Winkler v. Andrus

• Decision Date: 01 February 1980
• Docket Number: 79-2171 and 79-2172,79-1993,Nos. 79-1965,79-1988,s. 79-1965
• Citation: 614 F.2d 707
• Parties: Joseph A. WINKLER, Appellee and Cross-Appellant, v. Cecil ANDRUS, Secretary of the Interior, Appellant and Cross-Appellee, and Davis Oil Company and Marvin Davis, Intervenor-Appellant and Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 707

614 F.2d 707

Joseph A. WINKLER, Appellee and Cross-Appellant, v. Cecil ANDRUS, Secretary of the Interior, Appellant and Cross-Appellee and Davis Oil Company and Marvin Davis, Intervenor-Appellant and Cross-Appellee.

Nos. 79-1965, 79-1988, 79-1993, 79-2171 and 79-2172.

United States Court of Appeals Tenth Circuit.

Argued and Submitted Nov. 28, 1979.

Decided Feb. 1, 1980.

Richard C. Dibblee of Roberts, Black & Dibblee, Salt Lake City, Utah, for appellee and cross-appellant.

Joshua I. Schwartz, Dept. of Justice, Washington, D.C. (Sanford Sagalkin, Acting Asst. Atty. Gen., Washington, D.C., Charles Graves, U. S. Atty., Cheyenne, Wyo., Carl Strass and James Tomkovicz, Dept. of Justice, Washington, D.C., of counsel, William R. Murray, Jr., Dept. of the Interior, Washington, D.C., on brief), for appellant and cross-appellee.

Richard H. Bate of Schultz & Bate, Denver, Colo. (Richard F. Pickett and Henry F. Bailey, Jr. of Loomis, Lazear, Wilson & Pickett, Cheyenne, Wyo. and William A. MacNaughton, Gen. Counsel, Davis Oil Co., Houston, Tex., on brief), for intervenor-appellant and cross-appellee.

Before SETH, Chief Judge, and HOLLOWAY and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

These are consolidated appeals from a series of orders entered by the United States District Court for the District of Wyoming subsequent to a prior judgment in this same case which was rendered February 21, 1979. See Winkler v. Andrus, 594 F.2d 775 (10th Cir. 1979). The cited case was one in which the parties were Joseph A. Winkler and the Secretary of the Interior. The controversy pertained to a drawing of noncompetitive oil and gas lease offers relating to certain lands in Sublette County, Wyoming. In the case the Wyoming State Office of the Bureau of Land Management (BLM) ruled that even though Joseph A. Winkler was the first drawee, that his entry card had to be rejected because of a name insufficiency. We ruled that this action was contrary to law.

Following this decision, new facts surfaced. The second drawee had been given the lease in the interim. This was A. Lansdale. She had promptly assigned the oil and gas lease to Davis Oil Company. Davis had assigned a portion of the operating rights to Marvin Davis. Now the issue is whether or not Davis Oil Company and Marvin Davis are bona fide purchasers within the meaning of the Mineral Leasing Act, 30 U.S.C. § 184(h)(2) (1976).

Other issues are tendered by the parties and we will mention them, but their determination is not essential to the disposition of this case.

I. THE FACTS WHICH HAVE ARISEN SUBSEQUENT TO THE ORIGINAL PROCEEDINGS

Additional facts have arisen since the case was initially before us, and these affect the above-mentioned dispositive issue which we must address. As previously stated, this drawing was carried out pursuant to the Mineral Leasing Act and the regulations promulgated under that Act. See 30 U.S.C. § 226(c) (1976); 43 C.F.R. § 3112 (1978). The first drawn entry card was that of Joseph A. Winkler and, as noted above, this was rejected by the BLM on December 16, 1975, on a basis which this court determined was inadequate. The BLM had claimed that it was confused by the fact that Winkler had used an office stamp in setting forth his address, which referred to "J. A. Winkler Agency." Winkler appealed this rejection through administrative levels within the Department of the Interior to the Interior Board of Land Appeals.

Issuance of the oil and gas lease was suspended as far as the second drawee, Lansdale, was concerned during the pendency of the administrative appeal, pursuant to 43 C.F.R. § 4.21(a) (1978). On April 29, 1976, the IBLA affirmed the rejection of Winkler's card. Joseph A. Winkler, 24 I.B.L.A. 380 (1976). Under 43 C.F.R. §§ 4.1(b)(3) and 4.21(c), decisions of the IBLA constitute final agency action for purposes of judicial review under the Administrative Procedure Act, 5 U.S.C. § 704 (1976). Judicial review of IBLA decisions are to be commenced within 90 days after the Department's decision is rendered. 30 U.S.C. § 226-2 (1976). There is no procedure in the public land statutes for staying the effectiveness of the Department's decision, and the Administrative Procedure Act, 5 U.S.C. § 705 (1976) must be utilized in order to accomplish this.

