Naartex Consulting Corp. v. Watt

Citation232 U.S.App.D.C. 293,722 F.2d 779
Decision Date29 November 1983
Docket NumberNo. 82-1979,82-1979
PartiesNAARTEX CONSULTING CORPORATION, Appellant, Russell Huff, v. James G. WATT, Secretary of Interior, et al.
CourtU.S. Court of Appeals — District of Columbia Circuit

Appeal from the United States District Court for the District of Columbia (Civil Action No. 81-01540).

Daniel J. Piliero, II, Washington, D.C., with whom Kathryn L. Mann, Washington, D.C. was on the brief, for appellant.

C. Michael Buxton, Washington, D.C., with whom Charles D. Tetrault, Washington, D.C., and B. Lee Ware, Jr., Houston, Tex., for American Natural Resources Co., et al., Gerry Levenberg, Washington, D.C., and Laura L. Payne, Denver, Colo., for General American Oil Co. of Texas, Thomas P. Humphrey, Washington, D.C., for James S. Harrell, and C. Scott Crabtree, Denver, Colo., for Gordon L. Heele, et al., were on the joint brief, for appellees.

Jacques B. Gelin, Atty., Dept. of Justice, Washington, D.C., with whom Robert L. Klarquist, Atty., Dept. of Justice, Washington, D.C., was on the brief, for appellee, James G. Watt, Secretary of the Interior.

Thomas W. Ehrmann, Wayne E. Babler, Jr. and Charles A. Grube, Milwaukee, Wis., were on the brief, for appellee, Fred L. Engle d/b/a Resource Service Company.

Jerome C. Muys and John F. Shepherd, Washington, D.C., for Davis Oil Company, and Paul Messinger & Co. Raymond Shibley, Brian D. O'Neill and Daniel J. Conway, Washington, D.C., for Panhandle Western Gas Co., Raymond G. Larroca, Thomas Carr, Washington, D.C., and William C. Anderson, Tulsa, Okl., for Reading & Bates Petroleum Co., were on the joint brief, for appellees. Erik B. Carlson, Denver, Colo., also entered an appearance for appellee, Davis Oil Company.

Richard G. Morgan, Martha Priddy Patterson, and Charles W. Garrison, Washington, D.C., were on the brief, for appellee, Raymond G. Albrecht.

Before WALD and BORK, Circuit Judges, and DAVID W. WILLIAMS *, Senior District Judge for the Central District of California.

Opinion for the Court filed by Circuit Judge WALD.

WALD, Circuit Judge:

This action begins with a lottery, held in Wyoming in 1975 by the Department of Interior to select a lessee for a parcel of land in Wyoming that was, at the time, outside any known producing oil or gas field. Two years later, the land began producing oil; and two years later still, Naartex Consulting Corporation (Naartex), acting on behalf of an unsuccessful applicant in the lottery, challenged the issuance of the lease. Naartex claimed that Resource Service Company (RSC), the filing service that had entered the winning application on behalf of Norbert Albrecht, had retained an interest in many applications in the lottery, including Albrecht's, in violation of the legal limit of one application per person, 1 and that Albrecht and RSC had intentionally concealed this fact. Naartex also alleged that subsequent purchasers of interests in the lease had secretly conspired with Albrecht to pre-arrange their acquisitions before the lease was issued, also in violation of the regulations. 2 After pursuing administrative remedies, Naartex filed this action in the district court, primarily seeking damages from the private defendants, and mandamus relief against the government to order the cancellation of the lease.

The district court dismissed the complaint on numerous procedural grounds, set forth infra at 784-785. For the reasons explained below, we affirm.

I. BACKGROUND

In March 1975, the Wyoming State Office of the Bureau of Land Management (BLM) held a "simultaneous oil and gas leasing" lottery pursuant to 43 C.F.R. Secs. 3112 et seq. (1982) for the rights to lease a parcel of Wyoming land not "within any known geological structure of a producing oil or gas field." Mineral Lands Leasing Act of 1920, Sec. 17(b), 30 U.S.C. Sec. 226(b). 3 Norbert F. Albrecht won the lottery, and on June 1, 1975 the BLM issued to him lease number W-50394. One month later, Albrecht assigned his entire title to the lease to J.S. Harrell, while retaining a five percent royalty interest in the lease. Numerous subsequent assignments of drilling rights, reservations and transfers of royalty interests followed. In 1977, a producing well began operations on the leased land.

