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WASSERMAN v. UDALL

October 22, 1964

Jacob N. WASSERMAN, Plaintiff,
v.
Stewart L. UDALL, Secretary of the Interior, Defendant



The opinion of the court was delivered by: WALSH

This matter came before the Court on cross motions for summary judgment filed on behalf of Plaintiff, Defendant and Intervenor-Defendant.

Plaintiff, Wasserman, seeks a declaratory judgment to enjoin the Secretary of the Interior from issuing a lease for certain oil and gas lands located in Maryland to any party other than plaintiff. Plaintiff alleges that an adverse decision of the Secretary of the Interior as to the priority of Plaintiff's offer to lease the land was arbitrary and capricious, as plaintiff was the person first making proper application for a non-competitive lease of said lands, and who is qualified to hold a lease under the Mineral Leasing Act for Acquired Lands, 30 U.S.C. § 352 et seq.

 Defendant, the Secretary of the Interior, contends that plaintiff's offer was defective in that it failed to comply with the regulations; that when the Intervenor-defendant filed its offer this deficiency had not been corrected; and further that plaintiff has not exhausted his administrative remedies, and the same will not be exhausted until such time as plaintiff's lease offer should be rejected.

 The Intervenor, New York State Natural Gas Corporation, contends the decision of the Assistant Solicitor in finding the offer of plaintiff defective was proper; that such defect continued for failure of plaintiff to comply with the regulations; and that Intervenor's offer was the first offer to properly meet the requirements of the regulations.

 The parties are in agreement as to the applicable statutes, rules and regulations, and the procedural steps followed, and have stipulated as to copies of documents to be received in evidence, comprising the proceedings before the Department of the Interior.

 By authority of the Mineral Leasing Act of 1920, as amended, 30 U.S.C.A. § 226, the Secretary of the Interior may lease public lands subject to the Act if they are known or believed to contain oil or gas deposits. If lands to be leased are not within any known geologic structure of a producing oil or gas field, Sec. 226 requires that the Secretary issue a lease to the first qualified applicant without competitive bidding. If the lands are within a known geologic structure of a producing oil or gas field, they must be leased to the highest responsible qualified bidder by competitive bidding. By the Act of August 7, 1947, 30 U.S.C.A. § 352, the Secretary was authorized to also lease lands acquired by the United States.

 Pursuant to authority, the Secretary promulgated rules and regulations governing noncompetitive oil and gas leases, one of which, set out at 43 C.F.R. 200.7(d), provides that it shall not be in the public interest to grant a lease to one who would own less than a majority interest in the operating rights in any tract. In order to determine whether the offeror would own less than a majority, the regulation provides:

 'An offer for a fractional present interest noncompetitive lease * * * must be accompanied by a statement showing whether the offeror owns the entire operating rights to the fractional mineral interest not owned by the United States in each tract covered by the offer to lease, and if not, the extent of the offeror's ownership in the operating rights in each tract, and the names of the parties who own operating rights in such fractional interests.'

 Another regulation, set out at 43 C.F.R. 200.8(d), provides in part:

 'Each offer must describe the land * * * if not surveyed (by the public lands survey) by a metes and bounds description * * * in a manner consistent with the description in the deed conveying such lands to the United States.'

 The land in question is part of Tract 186, Garrett County, Maryland, acquired by the United States under the deed of J.C. and Elmer R. Gaut dated February 24, 1937. This land was conveyed to the State of Maryland and is within the Savage River State Forest, the United States having reserved a 75 per cent interest in the mineral deposits. Since said land is not within any known geologic structure of a producing oil or gas field, the mineral rights may be leased by the United States to the first qualified offeror without competitive bidding.

 The first offer to lease was filed by New York Gas, Intervenor herein, on February 13, 1958 (CLM-A 046107), the land description is given in metes and bounds, and was taken from the U.S. Forest Service records.

 Plaintiff's offer, (BLM-A 04272) was filed March 11, 1958, and the land description is also in metes and bounds and is from the Land Records of Garrett County, Maryland, Vol. 114, at folio 497.


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