision, the bar on “any” ownership of “any” lease under the 

Act does not apply unless “the laws, customs, or regulations” of an250
other country “deny similar or like privileges to citizens or corporations of this country.” The fact that another country takes steps to 

eliminate “similar or like privileges” does not, by itself, mean that this 

country would be barred from taking responsive action to restore 

“similar or like privileges” for purposes of § 181.1 To read § 181 as 

preventing such responsive action would require the United States to 

adopt the rather draconian measure of cutting off all ownership interests of another country’s citizens in federal mineral leases regardless 

how minimal the other country’s restriction on foreign ownership of 

mineral resources may be, so long as the foreign restriction eliminated 

“similar or like” privileges. This interpretation disregards the apparent 

underlying purpose of § 181 to permit reciprocal relations between the 

United States and another country concerning ownership of each 

other’s mineral resources.

Furthermore, the inflexible interpretation of § 181 disregards the principle that, under the Mineral Leasing Act, the Secretary of Interior has 

a “broad power” to manage federal mineral leases. See Udall v. 

Tollman, 380 U.S. 1, 4 (1965). Indeed, the Secretary is specifically 

delegated authority, inter alia, “to do any and all things necessary to 

carry out and accomplish the purposes of this chapter.” 30 U.S.C. 

§ 189. It seems plain that if another country were to eliminate “similar 

or like,” responsive action to re-establish such a balance of privileges in 

a particular case may well effectuate the statute’s purposes.

An interpretation of § 181 allowing “mirroring” action is consistent 

with the legislative history 2 and with what we understand to have been 

the Act’s construction by the Department of the Interior, the agency 

charged with implementing it.3 The sentence in § 181 dealing with 

“similar or like privileges” originated in the bill which became the 

Mineral Leasing Act of 1920 reported out by the House Committee on 

the Public Lands. The House Committee noted that its bill substituted

1 All § 181 provides is that if another country does deny “similar or like privileges” to United States 

citizens, a bar on ownership of federal mineral leases takes effect. This leaves open the question 

whether, once another country takes such action, the United States may take responsive action 

restoring “similar or like privileges.”

2See United States v. American Trucking Ass'n, 310 U.S. 534, 542-44 (1940) (for the principle that 

reliance on the purposes and history of a statute is appropriate in determining a statute's meaning).

3See, e.g.. R ed Lion Broadcasting Co. v. FCC, 395 U.S. 367 381 (1969) (“[T]he construction of a 

statute by those charged with its execution should be followed unless there are compelling indications 

that it is wrong. . .”); Udall v. Tollman, 380 U.S. 1, 16 (1968) (‘‘[wjhen faced with a problem of 

statutory construction, this Court shows great deference to the interpretation given the statute by the 

officers or agency charged with its administration”). An interpretation allowing “mirroring” responsive action is also consistent with the approach of 38 Op Att'y Gen. 476 (1936), which concluded that 

England should be regarded as a country in a “reciprocal” relationship with the United States for 

purposes of the Mineral Leasing Act. The Attorney General, while noting that certain requirements 

governing foreign investment under British law had no exact parallels in American federal law, 

reasoned that these special British restrictions “are not unduly restrictive or harsh, ” and some of them 

might even be matched in some state corporation statutes. Thus, the Attorney General, in adopting a 

practical approach to the statute's interpretation, refused to embrace the extreme view that any 

restriction in foreign law not matched in American law necessarily prompts application of an absolute 

bar on foreign ownership of mineral leases.

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language essentially identical to the present § 181 for a different Senate 

version 4 because, in its view, the Senate bill was too harsh and would 

be too likely to prompt retaliatory action by other countries:

The House amendment to this clause seeks to avoid retaliatory action against American investors in foreign countries

and provides that no citizen o f any foreign country shall, by

stock ownership, stock holdings, or stock control, own any

interest in any lease acquired under the provisions o f this act

where such foreign country, by its laws, customs, or regulations, denies similar or like privileges to citizens or corporations o f this country. The main argument for the Senate 

draft was that foreign control of domestic corporations 

operating a lease under the act would result in large 

exportations of oil, coal, and other minerals covered by 

the act, and thereby deplete the domestic supply. Under 

the House reciprocal clause above mentioned it is obvious 

that the citizens of the United States could largely offset 

such a result by their own operations in foreign countries, 

or, if an acute situation ever developed, a general embargo against exportation would be a sufficient remedy.

H.R. Rep. No. 398, 66th Cong., 1st Sess. 11 (1919) (emphasis added). 

During floor debate on the House bill, its sponsor, Congressman 

Sinnott, engaged in the following colloquy with Congressman Snell:

Mr. Snell: As I understand it, the British Government 

does not allow any alien to own any oil lands under the 

control of that Government. According to this act, 

what would be the result if a British subject owned 

stock in any one of our oil companies? What would be 

the situation in which he would find himself?

Mr. Sinnott: I f the British Government discriminates against

us, we meet that discrimination by denying to its citizens

the rights that are withheld from us.

Mr. Snell: If I were a British subject and held some stock 

in one of these oil companies, would I be forced to sell 

it?

Mr. Sinnott: The stock could be declared forfeited, under 

the forfeiture clause in the bill.

