Angelina Holly Corp. v. Clark

Citation587 F. Supp. 1152
Decision Date29 March 1984
Docket NumberCiv. A. No. 83-1212.
PartiesThe ANGELINA HOLLY CORPORATION, Plaintiff, v. William P. CLARK, Secretary of the Interior, et al., Defendants.
CourtUnited States District Courts. United States District Court (Columbia)

John P. Foley, Jr., Marcus W. Sisk, Jr., Sisk, Foley, Hultin & Driver, Washington, D.C., for plaintiff.

Pauline H. Milius, U.S. Dept. of Justice, Washington, D.C., for defendants; Mark K. Seifert, Dept. of the Interior, Washington, D.C., of counsel.

MEMORANDUM OPINION

JUNE L. GREEN, District Judge.

This matter is before the Court on the parties' cross-motions for summary judgment. For the reasons stated below, the Court denies plaintiff's motion for summary judgment and grants defendants' motion for summary judgment.

Statement of Facts

The facts in this action are undisputed. At issue here is the defendants' rejection of plaintiff Angelina Holly Corporation's ("Angelina Holly") offers for certain noncompetitive oil and gas leases. As authorized by the Mineral Leasing Act of 1920 ("the Leasing Act"), 30 U.S.C. § 181 et seq.,1 the Secretary of Interior ("the Secretary") is charged with the duty of leasing certain Federal lands for oil and gas deposits. The leasing of these lands is done either on a competitive bidding basis within any "known geological structure of a producing oil and gas field ...",2 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 ("KGS"). 30 U.S.C. § 226(c).

On February 22, 1980, Angelina Holly, a Texas corporation, filed with defendant, Bureau of Land Management of the United States Department of the Interior ("BLM"), New Mexico State Office, noncompetitive over-the-counter offers for oil and gas leases (numbered NM-A40368 TX, NM-A40369 TX, NM-A40370 TX, NM-A40371 TX, NM-A40372 TX, NM-A40373 TX, NM-A40374 TX, and NM-A40375 TX) on certain parcels of land in Giddings Field which are located in the Giddings/Somerville area of East Texas.

On September 11, 1979, prior to plaintiff's filing of its noncompetitive over-the-counter offers, similar offers (numbered NM-48308 TX, NM-A38409 TX, NM-A38410 TX, NM-A38411 TX, and NM-A38413 TX) were filed by Mr. Charles E. Davidson on parcels of land also located in Giddings Field. Included in the parcels on which Mr. Davidson submitted offers were tracts 305, 306, and 307 in Segment 3. Included in Angelina Holly's offer NM-A40370 were tracts 301, 303, 304, 308, and 313, also in Segment 3, and contiguous to the tracts filed by Mr. Davidson. Mr. Davidson's tract 305 lies between and is contiguous to tracts 301, 303, and 304 for which plaintiff submitted offers. Mr. Davidson's tract 306 lies between and contiguous to tracts 308 and 313 for which plaintiff submitted offers. Also, tract 308 for which plaintiff submitted an offer lies between and is contiguous to Mr. Davidson's tracts 306 and 307.

On December 1, 1980, Mr. Davidson was issued noncompetitive leases for the parcels of land, including tracts 305, 306, 307, and 330.

In a memorandum dated November 21, 1981 from the District Supervisor, Resource Evaluation Branch of the United States Geological Survey ("Survey"), Tulsa, Oklahoma, to the Chief, Oil and Gas Section of the BLM, New Mexico, the Survey indicated that they were "deferring structural determinations on a number of lease applications. The reasons for the delay are nearby producers or drilling wells that could result in KGS's being established." Exhibit C, Plaintiff's Complaint for Declaratory and Injunctive Relief ("Complaint"). The memorandum concluded by stating that a number of noncompetitive offers were being held in abeyance, including plaintiff's offers. Id.

On December 9, 1981, the Director of the Survey issued a memorandum extending the undefined KGS in the Giddings Field region into areas where plaintiff had submitted its noncompetitive offers for oil and gas leases. The Director determined that there was every reason to believe that the extended areas would be productive given the field studies and recent developments in oil production in the Giddings Field area.

Based on the December 9, 1981 undefined KGS extension of Giddings Field, the BLM rejected Angelina Holly's noncompetitive lease offers on February 3, 1982. The BLM stated that "all the lands in the offers are within an extension to the undefined known geologic structure of the Giddings Field .... Therefore, these lands are available for leasing only for competitive leasing under 43 C.F.R. 3120." Exhibit D, Complaint.

