Oil and Gas Leases: Acquired Lands Leases-Oil and Gas Leases: Description of Land

An oil and gas offer for acquired land is not defective because it is not accompanied by a map or plat showing the location of the land within the administrative unit or project of which it is a part, but the offeror may be required to submit a satisfactory showing of such a map or plat.

APPEAL FROM THE BUREAU OF LAND MANAGEMENT

Tidewater Oil Company has appealed to the Secretary of the Interior from a decision of the Division of Appeals of the Bureau of Land Management, dated June 6, 1963, which reversed a decision of the Division of Field Services land office dismissing the protest of Arthur E. Meinhart against the issuance of nine oil and gas leases on acquired land of the United States located in Highland and Bath Counties of Virginia within the George Washington National Forest on the ground that Tidewater's offers, which were in conflict with Meinhart's subsequent offers,1 were not in conformity with departmental regulations because they were not accompanied by the required statements of the interest of the corporate offeror and its attorney in fact who submitted the offers for the corporation.

Tidewater's offers were filed on March 30, 1961, and April 11, 1961, respectively. Meinhart's were filed on April 21, 1961, and May 17, 1961, respectively. All of Tidewater's offers were signed by Thomas T. Grady as attorney in fact. On the dates on which all the offers were filed there was in effect the following departmental regulation: (e) Each offer, when first filed, shall be accompanied by:

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(4) If the offer is signed by an attorney in fact or agent, separate statements over the signatures of the attorney in fact or agent and the offeror stating whether or not there is any agreement or understanding between them, or with any other person, either verbal or written by which the attorney in fact or agent or such other person has received, or is to receive, any interesst in the lease when issued, including royalty interest or interest in an operating agreement under the lease giving full details of the agreement or understanding, if it is a verbal one; the statement must be accompanied by a copy of any such written agreement or understanding;

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(g) (1) * *

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an offer will be rejected and returned to the offeror and will afford the applicant no priority if:

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(iv) The offer is signed by an agent in behalf of the offeror and the offer is not accompanied * * by the statements and evidence required by paragraph (e) (4) of this section. 43 CFR, 1954 rev., 200.8.

1 Tidewater's offers and Meinhart's conflicting offers and their dates of filing are listed in the attached appendix.

July 22, 1964

As stated, Tidewater's offers were signed by Grady as attorney in fact. With each offer there was filed a statement in the name of Tidewater Oil Company, but signed by Grady as "Agent," which recited, in addition to other matters, the following:

2. That there is no agreement or understanding between Tidewater Oil Company and said attorney in fact, either verbal or written, by which that attorney in fact is to receive any interest in the lease when issued, including any royalty interest.

3. That in the event the lease is granted pursuant to the lease offer to which this statement is attached, South Penn Oil Company will have a quasi-equitable interest therein, inasmuch as South Penn will be entitled to the assignment of the legal title to an undivided one-half interest therein, should the contingencies and provisions set forth in an agreement bearing date the 1st day of July, 1958, between Tidewater Oil Company and South Penn Oil Company occur and become effective, a copy of which is filed with the offer to lease identified by the Bureau of Land Management as BLM-A 050393 (Virginia) and made a part thereof and to which reference is made for all the terms and provisions thereof, the copy of said agreement so filed being incorporated herein by reference.

Tidewater's offers were all filed on Form 4-1196 (February 1961). Item 6 on the form certified that

Offerer is is not the sole party in interest in this offer and lease, if issued. (If not the sole party in interest, a statement should be filed as prescribed in 43 CFR 192.42 (e) (3) (iii).)2

In each offer the box stating that Tidewater was not the sole party in interest was checked.

On April 11 and 12, 1961, there were filed for each offer separate statements by Tidewater and South Penn Oil Company, signed by officers of the respective companies, that, in the event a lease was issued, each company would have a quasi-equitable interest in the lease as provided by their agreement of July 1, 1958. The statements were the same as paragraph 3 of Grady's statement.

Thereafter, on June 2, 1961, Tidewater filed with respect to each offer a statement signed by one of its officers that there was no agreement or understanding between it and Grady by which Grady was to receive any interest in the lease, when issued. Each statement was submitted with a letter declaring that it was filed for record purposes

243 CFR 192.42 (e) (3) (iii) was one of the regulations governing oil and gas leasing on public lands as distinguished from acquired lands. It required each offeror to make a statement with his offer that he was the sole party in the interest in the offer. If he was not. he was required to name the other interested parties, and all were required to file within 15 days a signed statement setting forth the interest of each and the nature of the agreement between them.

This regulation was in addition to another regulation, 43 CFR, 1954 rev., 192.42 (e) (4), which was identical with 43 CFR, 1954. rev., 200.8, quoted above.

In Bert Wheeler, 67 I.D. 203 (1960), the Department held that 192.42 (e) (3) (iii), requiring the sole party in interest statement, was not applicable to acquired lands offers.

only, that it was deemed to be unnecessary and redundant since the required statement of interest was already on file.

On January 9, 1962, Meinhart filed a protest against Tidewater's offers. He contended that the offers did not meet the requirements of 43 CFR 200.8 (e) (4) when filed in that no statement over the signature of an officer of Tidewater as to any agreement with Grady was filed with the offers and no such statement was filed until June 2, 1961, after Meinhart's offers had been filed.

The protest was dismissed by the Division of Field Services land office. On Meinhart's appeal to the Director, Bureau of Land Management, the land office was reversed. The present appeal by Tidewater followed.

The basic questions raised by the appeal are (1) what statements were required to be filed by 43 CFR, 1954 rev., 200.8(e) (4) and (2) whether the required statements were filed. Tidewater also raises a new issue which will be considered later.