Winkler did not, in commencing his court action, request a preliminary injunction or temporary restraining order to stay issuance of the lease. Nor did Winkler file a lis pendens notice which is necessary under 28 U.S.C. § 1964 (1976) and applicable state law (Wyo.Stat. § 1-6-108) to give constructive notice. The Wyoming State Office of the BLM lacked actual notice of the filing of the case in United States District Court, and it proceeded to issue its oil and gas lease no. W-52387 to Lansdale in accordance with the April 29 IBLA decision. ¹

On July 12, 1976, Lansdale made the mentioned assignment to Davis Oil Company, which in turn executed a drilling agreement with Marvin Davis ² in which it divided the operating rights between them. The Davis Oil Company is a partnership. There is no evidence that Davis conducted a title examination of BLM records prior to acquisition of the lease. On July 30, 1976, Davis Oil Company filed the assignment in the Wyoming State Office of the BLM for the purpose of obtaining an approval pursuant to 30 U.S.C. § 187a. By then the Wyoming office had received actual notice of the filing of the suit and it delayed acting on approval of the assignment. ³

It was not until June 9, 1977 that the BLM notified Davis Oil Company by letter that Winkler had filed a court action and that the district court had rejected his claim. The letter also advised Davis Oil Company that there was a likelihood that the decision of the district court would be appealed and that the BLM office would hold the assignment in its unapproved state until the appeal was resolved. Davis maintains that this letter was the first actual notice that it received that the lease might be subjected to cancellation.

The Wyoming office of the BLM did not await this court's first decision. Indeed, on November 3, 1978, while the case was pending in this court, it approved the assignment and did so retroactive to July 1, 1976. Davis' knowledge as of that date, however, is not controlling. In other words, the actions and commitments which Davis took after the BLM approved the assignment were with full knowledge of the fact that litigation in the first case was going on and that Davis' lease, at the very minimum, stood in the shadow of those proceedings.

The Department recognized belatedly that 30 U.S.C. § 184(h)(2) (1976) would preclude cancellation of the lease to the Davis Oil Company if Davis Oil Company qualified as a bona fide purchaser under the cited section. ⁴ Once the Department recognized this it proceeded immediately to seek relief in the district court under Rule 60(b)(6) of the Federal Rules of Civil Procedure from this court's earlier mandate. The district court, however, denied this request saying that it was bound by this court's prior decision. Soon thereafter, Davis Oil Company and Marvin Davis sought intervention and also moved for Rule 60(b) relief seeking further proceedings to determine that they were bona fide purchasers within the meaning of 30 U.S.C. § 184(h)(2). The district court certified the question whether Davis was a bona fide purchaser to this court for decision. Subsequently, it entered an order in which it granted Davis' motion to intervene and included in it a finding, which was not based on evidence, that Davis Oil Company and Marvin Davis were bona fide purchasers. After that everybody appealed.

II.

THE QUESTION WHETHER DAVIS OIL COMPANY AND MARVIN DAVIS WERE

BONA FIDE PURCHASERS WITHIN THE MEANING OF 30

U.S.C. § 184(h)(2)

The trial court has made a finding to the effect that Davis is a bona fide purchaser. It stated its intention to certify the question under 28 U.S.C. § 1292(b) (1976) "and then let (the Tenth Circuit Court of Appeals) decide who is entitled to this lease because I can't reverse the Court of Appeals," and "That doesn't mean I am approving (Davis') lease. I am going to let the Court of Appeals decide that issue." The Secretary in its brief states that the district court did not really intend to rule on this issue.

In order to have complied with the prior mandate of this court, the Secretary would have been required to cancel the Lansdale lease. The Secretary has broad authority to cancel oil and gas leases for violations of the Mineral Leasing Act and regulations thereunder, as well as for administrative errors committed before the lease was issued. See 30 U.S.C. §§ 184(a)(1), 188(a), 188(b) (1976); 43 C.F.R. §§ 3108.2-3, 3108.3; Boesch v. Udall, 373 U.S. 472, 83 S.Ct. 1373, 10 L.Ed.2d 491 (1963). The Secretary's authority is limited by 30 U.S.C. § 184(h)(2) (1976), the so-called bona fide purchaser amendment to the Mineral Leasing Act. This section provides:

The (Secretary of the Interior's) right to cancel or forfeit for violation of any of the provisions of this chapter shall not apply so as to affect adversely the title or interest of a bona fide purchaser of any lease, interest in a lease, option to acquire a lease or an interest therein, or permit which lease, interest, option, or permit was acquired and is held by a qualified person, association, or corporation in conformity with those provisions, even though the holdings of the person, association, or corporation from which the lease, interest, option, or permit was acquired, or of his predecessor in title (including the original lessee of the United States) may have been cancelled or forfeited or may be or may have been subject to cancellation or forfeiture for any such violation. . . .

This provision was added as an amendment to the Mineral Leasing Act in 1959 to protect bona fide purchasers of federal oil and gas leases who acquired their holdings in good faith from the...