Boesche v. Udall

• Decision Date: 27 May 1963
• Docket Number: No. 332,332
• Citation: 373 U.S. 472,83 S.Ct. 1373,10 L.Ed.2d 491
• Parties: Fenelon BOESCHE, Administrator, etc., Petitioner, v. Stewart L. UDALL, Secretary of the Interior
• Court: U.S. Supreme Court

373 U.S. 472

83 S.Ct. 1373

10 L.Ed.2d 491

Fenelon BOESCHE, Administrator, etc., Petitioner,

v Stewart L. UDALL, Secretary of the Interior.

No. 332.

Argued Feb. 25, 1963.

Decided May 27, 1963.

Leon BenEzra, Washington, D.C., for petitioner.

Archibald Cox, Sol. Gen., for respondent.

Mr. Justice HARLAN delivered the opinion of the Court.

The question presented in this case is whether the Secretary of the Interior has authority to cancel in an administrative proceeding a lease of public lands issued under the provisions of the Mineral Leasing Act of 1920, 30 U.S.C. §§ 181 et seq., in circumstances where such lease was granted in violation of the Act and regulations promulgated thereunder. Because of a seeming conflict in principle between the decision of the Court of Appeals in this case, 112 U.S.App.D.C. 344, 303 F.2d 204, and that of the Court of Appeals for the Tenth Circuit in Pan American Petroleum Corp. v. Pierson, 284 F.2d 649, and also because of the importance of the question to the proper administration of the Mineral Leasing Act, we brought the case here. 371 U.S. 886, 83 S.Ct. 184, 9 L.Ed.2d 120. For reasons stated hereafter we affirm the judgment below.

Section 17 of the Mineral Leasing Act, 30 U.S.C. § 226, authorizes the Secretary of the Interior to grant to the first qualified applicant, without competitive bidding, oil and gas leases of lands in the public domain not within a known geologic structure. These are called 'noncompetitive' leases. ¹ A departmental regulation provides that 'no offer' for a noncompetitive lease 'may be made for less than 640 acres except * * * where the land is surrounded by lands not available for leasing under the act.' 43 CFR § 192.42(d). 'Not available' has always been administratively construed to mean lands not available for leasing to anyone. Hence lands covered only by an outstanding application for a lease are considered available, Natalie Z. Shell, 62 I.D. 417 (1955), and therefore subject to the 640-acre requirement.

On September 11, 1956, petitioner² applied to the Santa Fe Land Office in New Mexico (whose authority also embraces Oklahoma) for an 80-acre noncompetitive lease of land in Oklahoma. There was already on file an application by one Connell for a noncompetitive lease of an adjoining 40-acre tract, but no lease had issued to Connell at the time of petitioner's application. Immediately following petitioner's application two other persons, Cuccia and Conley, filed for a lease of the entire 120 acres. On December 1, 1956, the 40-acre lease issued to Connell, the validity of which is not questioned here. In November 1957 an 80-acre lease issued to petitioner. Following notification that their 120-acre application had been rejected, Cuccia and Conley pursued a departmental appeal, 43 CFR §§ 221.1—221.2. This ultimately resulted in a cancellation of petitioner's lease on the ground that having failed to include in his application the adjoining 40-acre tract (no lease to Connell having then been issued), his 80-acre application was invalid, thus leaving the Cuccia and Conley application in respect of that tract prior in right. Accordingly a lease to them was directed.³

The ensuing litigation instituted by petitioner in the Federal District Court resulted in the judgment of the Court of Appeals, now under review, sustaining the administrative cancellation.

Petitioner's claim before this Court⁴ rests on § 31 of the Mineral Leasing Act, 30 U.S.C. § 188, as amended, which, in pertinent part, reads as follows:

'Except as otherwise herein provided, any lease issued under the provisions of * * * (this Act) may be forfeited and canceled by an appropriate proceeding in the United States district court for the district in which the property, or some part thereof, is located whenever the lessee fails to comply with any of the provisions of * * * (the Act), of the lease, or of the general regulations promulgated under * * * (the Act) and in force at the date of the lease * * *.

'Any lease issued after August 21, 1935,⁵ under the provisions of * * * (§ 17 of the Act, 30 U.S.C. § 226) shall be subject to cancellation by the Secretary of the Interior after thirty days' notice upon the failure of the lessee to comply with any of the provisions of the lease, unless or until the land covered by any such lease is known to contain valuable deposits of oil or gas.'

Petitioner contends: (1) § 31 is the exclusive source of the Secretary's power to forfeit a lease once it has been issued; (2) the section, by its second paragraph, limits administrative cancellation to instances where a lessee has failed to comply with the terms of his lease and then only so long as the land is not known to contain oil or gas; (3) since petitioner failed to comply not with the terms of his lease but with a departmental regulation, cancella- tion of his lease was governed by the first paragraph of § 31, which requires a judicial proceeding.