On February 22, 1982, pursuant to the applicable regulations, plaintiff gave notice of appeal from the BLM's decision rejecting plaintiff's offers. Plaintiff timely filed its statement of reasons for the appeal with the Interior Board of Land Appeals ("IBLA") on March 8, 1982.

Finally, on January 27, 1983, the IBLA affirmed BLM's decision to reject plaintiff's offers. Angelina Holly Corporation, 70 IBLA 294 (1983).

The average time for processing noncompetitive over-the-counter oil and gas offers from September 1979 through February 1980 in the BLM's New Mexico State Office was approximately 19 months. The longest processing period for such an offer was 29 months, and the shortest period was 7 months. Affidavit of Jacqueline Morales, Oil and Gas Adjudicator, BLM, New Mexico State Office, Defendants' Motion for Summary Judgment. ("Morales Affidavit"). Mr. Davidson's offers were processed within 13 months of his applications and the Angelina Holly offers were processed within 24 months of its applications.

Conclusions of Law

Plaintiff attacks the Interior Department's ("Interior") final agency decision on two grounds: first, that it and the BLM misapplied the regulatory test for determining the existence of a KGS and second, that there was an abuse of administrative discretion by the BLM through inconsistent and discriminatory treatment of plaintiff by rejecting its noncompetitive lease applications while accepting another similarly situated offeror's applications who applied nearly six months before plaintiff.

The Court has the power to review agency determinations under chapter seven 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 the 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, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (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.1979), cert. denied, 446 U.S. 982, 100 S.Ct. 2962, 69 L.Ed.2d 838 (1980); Duesing v. Udall, 350 F.2d 748, 751 (D.C.Cir.1965), cert. denied, 383 U.S. 912, 86 S.Ct. 888, 15 L.Ed.2d 667 (1966). Finally, when an agency decision involves matters of scientific expertise, the Court must show great deference to those agency determinations. See Baltimore Gas and Electric Co. v. National Resources Defense Council, 103 S.Ct. 2246, 2256, 76 L.Ed.2d 437 (1983) ("When examining ... scientific determinations ... a reviewing court must generally be at its most deferential.").

Plaintiff first challenges the Secretary's designation of certain parcels in the Giddings Field area to be within a KGS. Plaintiff argues that the BLM and the IBLA failed to follow their own regulations when they misapplied Interior's definition of a KGS to the tracts at issue and that the geological facts demonstrate that no KGS's are within said tracts.

The Court, however, does not agree. The Mineral Management Service ("MMS")3 conducted a careful study of Giddings Field, which included an examination of all wells located near Federal acreage to determine the possible extent of the producing reservoirs. The study concluded that:

unless it can be shown by appellants that a producing oil or gas reservoir definitely does not exist under any part of a nearby Federal mineral tract, then it is the position of the Minerals Management Service that there is a reasonable probability that all of the Federal mineral tracts in this portion of the Giddings Field are underlain by the reservoir of a producing oil or gas field, and that all of the Federal mineral tracts are presumptively productive of oil or gas. Therefore, they should be leased competitively.

Defendants' Motion for Summary Judgment, attachment 1, Letter of Mr. Charles John, District Supervisor, Resource Evaluation, Mineral Management Service, April 16, 1982. Based on material presented by the MMS, the IBLA affirmed the BLM's decision and concluded that there is a "reasonable probability that the land in question is underlain by a reservoir of a producing oil and gas field." Angelina Holly Corporation, 70 IBLA 294.

Plaintiff argues that IBLA's conclusion that the tracts at issue have a "reasonable probability" of being within a KGS is not the proper standard for determining the existence of a KGS. Plaintiff contends that the term "structure" is a scientific geological term ... and is not subject to opinion or conjecture but must be determined by accepted geographical data. Id., attachment 1, Letter of Angelina Holly to BLA, March 5, 1982 at 2.

Plaintiff, however, misunderstands the standard that is applied by Interior when determining the existence of a KGS. When Congress enacted the Leasing Act, the Secretary was afforded a significant amount of discretion in determining where a KGS is located. The reasons for this are the difficulties in determining the limits of a productive field. See generally, Oil Leasing Lands, Hearings Before the Committee on...

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    ......456, 27 L.Ed.2d 440 (1971); Angelina Holly Corp. v. Clark, 587 F.Supp. 1152, 1156 ... for dismissal for want of jurisdiction, Fed.R.Civ.P. 12(b)(1), or motion for summary judgment, ......
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