Chevron Oil Co. v. Andrus, 77-2186

• Citation: 588 F.2d 1383
• Decision Date: 09 February 1979
• Docket Number: No. 77-2186,77-2186
• Parties: 9 Envtl. L. Rep. 20,078 CHEVRON OIL COMPANY et al., Plaintiffs-Appellees, v. Cecil D. ANDRUS, Secretary, Department of the Interior et al., Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1383

588 F.2d 1383

9 Envtl. L. Rep. 20,078

CHEVRON OIL COMPANY et al., Plaintiffs-Appellees, v. Cecil D. ANDRUS, Secretary, Department of the Interior et

al., Defendants-Appellants.

No. 77-2186.

United States Court of Appeals, Fifth Circuit.

Feb. 9, 1979.

Gerald J. Gallinghouse, U. S. Atty., Ford J. Dieth, Asst. U. S. Atty., New Orleans, La., Andrew F. Walch, Dept. of Justice, James W. Moorman, Acting Asst. Atty. Gen., Edmund B. Clark, Charles E. Biblowit, Raymond N. Zagone, Attys., Dept. of Justice, Land & Natural Resources Div., Washington, D. C., for defendants-appellants.

Wilson S. Shirley, Jr., John C. Christian, M. Hampton Carver, New Orleans, La., for plaintiffs-appellees.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before BROWN, Chief Judge, GEWIN and TJOFLAT, Circuit Judges.

TJOFLAT, Circuit Judge:

This case requires us to construe the Department of Interior's regulations for the leasing of oil and gas development rights on the nation's outer continental shelf. The question presented is whether the Department has bound itself by regulation to abide by the unreviewed action of a regional manager in the evaluation of bids for leases. The district court held in the affirmative and on this basis issued an injunction forbidding the rejection of Chevron Oil Company's bids. We reverse.

I. Facts

Outer Continental Shelf (OCS) Oil and Gas Lease Sale No. 37 was held in New Orleans, Louisiana on February 4, 1975. Appellees (hereinafter Chevron) were the highest bidders on two of the tracts offered for lease. After the public opening of bids, the Gulf of Mexico OCS Office, Bureau of Land Management (BLM), Department of Interior, in accordance with its usual practice, prepared statistical analyses of the bids received. On the basis of this analysis, Mr. John Rankin, Manager of the Office, recommended that Chevron's bids be accepted. ¹ The Director of BLM also recommended acceptance. The Assistant Secretary for Land and Water Resources, Department of Interior, recommended that the bids be rejected as inadequate. Deputy Under Secretary of the Interior William W. Lyons, whose action was final for the Department in this matter, decided that Chevron's bids should be rejected. Pursuant to this determination, Chevron was notified in writing by Mr. Rankin on February 25, 1975, that its high bids on the two tracts had been rejected. ²

Requests for reconsideration were made to the Secretary of Interior but denied. Appellees then filed these suits seeking a declaration that they are entitled to the leases and an order directing that the leases be issued. On cross motions for summary judgment, the district court held that under the Department's regulations Mr. Rankin is the official whose decision to accept or reject high bids is controlling; Mr. Rankin, in the exercise of his independent judgment, concluded that Chevron's bids should be accepted, and that judgment could not be overruled by the Secretary or any subordinate acting for him. These appeals followed, and the order to issue the leases has been stayed pending our decision.

II. The Regulatory Scheme

Statutory authority for the letting of oil and gas leases is found in the OCS Lands Act, 43 U.S.C. §§ 1331-43 (1970), section 8(a) of which provides:

In order to meet the urgent need for further exploration and development of the oil and gas deposits of the submerged lands of the outer Continental Shelf, the Secretary (of the Interior) is authorized to grant to the highest responsible qualified bidder by competitive bidding under regulations promulgated in advance, oil and gas leases on submerged lands of the outer Continental Shelf . . . .

43 U.S.C. § 1337(a) (1970). Interior's regulations for mineral leases on the OCS appear at 43 C.F.R. Part 3300 (1977). The award of leases is covered by section 3302.5:

§ 3302.5 Award of lease.

Sealed bids received in response to the Notice of Lease Offer shall be opened at the place, date and hour specified in the notice. The opening of bids is for the sole purpose of publicly announcing and recording the bids received and no bids will be accepted or rejected at that time. In accordance with section 8 of the (OCS Lands) Act, leases will be awarded only to the highest qualified responsible bidder. The United States reserves the right and discretion to reject any and all bids received for any tract, regardless of the amount offered. Awards of leases will be made only by written notice from the authorized officer. . . . If the authorized officer fails to accept the highest bid for a lease within 30 days after the date on which the bids are opened, all bids for that lease will be considered rejected. Notice of his action will be transmitted promptly to the several bidders.