43 CFR, 1954 rev., 200.8 (e) (4) provides that, if an offer is filed by an attorney in fact, there must be filed separate statements of interest signed by the attorney in fact and by the offeror, respectively. Tidewater does not dispute this. Tidewater contends, however, that, regardless of the number of persons who may have an interest in the offer beside the offeror, the regulation requires only one set of separate statements to be filed, that is, with respect to any agreement between the offeror and the attorney in fact or between the offeror and some other person. It bases its contention on the use of the word "or" in the regulation:

*** separate statements *** stating whether or not there is any agreement or understanding between them [offeror and attorney in fact], or with any other person, *** by which the attorney in fact or agent or such other person (Italics added.)

has acquired, or is to acquire, an interest in the lease when issued. Tidewater asserts that the word "or" is used in the disjunctive sense although it concedes that "or" is often used to mean "and."

I believe that this interpretation is wholly at a variance with a normal reading of the regulation and would result in defeating the purpose of the regulation to a substantial extent. The word "or" seems clearly to be used in the conjunctive-disjunctive sense which is often conveyed by the use of the contrived expression "and/or." Tidewater's argument is that if the attorney in fact and a third person will derive an interest in the lease the offeror may elect to disclose either the agreement between him and the attorney in fact or between him and the third person and need not disclose both. There is no rational basis for giving the regulation such a strained interpretation.

July 22, 1964

The regulation is obviously designed to unearth all interests held in an offer by persons other than the offeror. This purpose would be almost completely frustrated if, where there are multiple interests, only one be disclosed. I conclude therefore that where an offer is signed by an attorney in fact there must be submitted with the offer separate statements signed by the attorney in fact and the offeror as to whether or not there is any understanding not only between them but with any other person whereby the attorney in fact or such other person has received or will receive an interest in the lease when issued.

The next question is whether the required separate statements signed by Tidewater and Grady were in fact filed with the offers. The statement by Grady was in the name of Tidewater but was signed only by Grady as agent. It therefore cannot suffice as the statement required to be signed by the offeror. On the other hand, although the statement was signed by Grady as agent, it may be questioned whether it suffices as the required statement of the attorney in fact since Grady purported to speak only for the offeror in the statement. However this may be, assuming that it was sufficient to constitute the statement of the attorney in fact, there is still missing the required statement by the offeror.

Tidewater contends that the statements furnished by its officers as to the agreement of July 1, 1958, with South Penn and that the agreement itself, which had previously been filed in another case, satisfy the requirement for a signed statement of the offeror. Tidewater, however, does not assert that the statements or the agreement contain any express provision showing or negating any interest by Grady in the offer or lease. Rather, Tidewater contends that because the agreement provides for the complete disposition of interests in the offers and leases to be issued it by necessary implication negates any interest in Grady.

The statements filed by Tidewater on April 11 and 12, 1961, over its officers' signatures say nothing about the existence of any understanding with Grady. The agreement between Tidewater and South Penn also says nothing about the existence or nonexistence of any understanding between Tidewater and Grady whereby Grady would acquire an interest in any lease to be issued. The agreement in fact was executed on July 1, 1958, and amended on April 8, 1960, before the filing of Tidewater's offers. A reading of the agreement reveals no provision which would necessarily prevent Tidewater from entering into an agreement with Grady whereby the latter would acquire an interest in the leases issued to Tidewater. Merely because the agreement provides that Tidewater and South Penn shall each have a 50 percent interest in leases issued after the effective date of the

agreement does not prevent Tidewater from creating an interest in Grady, like an overriding royalty interest, so far as its 50 percent interest is concerned.

It seems plain then that Tidewater did not timely comply with the requirement of regulation 43 CFR 200.8 (e) (4) that a statement be furnished over the signature of the offeror as to whether or not it had an agreement or understanding with its attorney in fact whereby the latter had received or would receive an interest in the lease when issued. It did not comply until June 2, 1961; therefore its offers can have priority only from that date.

At this point its should be noted that Tidewater's arguments relative to the sole party in interest statement and the instruction on the lease form (Item 6) governing such statement are not relevant since the sole party in interest requirement springs from another regulation (see footnote 2).

The final point remaining for consideration is Tidewater's contention that Meinhart's offer BLM-A 057149 is fatally defective because it contains an error in the description of the land applied for and that that offer and also Meinhart's offer BLM-A 057151 are defective because no map was filed with them. Tidewater's argument on the defective description rests upon the following regulations:

(a) Each offer or application for a lease or permit must contain * * * (2) a complete and accurate description of the lands for which a lease or permit is desired. *** 43 CFR 1964 rev., 200.5, now 43 CFR, 1964 Supp., 3212.1.

(b) Seven copies of Form 4-1196*** for each offer to lease shall be filed *** ** If less than seven copies are filed, the offer will not be rejected * * * until 30 days from filing have elapsed and if during that period the remaining required copies are filed, the offeror's priority will date from the date of the first filing.

(c) One of the copies of the offer first filed should be prominently marked as the "original" by the offeror. If not so marked by the offeror one copy of the offer will be marked "original" by the Bureau of Land Management. The copy marked "original" will govern as to the lands to be covered by the lease. *** 43 CFR, 1954 rev., 200.8.

Meinhart filed a single copy of offer BLM-A 057149 on May 17, 1961, in which he gave a description of one call of his metes and bounds description to "corner 87." Within 30 days thereafter he filed six additional copies in which the same call was described as being to "corner 97." None of the copies was marked as "original" by either Meinhart or by the land office.

Tidewater asserts that, since no copy was marked "original" and none can be so marked at this late date and since there is a variance among the copies in the land description, the offer must be rejected as not giving a complete and accurate description of the land applied for. The short answer is that the applicable regulation states only that