Mr. Snell: There is no protection then for any foreigner who

happens to own stock in one o f our oil companies, is there?

‘ The language in the Senate bill that was rejected by the House Committee had provided that “no 

alien shall . . . own any interests in a lease” under the Act “except with a specific provision in such 

lease authorizing the President, in his discretion, to take over and operate such lease, paying just 

compensation” to its owner, and provided further that “the Secretary of the Interior may require the 

sale for consumption in the United States of all or any portion of the products of any leased property 

in which it appears that any alien has an interest by stock ownership or otherwise.” 58 Cong. Rec. 

4160(1919).

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Mr. Sinnott: Not if his Government denies us the same

rights.

58 Cong. Rec. 7528 (1919) (emphasis added). Although the specific 

question posed above by Congressman Snell dealt with England, a 

country described as not allowing “any alien” to own “any oil lands,” 

and thus presented an example of the type of case in which a flat ban 

would logically apply, Congressman Sinnott did not say that English 

citizens would be denied “any” rights to own federal mineral resources 

under the legislation. Rather, he explained that “we meet that discrimination [by a foreign nation] by denying to its citizens the rights that are 

withheld from us.” This statement reflects a reciprocity principle under 

which the United States would be able to respond to another country’s 

restrictive practices by “meeting” the other country’s discrimination, in 

short, by responding in kind.

We also understand from conversations with legal staff of the Department of Interior that § 181 has not been read in the past as barring, 

and the Mineral Leasing Act as a whole has been read as authorizing, 

responsive “mirroring” action by the Secretary when another country 

restricts foreign investment in its mineral resources. For instance, we 

have been told that after Sweden and the Philippines placed restrictions 

on the percentages of permissible foreign ownership of their mineral 

resources, the Secretary imposed corresponding restrictions on the permissible percentages of Swedish and Philippine ownership of any corporation having a federal mineral lease. The courts have acknowledged 

that the interpretation of a statute by the agency charged with implementing it is entitled to some independent weight, barring contrary 

legislative language, purpose, or history. See, e.g., Red Lion Broadcasting Co. v. FCC, 395 U.S. 367, 381 (1969); see also General Electric Co. v. 

Gilbert, 429 U.S. 125, 141 (1976). In this case, there is no such contrary 

indication regarding § 181 of which we are aware.

Conclusion

We conclude that the Mineral Leasing Act, including § 181, permits 

the Secretary to respond in kind when another country restricts American investment in its minerals.5 In concrete terms, this principle would

*We do not believe an equal protection argument could be successfully raised against this interpretation Distinctions may be made on the basis of nationality by Congress or the Executive Branch so 

long as they rest on a sufficient rational foundation. See, e.g., Narenji v. Civiletti, 617 F.2d 745 (D.C. 

Cir. 1979), cert, denied. 446 U.S. 957 (1980), and cases cited therein. Moreover, we do not believe that 

treaties in force would present a serious problem. It is our understanding that the Secretary would act 

only in cases in which a foreign power already had imposed restrictions of a similar kind. If there 

were an outstanding treaty of friendship, commerce, and navigation with the country of concern, the 

initial imposition of a restriction by our treaty partner would presumably be based on one of two 

possible assumptions. (1) that such action does not violate the treaty, in which case this country could 

act similarly without violating the treaty, or (2) that such action violates the treaty, in which case the 

breach by our treaty partner would leave us free to act reciprocally. See Vienna Convention on the 

Law of Treaties, S. Ex. L , 92d Cong., 1st Sess. (1971), Art 60.

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not appear difficult to apply in most cases, for instance in cases involving another country’s restriction on the percentage of foreign ownership of corporations having interests in its mineral resources, or a 

restriction on any investment at all in a certain type of mineral covered 

by the Act. There may be other kinds of restrictions—for instance, 

changes in a foreign country’s tax laws that would discourage investment in mineral resources by corporations having a certain percentage 

of foreign stockholders—that would be more difficult for the Secretary 

to “mirror,” if only because the Secretary may lack authority to take 

the necessary “mirroring” action {e.g., changing the tax laws of the 

United States in parallel fashion). In such cases, a question would arise 

whether other actions could be taken by the Secretary that would, in 

substance if not precisely in form, correspond sufficiently with the 

foreign nation’s restrictions to permit the conclusion that “similar or 

like privileges” would be restored by such actions. Each situation must 

be approached on a case-by-case basis. However, we believe that the 

Secretary would be recognized by a reviewing court as having a 

reasonable degree of discretion in applying § 181 in a practical, flexible 

manner. See 38 Op. Att’y Gen. 476 (1936).6

T h e o d o r e B. O lso n

Assistant Attorney General

Office o f Legal Counsel

‘ This discussion has focussed on the application of § 181 to new mineral leases or changes in 

existing mineral leases. Additional issues would be raised if the Secretary sought to seek judicial 

cancellation of existing leases because of action by a foreign country denying "similar or like 

privileges” to American investors. We would be glad to provide advice in such situations should the 

occasion arise. See generally 30 U.S.C. §§ 184(hXl) & 188(a); Dames & Moore v. Regan, 453 U.S. 654 

(1981).

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