United States v. Gratoit
On May 18, 1796, Congress directed that surveys note "all mines, salt licks, salt springs, and mill seats," and that a mile square around every salt-spring be "reserved for the future disposal of the United States." On May 10, 1800, Congress added, "that the land of the United States reserved for future disposition, might be let on leases by the surveyor-general, for terms not exceeding seven years."
When Ohio was formed into a State from the Northwest Territory, Congress stipulated on April 30, 1802 and March 3, 1803, that the reserved salt-springs should remain unsold "for the use of the people of the state" under regulation of the legislature. Leases of these salt-springs could not run more than 10 years.
In 1804, an act was passed for the "disposal of public lands in the Indiana Territory" reserving "the several salt-springs in said territory" together with adjacent lands "for the future disposal of the United States."
On March 3, 1807 Congress passed "An Act making provisions for the disposal of the public lands situate[d] between the United States military tract and the Connecticut reserve, and for other purposes." (The military lands were those now called "West Point." The area in question was ceded land within the Northwest Territory, including the Indiana Territory.) The Act withdrew unappropriated land from settlement. Any prior settlers were allowed to remain as "tenants at will" with the approbation of the President. However, if the settled land included a spring or mine, the "tenant" was not allowed to work it without further "approbation" of the President. The President was authorized to lease such springs and mines "for a term not exceeding five years."
Also, on March 3, 1807, Congress passed U.S. Statutes At Large, Ninth Congress, Sess. II, Ch. 46, pp. 445-446 "An Act to prevent settlements being made on lands ceded to the United States, until authorized by law." This act appears to have been enacted at the time of the organization of the territories of New Orleans and Missouri from lands ceded to the United States (not the federal government) by the Louisiana Purchase.
The case of United States v. Gratiot, 39 U.S. (14 Pet.) 526; 10 L.Ed 573, (1840) concerned the question of whether the President had the authority to operate, lease or contract services of a government owned lead mine. The statutory authority was based on the 1807 Act (regarding lands between West Point and Connecticut reservation,) enacted when the mine was still part of ceded Indiana Territory, before entry of Illinois into the Union. The Constitutional authority was based on the premise that the lands and mines were real property ("right of soil",) the title to which had been transferred through deeds of cession by the original states to the federal (confederate) government or "United States in Congress Assembled." In effect, it was land "owned" by all of the original States.
The Constitution of the United States in Article 4, Section 3 specifically authorizes:
"That Congress shall have the power to dispose of and make all needful rules and regulations respecting the territory or other property, belonging to the United States."
Justice Thompson for the Court elaborated:
..."The term 'territory' as here used, is merely descriptive of one kind of property, and is equivalent to the word 'lands.' And Congress has the same power over it as over other property belonging to the United States; and this power is vested in Congress without limitation, and has been considered the foundation upon which the territorial government rests."
The defendant in the case had pointed out that there were no such government leases on lead mines established in the Missouri territory (west of the Mississippi) that survived statehood. It was noted that upon entry into the Union "the whole system was driven out of the State of Missouri. In that state there is no longer a body of tenantry, holding under leases from the United States."
The distinction made was that the right of lease is an incidence of ownership of property. The lands and mines of the Northwest Territories, (including Illinois,) were real property ceded in ownership title from the States to the federal government. The right to lease was exercised as a right of ordinary ownership of real property by the federal government that survived statehood. (See Pollard v. Hagan) The Constitution defined this right of ownership as the power to dispose of and make all needful rules and regulations respecting property owned by the federal government, including land.
Missouri, which is west of the Mississippi, was acquired as a cession of sovereign title and dominion from one nation to another. The lands and mines were, therefore, not "owned" as "property" of the federal government. Upon statehood, the only power the federal government legitimately retained over their disposal was that as a tribunal, assuring that "equitable interests" had been adjudicated by the State, that "Indian occupancy" had been extinguished and that international treaty obligations had been discharged.
The federal government did not "own" these lands as a proprietor, but, upon ensuring national obligations were discharged, merely held the lands and resources as a trustee for the sovereign people of the future States.
Unfortunately, the distinction between federal status toward the eastern and western "public lands" has become blurred and, although, eastern public lands have been disposed of, Western public lands are still retained and treated as if they were real property of the federal government.