In a decision dated March 19, 1970, the Office of Appeals and Hearings, Bureau of Land Management, acting for the Director, Bureau of Land Management, vacated the land office decision of September 24, 1969, and rejected all nine lease offers for the reason that the lands applied for are within the known geologic structure of a producing oil field and are, therefore, not subject to noncompetitive leasing and for the additional reasons that each of the lease offers failed to describe all of the accreted land available for leasing.
Plaintiff appealed to the Secretary of the Interior from the Bureau's decision, charging that the Office of Appeals and Hearings had committed error in:
1. Finding that Plaintiff should have described additional accreted land;
2. Permitting Texaco, Inc., to appeal from a decision by which it was not adversely affected;
3. Failing to recognize unjustifiable delay by the land office in the processing of plaintiff's lease offers; and
4. Holding that lands determined, subsequent to the filing of a noncompetitive oil and gas lease offer but prior to issuance of a lease to be within the limits of a known geologic structure, are subject only to competitive leasing.
Neither Texaco nor Chevron appealed from the Bureau's decision.
By its decision of September 10, 1971, the Board of Land Appeals, speaking for the Secretary of the Interior, affirmed the Bureau's decision upon a determination that:
1. Texaco's appeal from the land office decision was properly entertained by the Director, Bureau of Land Management;
2. Lands on a known geologic structure of a producing oil or gas field are not subject to noncompetitive oil and gas leasing; and
3. The filing of an offer for a noncompetitive oil and gas lease vests no rights in the offeror, and the determination, after the filing of a lease offer but before issuance of a lease, that land is within the limits of a known geologic structure precludes the issuance of a noncompetitive lease.
Finding the last point to be determinative of the matter, the Board did not consider the correctness of the Bureau's determination that plaintiff failed to describe all of the accreted land in section 17 available for leasing in accordance with the pertinent regulation.
On December 7, 1971, Plaintiff filed the Complaint herein, seeking judicial review of the Board's decision.
There are three basic issues presented by the parties' cross motions for summary judgment.
1. Did the Land Office decision of September 24, 1969 constitute formal acceptance of Plaintiff's lease offers and did that decision vest in Plaintiff any equitable right to receive the leases in question?
2. Was Defendant required under the provisions of the Mineral Leasing Act, as amended, and pertinent regulations thereto to award Plaintiff leases on a noncompetitive basis for lands which were discovered after filing but before acceptance to be within the limits of a known geologic structure and therefore statutorily subject only to competitive leasing?
3. Were the regulations complained of promulgated contrary to law?
A. The Land Office Decision of September 24, 1969 Did Not Constitute Acceptance of Plaintiff's Lease Offers, Nor Did It Vest in Plaintiff an Equitable Right to Receive a Lease
It is clear from the express language of Section 17 of the Mineral Leasing Act, as amended, 30 U.S.C. § 226, that public lands of the United States "which are known or believed to contain oil or gas deposits may be leased" [Sec. 226(a)] by the Secretary of the Interior and that, "if the lands to be leased are not within any known geological structure of a producing oil or gas field, the person first making application for the lease who is qualified to hold a lease * * * shall be entitled to a lease of such lands without competitive bidding." [Sec. 226(c)]. The Courts have long construed these provisions as giving the Secretary broad discretion in the issuance of oil and gas leases, the only limitation upon his discretion (as to land which is not within any known geologic structure of a producing oil or gas field) being that, if the land is leased, it must be leased to the first person making application therefor who is qualified under the statute and applicable regulations to receive a lease. Udall v. Tallman, 380 U.S. 1, 4, 85 S. Ct. 792, 13 L. Ed. 2d 616 (1965), rehearing denied, 380 U.S. 989, 85 S. Ct. 1325, 14 L. Ed. 2d 283; Duesing v. Udall, 121 U.S. App. D.C. 370, 372, 350 F.2d 748, 750 (1965); Pease v. Udall, 332 F.2d 62, 63-64 (C.A. 9, 1964); Thor-Westcliffe Development, Inc. v. Udall, 114 U.S. App. D.C. 252, 254, 314 F.2d 257, 259 (1963), cert. denied, 373 U.S. 951, 83 S. Ct. 1681, 10 L. Ed. 2d 706. Given this broad discretion of the Secretary and the explicit statutory limitation, the courts have consistently held that no right to receive an oil and gas lease is obtained by the filing of a lease offer, even though the offeror be the "first qualified applicant," and that the Secretary may determine at any time prior to the acceptance of a lease offer not to lease particular land even if offers for such land were filed long before the determination not to lease or were filed in response to a direct invitation to file. Udall v. Tallman, supra ; Schraier v. Hickel, 136 U.S. App. D.C. 81, 83-85, 419 F.2d 663, 665-667 (1969); Duesing v. Udall, supra ; Haley v. Seaton, 108 U.S. App. D.C. 257, 260-261, 281 F.2d 620, 623-624 (1960).
Moreover, a reading of the pertinent Department of Interior regulations and applicable case law quickly dispels Plaintiff's argument that the Eastern States Land Office decision of September 24, 1969 was a formal acceptance of his lease offers by the United States.
The regulations prescribing the procedures for obtaining a noncompetitive oil and gas lease provide, and provided at the time Plaintiff filed his offers, that:
The United States will indicate its acceptance of the lease offer, in whole or in part, and the issuance of the lease by the signature of the appropriate officer thereof in the space provided. * * * [43 CFR 3111.1-1(c), formerly 43 CFR 3123.5(b), 29 F.R. 4511 (1964).]