On January 25, 1979, Alvin Abrams, as president of Geosearch, Inc., filed with the BLM a protest challenging the issuance of the lease to Albrecht. The Geosearch protest--filed in the name of all unsuccessful applicants in the lottery for lease W-50394--claimed that Albrecht's initial application violated the Department of Interior (DOI) regulations mandating disclosure in all lease applications of "the names of all other parties who own or hold any interest in the application, offer or lease, if issued." 43 C.F.R. Sec. 3102.2-3. Geosearch protested that Albrecht had an undisclosed service agreement with Fred Engle, d/b/a Resource Service Company (RSC) when he filed his lease application, and that his service agreement constituted an "interest in the lease" that must be disclosed. 4 The BLM dismissed this protest on February 6, 1979 on various grounds, and on May 6 the Interior Board of Land Appeals (IBLA) dismissed Geosearch's appeal because a statement of reasons for the appeal had not been filed. 5

Four months later, on September 19, 1979, Abrams filed another protest against the issuance of lease W-50394, this time as the president of Naartex. 6 Naartex based its protest upon rights assigned to it by Russell Huff, an unsuccessful applicant in the 1975 lottery. On September 28, 1979, BLM dismissed the protest on the grounds that (1) Huff retained no interest in the lease because he failed to challenge its issuance within 30 days, (2) subsequent title transfers of the lease rendered its new holders "bona fide purchasers" whose interests may not be cancelled even though the initial lease holder may have violated the Mineral Lands Leasing Act, 7 and (3) sections 27(h)(1) and 31(a) of the Mineral Lands Leasing Act, 30 U.S.C. Secs. 184(h)(1), 188(a), preclude the cancellation of a "producing lease" such as W-50394. 8 The IBLA dismissed Naartex's subsequent appeal on June 9, 1980 for the same reasons, noting also that Naartex "ha[d] not shown that the service agreement alleged to exist between [RSC] and Albrecht" constituted an "interest" that should have been disclosed pursuant to the regulations. 9

On September 8, 1980, Naartex petitioned the IBLA for reconsideration of its decision. The IBLA denied the petition on September 18 because the petition was not "filed promptly" in accordance with Department regulations. 10 Next, on December 12, Naartex petitioned the Secretary of Interior to review the appeal; on April 6, 1981, Undersecretary Hodel denied the petition, finding the IBLA decision "to be a persuasive and conclusive disposition of the issues in this case." 11

Naartex filed a complaint in the district court on July 6, 1981, claiming that the administrative failure to cancel lease W-50394 was arbitrary and capricious and a deprivation of property without due process of law. The complaint also sought damages from various private defendants for "intentionally deceiv[ing] the Department and all other offerors for parcel W-484 [i.e., lease W-50394]," and for violating DOI disclosure regulations. 12 The district court summarily dismissed the action on the grounds that: (1) the court lacked personal jurisdiction over the private defendants, (2) venue did not lie in the District of Columbia, (3) the private defendants were indispensable parties to the action, (4) the Mineral Lands Leasing Act creates no private right of action, (5) the Anti-Assignment laws, 31 U.S.C. Sec. 203 and 41 U.S.C. Sec. 15, bar Naartex from asserting Huff's claims against the government, (6) Huff himself should not be permitted to join or intervene in this action because he failed to challenge the lease issuance in a timely manner, and because intervention should not be employed to cure an otherwise futile action, and (7) Naartex and Huff both lacked standing to challenge the lease issuance. See Naartex Consulting Corp. v. Watt, 542 F.Supp. 1196 (D.D.C.1982).

We affirm. The district court lacked personal jurisdiction over the private defendants, who are indispensable parties to this action. Venue also does not lie in this district. In addition, the district court was not obliged to transfer this action to another district where personal jurisdiction and venue could be had, because Naartex's claims suffer from serious substantive defects. Thus the district court properly dismissed the claims against the private defendants. As to the claims against the government, the district court also correctly chose to dismiss. Naartex runs afoul of federal anti-assignment statutes when it attempts to assert claims against the government on the basis of an assignment by Russell Huff, an unsuccessful lease applicant. Moreover, joinder of Huff to avoid the anti-assignment prohibition would have been futile. The Mineral Lands Leasing Act and regulations thereunder preclude cancellation of a producing lease--such as W-50394--except by judicial proceedings instituted by the Attorney General in the district where the leased land is located. Finally, because the private defendants are indispensable parties to the action to cancel the lease, the action may not proceed in their absence.

II. THE CLAIMS AGAINST THE PRIVATE DEFENDANTS

Counts IV through VII of Naartex's amended complaint seek declaratory and injunctive relief and money damages from a variety of private defendants. These defendants include Raymond Albrecht, the brother and successor in interest of Norbert Albrecht, the winner of the 1975 lottery; RSC, the filing service that allegedly entered the Albrecht lease application without disclosing its own interest in that application; and numerous companies and individuals that gained interests in lease W-50394 after its issuance.

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