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SATELLITE 8301123 v. HODEL

November 21, 1986

SATELLITE 8301123, et al., Plaintiffs
v.
DONALD P. HODEL, Secretary of the United States Department of Interior, Defendant



The opinion of the court was delivered by: GREEN

Plaintiffs seek judicial review of a decision by the Interior Board of Land Appeals ("the Board" or "IBLA"), United States Department of Interior, in Satellite 8211104, et al., 89 IBLA 388 (Nov. 23, 1985). In that decision, the Board affirmed decisions by the New Mexico State Office, Bureau of Land Management ("BLM"), rejecting applications filed by plaintiffs in 1983 for three oil and gas leases on federal lands in New Mexico. Both parties have moved for summary judgment. For the reasons set forth below, the Court grants summary judgment in defendant's favor, affirming the Board's decision.

 Background

 There are no material facts in dispute. As authorized by the Mineral Leasing Act of 1920 ("the Leasing Act"), 30 U.S.C. §§ 181 et seq., the Secretary of the Interior ("the Secretary") is charged with the duty of leasing certain federal lands for oil and gas deposits. The leasing of these lands is accomplished either on a competitive bidding basis within any "known geological structure of a producing oil or gas field. . . .", 30 U.S.C. § 226(b), or on a noncompetitive basis to the first qualified applicant where the lands are not within a known geological structure. 30 U.S.C. § 226(c). This case involves applications for noncompetitive leases.

 Pursuant to 30 U.S.C. § 189, the Secretary has promulgated regulations governing what is known as a simultaneous oil and gas ("SOG") leasing system for issuing noncompetitive oil or gas leases. 43 C.F.R. Subpart 3112 (1982). *fn1" Under this system, the BLM posts a bi-monthly list of parcels available for SOG leasing. Persons desiring to lease a particular parcel must file an application for that parcel within fifteen working days after the list is posted. 43 C.F.R. § 3112.1-2. All applications received for a particular parcel within this "filing period" are deemed simultaneously filed. A computerized, random selection is then conducted and three applications are selected for first, second, and third priority. 43 C.F.R. § 3112.3-1. If the first selected applicant is determined to be qualified and his application is otherwise satisfactory, the BLM may issue him an SOG lease. If the first selected application is rejected, the second and third applications are considered in order. Id.

 Satellite Energy Corporation ("SEC") is a lease filing service which, among other things, forms "pools" of applicants from its clientele to participate in the SOG system. Among the pools formed by SEC are the plaintiffs Satellite 8301123, Satellite 8305121, and Satellite 8303155. Each pool is composed of individual United States citizens who have minimum five percent equity interests in the pool. In addition, the pool members pay SEC a fee for assistance in selecting which parcels to apply for and in completing the lease applications. See Administrative Record ("A.R.") at A 27-41.

 In January 1983, Terence Corwin, in his capacity as president of SEC, submitted an SOG application for lease parcel NM 213 (lease serial number NM 56398) and paid the required filing fee on behalf of Satellite 8301123. This application was selected with first priority in February 1983, and BLM sent a lease form for NM 56398 to the address listed for Satellite 8031123 on the SOG application: 10 Siracusa Blvd., Smithtown, New York 11787. This lease form was executed by Terence Corwin as nominee of Satellite 8301123 on June 28, 1983, and was returned to the BLM. A.R. at A 15, 54-60.

 In March 1983, Michael Corwin, as vice-president of SEC, submitted an SOG application for lease parcel NM 246 (lease serial number NM 56771) and paid the required filing fee on behalf of Satellite 8303155. In April 1983, this application was selected with first priority for lease serial number NM 56771. A.R. at B 11, 29.

 In May 1983, Terence Corwin, in his capacity as president of SEC, submitted an SOG application for lease parcel NM 107 (lease serial number NM 57135) on behalf of Satellite 8305121. In June 1983, this application was selected with second priority for lease serial number NM 57135. BLM subsequently rejected the SOG application selected with first priority, thereby elevating the application of Satellite 8305121 to first priority. A.R. at C 49, 97.

 The address listed for Satellite 8301123, Satellite 8303155, and Satellite 8305121 on all three of these SOG applications submitted by SEC was the same: 10 Siracusa Blvd. Smithtown, New York 11787. This address was the residence of Terence Corwin. A.R. at A 24. By decisions dated August 29 and September 28, 1983, the New Mexico State Office of the BLM rejected the applications submitted by SEC for lease serial numbers NM 56898, NM 56771, and NM 57135. The basis for these decisions was the BLM's conclusion that the address listed for the individual Satellite applicants "is effectively '. . . the address of any other person or entity which is in the business of providing assistance to those participating in the simultaneous oil and gas leasing system,' thereby violating Title 43, C.F.R. 3112.2-1(d)." Satellite 8211104, et al., 89 IBLA at 390 (quoting from BLM decisions of August 29 and September 28, 1983).

 Satellite 8301123, Satellite 8305121, and Satellite 8303155, through the same counsel, appealed to IBLA. A.R. at A 49-51, C 43-44. By decision dated November 22, 1985, the IBLA affirmed the BLM's rejection of the three applications, finding that each of the Satellite applicants violated the prohibition against using a filing service's address in lieu of the applicant's. 43 C.F.R. § 3112.2-2(d). In addition, the Board determined that the application and executed lease form submitted on behalf of Satellite 8301123 was invalid because the articles for that pool, authorizing Terence Corwin to act as attorney-in-fact in executing SOG lease offers, failed to prohibit him from executing SOG lease offers on behalf of any other participants. 43 C.F.R. § 3112.6-1(b)(1)(i).

 Discussion

 A. The Standard of Review

 The Court has the power to review agency determinations under Chapter 7 of the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 704, 706. Under section 706 of the APA, the Court may set aside an agency action only where it is shown to be "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). It is plain that the standard of review is a narrow one and that the Court cannot substitute its own judgment for that of the agency. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 28 L. Ed. 2d 136, 91 S. Ct. 814 (1971). The Court further recognizes that there must be a judicial presumption favoring the validity of administrative action, particularly where the Congress has empowered the agency with considerable discretion. E.g., Wilderness Public Rights Fund v. Kleppe, 608 F.2d 1250, 1254 (9th Cir. ...


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