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GENDELMAN v. WATT

August 28, 1984

Alvin B. GENDELMAN, Plaintiff,
v.
James G. WATT, Defendant



The opinion of the court was delivered by: PARKER

 BARRINGTON D. PARKER, District Judge:

 This matter comes before the Court on the parties' cross motions for summary judgment. The issue presented is whether the action of the defendant, the Secretary of the Interior ("Secretary"), in rejecting the plaintiff's application for a mineral lease was arbitrary and capricious. For the reasons set forth below, the Court determines that the Secretary's action was not arbitrary and capricious, and grants summary judgment in favor of the defendant.

 FACTUAL BACKGROUND

 Although the parties concede that this case involves no disputed issues of fact, a short description of the mineral lease program is a useful prelude to understanding the plaintiff's arguments about the mineral lease in question. In May, 1981, the plaintiff, Alvin B. Gendelman applied for a mineral lease for land located in Montana, under a program administered by the Department of the Interior ("Department"). This program allows individuals and other entities to file lease applications for government land which is located outside of any known oil or gas producing field. Mineral Lands Leasing Act of 1920 ("Act"), 30 U.S.C. § 226 et seq. Under this "simultaneous filing" system, the Department, through state offices of the Bureau of Land Management ("BLM"), publishes a bi-monthly list of available parcels of land, announces a filing deadline for applications, and uses a lottery to select a priority applicant from the list of applicants who have timely filed applications. This applicant must comply with certain express regulatory requirements in order to finally obtain approval for the lease. 43 C.F.R. § 3112.5-1(b). If the priority applicant fails to satisfy these requirements, an alternative applicant whose application complies with these requirements is selected. 43 C.F.R. § 3112.4-1.

 In this case, the plaintiff's application was submitted by a filing service. Lease filing services are commonly employed by individuals to file numerous applications in their behalf for different tracts of available land in the mineral leasing program. When a lease filing service submits an application on behalf of an individual, the service must show that it has current authority to serve as an agent with respect to that application. At the time the plaintiff submitted his application, the agency authority requirement could be satisfied in one of three ways. First, the applicant could submit a personal statement or copy of the contract which created the agency relationship with each lease application. 43 C.F.R. § 3102.2-6(a). Second, the agent could file a single copy of its standard form contract and a list of the lease applicants who were parties to the contract. These two documents were to be filed within 15 days of the application, and the list had to include the names and addresses of each applicant. 43 C.F.R. § 3102.2-6(b). Third, the filing service could request BLM to maintain a file which contained a statement or contract describing the agency relationship with one or more clients. BLM then assigned a serial number to the file, and the agent could then include that serial number on each lease application filed on behalf of the named clients. In order for an applicant to utilize this reference system, the BLM file had to contain a current statement of the agency relationship. 43 C.F.R. § 3102.2-1(c).

 On July 14, 1980, the plaintiff executed a standard-form contract with two filing services, Stewart Capital Corporation ("Stewart") and Melbourne Concept Inc. ("Melbourne"), which gave the two services authority to file lease applications on behalf of the plaintiff. The contract was for the first bimonthly filing period, but Paragraph 13 of the contract provided for renewals for subsequent filing periods. Annex C to the contract provided that these renewals were to be "on all the same terms, conditions and representations as set forth in the previous filing service agreement."

 In a decision dated February 11, 1982, the Montana State Office of BLM rejected Gendelman's lease application for the reason that it did not comply with either of the three alternatives for substantiating Stewart's authority to act on Gendelman's behalf. The Interior Board of Land Appeals ("Board") affirmed the Montana decision as modified. 67 IBLA 333 (Oct. 1, 1982). The Board found that Gendelman had not complied with section 3102.2-6(b), 67 IBLA 336, and that the reference file did not satisfy the requirements of section 3102.2-1(c) because "there was no updated authorization in the file for Stewart to act for [Gendelman] in the May 1981 drawing." Id. at 337. *fn1" The Board also rejected Gendelman's argument that the lease should issue because the Montana State Office had previously approved a lease application which contained deficiencies similar to those in Gendelman's application. The Board noted that although BLM's action in a "prior situation" may have been inconsistent, BLM's interpretation of the regulations in this case was nevertheless proper. Id. at 339.

 LEGAL ANALYSIS

 Courts have consistently applied the arbitrary and capricious standard of review to the Secretary's rejections of noncompetitive oil and gas leases. See, e.g., Brick v. Andrus, 202 U.S. App. D.C. 213, 628 F.2d 213, 214 (D.C.Cir.1980). In this case, the arbitrary and capricious standard governs the crux of the dispute between the parties: whether the Secretary's strict interpretation of the applicable regulations, as applied to Mr. Gendelman, was reasonable. The plaintiff's argument that his application met the technical requirements of the regulations was fully argued at the administrative level, and properly rejected by both BLM and the Board. Thus, the issue for the Court's consideration is whether Gendelman's compliance with the regulations, while concededly imperfect, was not so imperfect that his application should have been rejected.

 In this circuit, the Secretary may strictly enforce the application requirements of the simultaneous filing system, and may reject applications which do not fully comply with the per se requirements of the regulations. Brick v. Andrus, 628 F.2d at 216. *fn2" The Secretary, however, may not demand strict compliance if the rules do not properly notify the applicants of applicable requirements, or if these rules are not consistently applied. Id.

 In this case, the Secretary's interpretation of the regulations, while strict, was not improper, and the administrative flaws noted in the Brick analysis were not present here. The regulations were not ambiguous, and they properly put applicants on notice of the requirements for showing agency qualification. Section 3102.2-1(c) stated that a "serial number shall not be used if the statement on file is not current," and the preamble to the final BLM rulemaking rejected:

 
comments [which] suggested that the requirement of the proposed rulemaking that all statements of qualifications be kept current was too great a burden to place on an applicant. . . . No application or offer will be accepted unless ...

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