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04/25/58 Max Barash, v. Fred A. Seaton

April 25, 1958




Before EDGERTON, Chief Judge, and BAZELON and FAHY, Circuit Judges.



BAZELON, Circuit Judge.

On June 5, 1953, appellant filed an application with the Secretary of the Interior for a noncompetitive oil and gas lease covering 954.51 acres of acquired land. *fn1 Acquired land is Government owned land acquired from private ownership. Public land is Government owned land which was part of the original public domain. For leasing procedures, both are governed by the provisions of § 17 of the Mineral Leasing Act of 1920, as amended, 30 U.S.C.A. § 226. *fn2

These provisions require the Secretary to issue a lease to the first qualified applicant, providing the land is not within any known geologic structure of a producing oil or gas field. If the land is within such structure, it must be leased to the highest responsible qualified bidder by competitive bidding. The question whether lands are within such structure is one of fact which the Secretary has delegated to the Director of the Geological Survey who is required by the Secretary's regulations to define the boundaries of the structure and delimit the definition on maps filed in the appropriate field offices. 43 C.F.R. 192.6. Notices of these determinations have been published in the Federal Register since the effective date of the Administrative Procedure Act of June 11, 1946, c. 324, § 3(a)(3), 60 Stat. 238, 5 U.S.C.A. § 1002(a)(3).

It has been stipulated that Barash "was and is the person first making application for a noncompetitive lease covering the 954.51 acres who is qualified to hold a lease under the Act." And the Secretary admits that "no map or diagram was placed on file . . ." by the Director of Geological Survey, nor was there publication in the Federal Register.

In September 1954, more than a year after Barash filed his application, he learned, in the course of trying to expedite issuance of his lease, that the land had been offered for competitive leasing in July 1953 and that three leases had issued, all without notice to him: two leases to the Texas Company, effective September 1, 1953, totaling 916.21 acres; and one to Baker & Taylor, effective October 1, 1953, for 38.30 acres. Thereupon Barash protested to the Secretary and requested cancellation of these competitive leases and the issuance of his lease. Subsequent administrative proceedings disclosed that the Bureau of Land Management had based its decision to offer the lands in question for competitive leasing on a memorandum to the Bureau from the Acting Director of the Geological Survey, in reply to an inquiry by the Department of Agriculture which exercised administrative control of the acquired lands in question. The memorandum, dated June 12, 1952 - a year before appellant filed his application - reads, in pertinent part:

". . . The Department of Agriculture, Soil Conservation Service, has inquired of the Geological Survey whether it is in the best interests of the United States to offer for competitive lease sale certain lands in Gray County, Texas.

"The records of the Geological Survey disclose that this land may be subject to drainage of its oil and gas content as the subject area is on the southern edge of the Panhandle field. In order that the extent and worth of the deposits in the field may be determined and development may proceed in an orderly manner, the Geological Survey recommends that the oil and gas rights owned by the United States within the area involved be offered for lease in accordance with the competitive leasing provision of the Mineral Leasing Act, as amended."

Following appellant's protest, the Bureau of Land Management requested the Geological Survey to "be advised as to the date on which this land was determined to be within the known geologic structure of the Panhandle Field and whether such determination was effective as to all the lands embraced in [appellant's] application." The Acting Director gave the following advice on February 11, 1955:

"As of June 12, 1952, when the Geological Survey reported that the Lake McClellian Park Lands 'may be subject to drainage,' no determination had been made as to whether all of the lands were or were not within a known geologic structure.

"A review of the structural aspects of the lands involved has been made as of June 5, 1953, the date of filing of [appellant's] application. This review shows that part of the lands on which competitive leases were sold in July 1953 are not within a known geologic structure as those limits were deemed to exist on June 5, 1953.

"The lands believed to be within the known geologic structure are confined to surveys (sections) 9 and 10 of the subdivision of the Rockwell County School Land, Gray County, Texas [totaling 335.90 acres]. The remainder of the lands [totaling 618.61 acres] were not within a known geologic structure on June 5, 1953."

Based upon the foregoing memorandum, the Bureau of Land Management held that (1) appellant was entitled to a lease on the 618.81 acres because they "were not then and are not now situated on a known geologic structure"; and (2) appellant was not entitled to a lease on the remaining 335.90 acres because they "were actually defined as being on the known geologic structure of Panhandle Field prior to June 5, 1953 [the date of appellant's application]." Upon appeal by both parties, the Secretary decided against appellant as to the entire 954.51 acres. Appellant thereupon brought this suit to review the ...

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