Superior Oil Company v. Udall
| Decision Date | 06 January 1969 |
| Docket Number | No. 22192,22194.,22192 |
| Citation | 409 F.2d 1115 |
| Parties | SUPERIOR OIL COMPANY et al. v. Stewart L. UDALL, Secretary of the Interior, Appellant, Union Oil Company of California. SUPERIOR OIL COMPANY et al. v. Stewart L. UDALL, Secretary of the Interior, Union Oil Company of California, Appellant. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Mr. Robert M. Perry, Atty., Department of Justice, with whom Messrs. Edmund B. Clark and Thomas L. McKevitt, Attys., Department of Justice, were on the brief, for appellant in No. 22,192.
Mr. Roger H. Doyle with whom Mr. E. W. Cole was on the brief, for appellant in No. 22,194.
Mr. Abe Krash, Washington, D. C., with whom Messrs. Thurman Arnold and Daniel A. Rezneck, Washington, D.C., were on the brief, for appellees, Superior Oil Company, et al.
Before BURGER, TAMM and ROBINSON, Circuit Judges.
These appeals challenge a judgment of the District Court which permanently enjoined the Secretary of the Interior from issuing an oil and gas lease on certain public lands to Union Oil Company of California and directed that such lease be issued to Superior Oil Company, Ashland Oil and Refining Company, Canadian Superior Oil Company (U.S.) Ltd., General Crude Oil Company, Highland Oil Company, Kerr-McGee Corporation, Texas Eastern Transmission Corporation and Transocean Oil, Inc., collectively described hereafter as Superior.
Sealed bids were duly called for by the Secretary of the Interior for the sale of certain oil leases and when bids were opened it developed that the document purporting to be Union's sealed bid of $13,600,000 was not signed but that the next highest offer made by Superior, was $11,628,691.20 and was signed and otherwise in full compliance with the statute, the regulations and the Notice of Sale. At this point the officer opening the bids announced: "The next bid, gentlemen, I regret to announce * * * is not acceptable * * * it has not been signed."1 The bidding officer nevertheless retained the checks submitted by both Union and Superior and subsequently the Secretary declared that Union was the highest qualified responsible bidder. After the District Court entered a temporary restraining order which prevented the Secretary from issuing a lease to Union, the Secretary tendered return of Superior's funds which he had deposited in a "suspense account." Superior refused the tender and demanded that a lease be issued to it as the highest bidder.
(1)
The detailed facts essential to our consideration can best be reflected in a summary of the Findings of Fact of District Judge Sirica, which are as follows:
(1) That the Department of the Interior duly published a Notice of Sale of leases for the tracts in question pursuant to statutes and regulations fixing the time and place for filing an opening of bids as May 21, 1968 at 10:30 a.m.;
(2) The Notice required bids to be filed pursuant to the regulations (43 C.F.R. § 3382, j.) which provides that "leases will be awarded to the highest qualified bidder on the basis specified in the notice of lease offer." The Notice called for sealed bids and required that the bid for each tract be in a separate sealed envelope. The notice also set forth a sample form of bid and prescribed that it be signed by an authorized officer. One fifth of the bid price was to accompany each bid.
(3) Superior's bid complied with all requirements of the Notice, statutes and regulations.
(4) Union submitted a document in a sealed envelope offering $13,600,000 with a tendered check of $2,720,000 in the envelope but the purported bid within the sealed envelope was not signed by any officer of Union; a cover or transmittal letter accompanied the sealed envelope and described the latter as Union's bid.
(5) Pursuant to the Notice of Sale all bids were opened May 21, 1968, at 10:30 a. m. in a public meeting in New Orleans conducted by a Mr. Rankin, Manager of the Bureau of Land Management Department of the Interior. Order No. 575 of the Department, dated October 13, 1954 (19 Fed.Reg. 6720) authorized Rankin to take all actions in connection with leases. Pursuant to regulation, he also had the power to reject bids (43 C.F.R. § 3382.5).
(6) Nine bids were received and after the opening Rankin announced that Union's tender although apparently the highest was "not an acceptable bid" because it "had not been signed." At the same time Rankin stated that Union's tender was an "unacceptable bid."
(7) Superior's bid was higher than any tender except that of Union.
(8) On the sixth day thereafter, May 27, the draft submitted by Superior for $2,325,738.24 was deposited for collection in a bank with the endorsement of the Department of the Interior for the account of the United States. In accordance with practice and regulations, checks of all bidders lower than Superior were returned uncashed to unsuccessful bidders. The draft tendered by Union was similarly held and deposited by the Secretary in a suspense account pending the Secretary's administrative decision as to the status of Union's bid.
(9) A right to an administrative appeal is provided by the regulations for those whose bids are rejected but Union did not take an appeal from Rankin's announced decision of May 21, 1968 that Union's documents were "unacceptable" because unsigned.
(10) On June, 1968 the Secretary announced his decision that the bid made by Union was valid. The District Court on June 18, 1968 per Chief Judge Curran issued a Temporary Restraining Order enjoining the Secretary from executing a lease to Union and on July 3 this was made a preliminary injunction by an order of Judge Corcoran.
Other findings related to the irreparable injury to Superior if Union secured a lease, took possession and began drilling operations and in light of our disposition they need only be noted by reference to the more detailed Findings of Judge Sirica.
From these Findings of Fact the District Court concluded that:
If the dispositive Findings of Fact are supported by evidence this court is obliged to affirm; indeed we are bound to affirm unless the District Court is "clearly erroneous." F.R.Civ.P. 52(a).
Union contends its bid consists of the paper containing an offer of $13,600,000.00 under seal and the transmittal letter which was signed by an authorized officer.2
Superior contends that a valid bid responsive to the Secretary's Notice of Sale must be complete in the papers which are sealed and cannot be aided by an extraneous paper; that the bidding officer rejected Union's bid by declaring it "unacceptable" because it was unsigned; and, finally, that the Secretary accepted its bid by retaining the Superior check and depositing it to the account of the Treasury of the United States after returning bid checks to all bidders whose bids were lower than those of Superior and Union.
The Secretary contends that he is not bound by the acts or utterances of Rankin, Manager of the New Orleans Outer Continental Shelf Office, Bureau of Land Management, at the time of opening the bids. The section of the regulations applicable to the award of leases, 43 C.F.R. 3382.5, provides:
Following the public opening of the sealed bids as provided in the notice of lease offer, the authorized officer, subject to his right to reject any and all bids will award the lease to the successful bidder.
The language of this provision demonstrates that it is the "authorized officer" who has the right to reject bids. The only inquiry then becomes one of discerning the individual who is clothed with the rights of the "authorized officer." For this determination, we turn to Department of the Interior Order No. 575, October 13, 1954, 19 Fed.Reg. 6720:
We therefore see that Rankin was in fact the "authorized officer" who had the authority to "reject any and all bids" and that his characterization of Union's bid as "not an acceptable bid" was not subject to correction as the Secretary asserts. We will later deal with the question whether the Secretary expressly or impliedly accepted Superior's bid.
Having in mind the large sums involved, the large public interest in precision and secrecy of bids for the sale of public land leases, and in the careful procedures called for, the bidders and the public have a substantial interest in certainty. This underlies the detailed procedures provided in the regulations. The need for precision, care and certainty is underscored by the fact that the interest at current permissible rates on the funds of Union and Superior which are immobilized during the pendency of this litigation amount...
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