June 9, 1964 held back or diverted onto the appellant's land. The water would have continued down the hillside in the gullies as it had done prior to the construction of the lateral. Therefore, we determine that 33 U.S.C., sec. 702c, does not bar recovery in the instant case, because the administrative record shows that the damage to Mr. Powers' property was the direct result of nontortious activities of employees of the Bureau of Reclamation. The appellant has alleged damages in the amount of $395.00. We find that the actual damages were as follows: Accordingly, the original determination is hereby reversed, and the sum of $370.25 is awarded to Mr. Powers. A-29937 EDWARD WEINBERG, Deputy Solicitor. RICHFIELD OIL CORPORATION Decided June 9, 1964 Oil and Gas Leases: First Qualified Applicant Where an oil and gas lease is issued which erroneously omits a part of the land applied for which is available for leasing, and the land office simultaneously issues a decision which indicates that the omitted land is included in the lease, the omission will not be construed as a rejection of the offer as to the omitted land from which the offeror must appeal in order to preserve the priority of his offer, but the lease may be amended to include the omitted land nothwithstanding the filing of a conflicting offer for the same land subsequent to the issuance of the lease but prior to the discovery of the omission. Jeanette L. Luse et al., 61 I.D. 103 (1953), distinguished. APPEAL FROM BUREAU OF LAND MANAGEMENT Richfield Oil Corporaion has appealed to the Secretary of the Interior from a decision dated January 9, 1963, whereby the Division of Appeals, Bureau of Land Management, affirmed a decision of the Utah land office rejecting its noncompetitive oil and gas offer for lot 8, sec. 13, T. 23 S., R. 23 E., S.L.M., Utah, filed pursuant to section 17 of the Mineral Leasing Act, as amended, 74 Stat. 781 (1960), 30 U.S.C. § 226 (Supp. IV, 1963). The offer was rejected because the described land was embraced in oil and gas lease Utah 021095. On February 4, 1957, R. A. Lutz filed oil and gas lease offer Utah 021095 for four sections of land. It described one section, in T. 23 S., R. 23 E., S.L.M., as "Section 13: All including River Bed." On March 25, 1957, a lease was issued to Lutz, effective April 1, 1957, which described the lands leased in section 13 as "Lots 1, 2, 3, 4, 5, 6, 7, NE4, E2NW1, NW4NW, NESW1⁄44, NSE4." This description included all of the legal subdivisions of section 13 except lot 8, which comprises 4.08 acres. By a decision of the same date the land office suspended the offer "as to the beds of the Green, Colorado, and Dolores Rivers, pending determination of the status of the riverbeds.” The decision further stated that The enclosed lease embraces the remainder of the land applied for. Upon the elimination of the conflict your offer will be further considered and a supplemental lease issued as to any land which may be available. The appellant filed its lease offer on July 23, 1960. By a decision dated January 18, 1961, the land office corrected lease Utah 021095 to include the previously omitted lot 8 of section 13 and rejected the suspended part of the offer as to the river bed lands. The Lutz offer was rejected as to the river bed lands because those lands were unsurveyed and no metes and bounds description was furnished. The appellant's lease offer was thereafter rejected by the land office. In its appeal to the Secretary, as in its appeal to the Director, Bureau of Land Management, Richfield contends that by his failure to appeal from the decision issuing the lease which omitted lot 8, Lutz abandoned his preferential right under section 17 of the Mineral Leasing Act as the "person first making application for the lease who is qualified to hold a lease." It further contends that Lutz' offer was effectively rejected as to lot 8, citing as authority for these arguments the Department's decisions in C.A. Rose, A-26354 (May 13, 1952), and Jeanette L. Luse et al., 61 I.D. 103 (1953). The Division of Appeals held that since lease offer Utah 021095 was not rejected as to lot 8, even though the offeror did not appeal on the basis that it should have been included in his lease, the offer remained intact as to that lot until action was taken by the land office to correct the lease. In making this determination, the Division of Appeals relied upon the statement in the land office decision of March 25, 1957, that "upon the elimination of the conflict your offer will be further considered and a supplemental lease issued as to any land which may be available" (italics added). As to other contentions of the appellant, the Division of Appeals held that the present. case is distinguishable in fact from the cases cited by the appellant. It did not, however, set forth the distinguishing facts. After careful review of the appellant's arguments and the cases cited as authority, I concur in the results of the Bureau's decisions. The rule is well established by the decisions of this Department that an applicant for a noncompetitive oil and gas lease whose appli June 9, 1964 cation is rejected and who fails to appeal within the time allowed for appeal will lose his preference right to a lease as against subsequent qualified applicants. Charles D. Edmonson et al., 61 I.D. 355 (1954). The present case, however, is readily distinguishable from that case and other cases (except the Luse case) in which the same rule has been followed inasmuch as the land office did not in terms reject Lutz' offer as to lot 8. On the contrary, the land office decision specifically stated that the lease was issued for all of the offered lands except the river bed lands. The lease, as issued, did not agree entirely with the decision, but there was no stated rejection from which to appeal. In the Rose and Luse cases, supra, the Department held that where an erroneous decision of the Bureau of Land Management fails to recognize the preferential right of the first qualified applicant to obtain a noncompetitive oil and gas lease on a tract of land, and where the error is as obvious to the applicant as to anyone else, the failure of the applicant to take an appeal from such a decision is considered to be an abandonment of the preferential right; and that right cannot be reestablished by administrative action to the prejudice of third persons whose rights have intervened. In the Rose case there was a specific rejection of the application of the first applicant from which he did not appeal. In the Luse case, the one factually most resembling the present case, there was no stated rejection of the first application. There Mrs. Hornung applied for, among other lands, lot 14, section 6. She was sent lease forms on September 8, 1949, which omitted lot 14, section 6, but included lot 1, section 6, for which she had not applied. The lease forms, as