The Secretary has delegated administration of these regulations as follows:

Subject to the supervisory authority of the Secretary, the regulations in this part shall be administered by the Director, Bureau of Land Management, hereinafter referred to in this part as the Director.

43 C.F.R. § 3300.0-3 (1977).

The "authorized officer" in section 3302.5 is defined in 43 C.F.R. 3000.0-5(f) as "any person authorized by law or by lawful delegation of authority in the Bureau of Land Management to perform the duties described." The Director, BLM has been authorized "to take all actions . . . with respect to (OCS mineral leases)," Secretary of Interior Order No. 2583, Part 2, § 2.36, 15 Fed.Reg. 5643 (1950), As amended, 27 Fed.Reg. 2862 (1962), and the Director has in turn authorized the Manager, Gulf of Mexico OCS Office to act with respect to leases in the Gulf of Mexico, Bureau of Land Management Order No. 701 § 4.6(b), As amended, 39 Fed.Reg. 9213 (1974). Mr. Rankin has been the Manager of the Gulf of Mexico OCS Office since 1959.

Chevron's argument, accepted by the court below, is straightforward. Read as a whole, regulations vest the authority to award or withhold leases in the "authorized officer." Mr. Rankin, by delegation, is the authorized officer for Gulf of Mexico leases; therefore, the argument goes, his decision to accept Chevron's bids was binding on the Department, in the absence of a specific regulation permitting the Secretary or anyone acting for him ³ to overrule Mr. Rankin. Primary reliance is placed on the case of United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260, 74 S.Ct. 499, 98 L.Ed. 681 (1954), for the proposition that an executive officer who by regulation vests his discretionary authority in a subordinate thereby deprives himself of the power to make the decision himself. Chevron argues that here the Secretary may amend the regulations and revest in himself the authority to issue or deny leases, but so long as the present regulations stand, Mr. Rankin's decisions are controlling.

This argument, in our view, misconstrues Interior's regulations and misreads Accardi. In that case, regulations of the Attorney General delegated to the Board of Immigration Appeals certain of his discretionary powers in deportation cases and required that

"(i)n considering and determining . . . appeals, the Board of Immigration Appeals shall exercise such discretion and power conferred upon the Attorney General by law as is appropriate and necessary for the disposition of the case. The decision of the Board . . . shall be final except in those cases reviewed by the Attorney General (as further provided for herein)."

347 U.S. at 266, 74 S.Ct. at 503 (quoting 8 C.F.R. § 90.3(c) (1949)). The Court held that the regulations required the Board to exercise its own judgment in considering appeals, and "as long as the regulations remain operative, the Attorney General denies himself the right to sidestep the Board or dictate its decision in any manner." Id. at 267, 74 S.Ct. at 503. The Attorney General had dictated the Board's decision in Accardi's case by including his name in a list of "unsavory characters" whom the Attorney General wanted deported and circulating the list to the Board members prior to their decision on Accardi's appeal. Accordingly, the Court ordered a new hearing at which the Board was to exercise its own independent judgment, as the regulations required.

We think Accardi stands for the unremarkable proposition that an agency must abide by its own regulations. See Service v. Dulles, 354 U.S. 363, 372, 77 S.Ct. 1152, 1157, 1 L.Ed.2d 1403 (1957). Where, as in Accardi, the regulations vesting discretion in a subordinate require that subordinate to exercise his independent judgment, the administrator must permit him to do so, but the question in each case is what do the regulations require and has the agency complied with them. In Accardi, the Court found that the language of the regulations ("the Board . . . Shall exercise such discretion" (emphasis added)) required the Board to arrive at an independent decision, subject to review by the Attorney General in specified instances. The regulations conferred important due process rights upon petitioners before the Board which the Attorney General could not violate by interfering Prior to the Board's decision and dictating the result. The Court said nothing about the circumstances under which the Attorney General could review and reverse a decision once it had been made by the Board. Accardi says only that, where applicable regulations so provide, an agency head must permit his subordinate, as an initial matter, to make an independent judgment without interference. Service v. Dulles, 354 U.S. at 386, 77 S.Ct. at 1164 (in Accardi, "the Attorney General bound himself not to exercise his discretion until he had received an impartial recommendation from a subordinate board"); Marcello v. Bonds, 349 U.S. 302, 311, 75 S.Ct. 757, 762, 99 L.Ed. 1107 (1955) (issue in Accardi was "prejudgment").

United States v. Nixon, 418 U.S. 683, 94 S.Ct. 3090, 41 L.Ed.2d 1039 (1974) did not

modify Accardi's holding. One issue in that case was whether a justiciable...