The Secretary, on the other hand, contends: (1) the provisions of § 31 as a whole apply only to events, whether in violation of lease terms, the Act, or the regulations, occurring after a lease has been issued; (2) the Secretary's authority to cancel on the basis of pre-lease events is found not in § 31 but in his general powers of management over lands in the public domain; (3) that authority remained unaffected by the Mineral Leasing Act.

I.

We think that the Secretary, under his general powers of management over the public lands, had authority to cancel this lease administratively for invalidity at its inception, unless such authority was withdrawn by the Mineral Leasing Act. With respect to earlier statutes containing no express administrative cancellation authority, this Court, in Cameron v. United States, 252 U.S. 450, 40 S.Ct. 410, 64 L.Ed. 659, found such authority to exist. In there sustaining the Secretary's power to cancel administratively an invalid mining claim, the Court said (at p. 461 of the 252 U.S., at p. 413 of 40 S.Ct.):

'True, the mineral land law does not in itself confer such authority on the Land Department. Neither does it place the authority elsewhere. But this does not mean that the authority does not exist anywhere, for, in the absence of some direction to the contrary, the general statutory provisions before mentioned vest it in the Land Department.'

The statutory provisions referred to by the Court are those vesting the Secretary with general managerial powers over the public lands.⁶

The Secretary has also long been held to possess the same authority with respect to other kinds of interests in public lands: Harkness & Wife v. Underhill, 1 Black 316, 17 L.Ed. 208; Lee v. Johnson, 116 U.S. 48, 6 S.Ct. 249, 29 L.Ed. 570; Orchard v. Alexander, 157 U.S. 372, 15 S.Ct. 635, 39 L.Ed. 737 (all involving homestead entries); Brown v. Hitchcock, 173 U.S. 473, 19 S.Ct. 485, 43 L.Ed. 772 (selection list); Knight v. United States Land Assn., 142 U.S. 161, 12 S.Ct. 258, 35 L.Ed. 974 (erroneous survey); Hawley v. Diller, 178 U.S. 476, 20 S.Ct. 986, 44 L.Ed. 1157 (timber land entry); Riverside Oil Co. v. Hitchcock, 190 U.S. 316, 23 S.Ct. 698, 47 L.Ed. 1074 (lieu land selection).

The continuing vitality of this general administrative authority was recently confirmed by us in Best v. Humboldt Placer Mining Co., 371 U.S. 334, 83 S.Ct. 379, 9 L.Ed.2d 350.

We are not persuaded by petitioner's argument—based on cases holding that land patents once delivered and accepted could be canceled only in judicial proceedings (e.g., Johnson v. Towsley, 13 Wall. 72, 20 L.Ed. 485; Moore v. Robbins, 96 U.S. 530, 24 L.Ed. 848)—that the administrative cancellation power established by Cameron and the other cases cited is confined to so-called equitable interests, and that a lease, which is said to resemble more closely the legal interest conveyed by a land patent, is not subject to such power. We think that no matter how the interest conveyed is denominated the true line of demarcation is whether as a result of the transaction 'all authority or control' over the lands has passed from 'the Executive Department,' Moore v. Robbins, supra, at 533, of 96 U.S., or whether the Government continues to possess some measure of control over them.

Unlike a land patent, which divests the Government of title, Congress under the Mineral Leasing Act has not only reserved to the United States the fee interest in the leased land, but has also subjected the lease to exacting restrictions and continuing supervision by the Secretary. Thus, assignments and subleases must be approved by the Secretary, 30 U.S.C. § 187; he may direct complete suspension of operations on the land, 30 U.S.C. § 209, or require the lessee to operate under a cooperative or unit plan, 30 U.S.C. (Supp. IV, 1963), § 226(j); and he may prescribe, as he has, rules and regulations governing in minute detail all facets of the working of the land, 30 U.S.C. § 189; 30 CFR, pt. 221. In short, a mineral lease does not give the lessee anything approaching the full ownership of a fee patentee, nor does it convey an unencumbered estate in the minerals.⁷ Since the Secretary's connection with the land continues to subsist, he should have the power, in a proper case, to correct his own errors.

The dispositive question in this case, therefore, is whether this general administrative power of cancellation was withdrawn by § 31 of the Mineral Leasing Act. To that question we now turn.

II.

We believe that both the statute on its face and the legislative history of the enactment show that § 31 reaches only cancellations based on post-lease events and leaves unaffected the Secretary's traditional administrative authority to cancel on the basis of pre-lease factors.

1. Were § 31 deemed to be the exclusive source of the power to cancel, the Act, in respect of its 'first qualified applicant' requirement relating to noncompetitive leases, would be self-defeating. For in cases where there had been no breach of a...