transmitted, were signed by Mrs. Hornung, and a lease was issued effective December 1, 1949. On November 26, 1951, Mrs. Hornung requested that lot 14 be substituted for lot 1. Meanwhile, on March 1, 1950, lot 14 had been leased to Mrs. Luse. The Department held that since the error in omitting lot 14 from Mrs. Hornung's lease should have been more apparent to her as the applicant for the land than to anyone else, and since she failed to appeal from the manager's action in executing the lease without the inclusion of lot 14, she was deemed to have abandoned the preferential right which she initiated by applying for lot 14 and to have acquiesced in the lease as it was issued. The present case is distinguishable from the foregoing both upon factual differences and upon substantive changes in the regulations since 1949. At the time of the issuance of the lease to Mrs. Hornung in 1949, a person who desired a noncompetitive oil and gas lease on public lands was required to file an application describing the desired lands in the proper land office. The land office then mailed to the applicant copies of a lease which described such of the lands applied for as were available for leasing. Only after the lease forms were signed by the applicant and returned to the land office was the lease issued. Under that procedure, if there were a discrepancy in the land descriptions in the application and the lease forms, it would or should be apparent to the applicant before he signed the lease. At the present time, a person wishing to lease public lands files an offer describing the desired lands. The land office, after determining what lands are available for leasing, issues a lease for those lands on the same form which has been used as an offer without further action or opportunity for review on the part of the offeror. Moreover, whereas in the Luse case it should have been readily apparent to Mrs. Hornung that the land description on the lease form was not the same as the description in her application, the discrepancy was not so apparent to the offeror in this instance.1 It was not apparent on the face of the lease issued to Lutz that the lands described therein did not include all of the legal subdivisions of sec. 13, T. 23 S., R. 23 E. The omission of lot 8 could have been discerned only by reference to the official survey plat in the land office.2 Aside from these factors, the noncompetitive oil and gas leasing regulations were amended in 1950 to provide that: If any of the land described in item 2 of the offer is open to oil and gas filing when the offer is filed but is omitted from the lease for any reason and thereafter becomes available for leasing to the offeror, the original lease will be amended to include the omitted land unless, before the issuance of the amendment, the land office receives a withdrawal of the offer with respect to such land or an election to receive a separate lease in lieu of an amendment. Such election shall consist of a signed statement by the offeror asking for a separate lease accompanied by a new offer on the required form describing the remaining lands in his original offer, executed pursuant to this section. The new offer will have the same priority as the old offer. * ** 43 CFR, 1964 Supp., 3123.5 (c), formerly 43 CFR 192.42 (j).3 Thus, it is clear that under the current regulations the acceptance of an offer for less land than that applied for does not, without more, necessarily mean that the offer is rejected as to the land not included. The land omitted may be included in a prior offer which has not been adjudicated or may be for some other reason not immediately available for inclusion in the lease. Thus the failure of the land office in this case to include lot 8 in Lutz' lease did not purport to be such a 1 R. J. McGrath, A-27187 (November 29, 1955), a case somewhat similar to Luse, is distinguishable for the same reason. 2 Where the lessee in a similar situation alleged she never received a copy of the lease which omitted several parcels of land she had applied for, the Department refused to follow Luse, holding its reasoning could not apply if the lessee is not put on notice that some of the land she applied for has been omitted from the lease. Melvin A. Brown, 62 I.D. 454 (1955). 3 The language of this regulation as it first appeared in the Federal Register on December 5. 1950 (15 F.R. 8583), was substantially the same as that contained in the current regulation. June 30, 1964 rejection of Lutz' offer for lot 8 as to require him to appeal in order to retain his preference right to lease lot 8. It is true that the land office decision said only that the offer was being suspended as to the river bed lands. On the other hand, it did not say that the offer was being rejected as to lot 8. On the contrary it said that the lease being issued included all the remaining land. I believe, therefore, that it would be improper to charge Lutz with notice that his offer was being rejected as to lot 8 and that he must appeal from the rejection to preserve his rights to that tract. Accordingly, the land office acted properly in amending lease Utah 021095 to include lot 8 and in rejecting Richfield's offer for the same land. It further appears that Richfield's lease offer may have been defective for failure to include the river bed adjacent to lot 8, since it described less than 640 acres, and other contiguous land may have been available for leasing. See Emily K. Connell, 70 I.D. 159 (1963). It is not clear from the record whether or not the adjacent river bed is available for leasing since Lutz' offer was rejected as to that land for failure to describe the land properly and not because it was unavailable for leasing. In view of the conclusion already reached, however, it is not necessary to resolve the question of the qualification of the appellant's offer. Therefore, pursuant to the authority delegated to the Solicitor by the Secretary of the Interior (210 DM 2.2A (4) (a) ; 24 F.R. 1348), the decision appealed from is affirmed. ERNEST F. HOM, Assistant Solicitor. A-30048 CHESTER C. GIBBY Decided June 30, 1964 Contracts: Damages: Liquidated Damages-Timber Sales and Disposals Where damages for default by a bidder in a timber sale have been liquidated by the parties in the amount of a deposit submitted with the bid, such liquidated damages are for assessment as measuring the extent of the bidder's obligation in the matter without the necessity of inquiring into the question of the actual damages incurred. APPEAL FROM THE BUREAU OF LAND MANAGEMENT Chester C. Gibby has appealed to the Secretary of the Interior from a decision dated April 23, 1963, whereby the Division of Appeals, Bureau of Land Management, affirmed a decision of the Salem, Oregon, district office terminating his right to purchase certain timber in sec. 17, T. 8 S., R. 6 W., Will. Mer., Oregon, offered for sale pursuant |