October 30, 1964

School Lands: Indemnity Selections-School Lands: Mineral Lands School land indemnity selections for lands within the known geologic structure of a producing oil and gas field, unless the lost lands are similarly situated, or for lands in a producing or producible lease, must be rejected, and the date of determination as to whether the selected lands are in the known geologic structure of a producing oil and gas field or are in a producing or producible lease is the date when the State has complied with all requirements for making a selection.

School Lands: Indemnity Selections-School Lands: Mineral Lands-Oil and Gas Leases: Known Geological Structure

The phrase "known geologic structure of a producing oil and gas field" has been so long understood to include oil and gas fields which once produced and are still capable of production, although not currently producing, that the phrase as used in Rev. Stat. § 2276 (a) (2) will be considered to have the same meaning, despite the fact that the word "producing" is used in the next paragraph of the statute to mean actual production.

School Lands: Indemnity Selections-School Lands: Mineral Lands-Oil and Gas Leases: Production-Oil and Gas Leases: Unit and Cooperative Agreements

Land in any lease of a suit agreement which is in a participating area is to be considered as land in a producing or producible status so that all lands subject to that lease, whether in the unit or participating area, are not eligible for selection by a State as school indemnity lands.

Administrative Practice-Bureau of Land Management

The Director of the Bureau of Land Management has authority at any time to take up and dispose of any matter pending in a land office or to review any decision of a subordinate officer with or without an appeal. School Lands: Indemnity Selections School Lands: Mineral Lands

If a State offers mineral land as base for an indemnity selection of land which is both valuable for oil shale and valuable for oil or gas and is situated within the known geologic structure of a producing oil or gas field (and the base land is not so situated) or is included in a producing or producible oil and gas lease, the State may obtain the selected land, including the oil shale deposits, upon consenting to a reservation to the United States of the oil and gas in the selected land.

APPEALS FROM THE BUREAU OF LAND MANAGEMENT

The State of Utah has appealed to the Secretary of the Interior from a decision dated February 28, 1962, and from several other decisions of the Division of Appeals, Bureau of Land Management, affirming

land office decisions rejecting in whole or in part school land indemnity selections filed by the State pursuant to Rev. Stat. §§ 2275 and 2276 (1875), as amended, 43 U.S.C. §§ 851, 852 (1958), as amended, 43 U.S.C. § 852 (Supp. V, 1964).1

Since common issues of law run throughout the appeals, it is considered advisable to dispose of them in one decision.

Sections 2275 and 2276 of the Revised Statutes, as amended, authorize a State to select public lands in lieu of school lands granted but lost to it before title could pass. Section 2276, as amended by the act of August 27, 1958, 72 Stat. 928, provides in part as follows:

(a) The lands appropriated by section 2275 of the Revised Statutes, shall be selected from any unappropriated, surveyed public lands within the State or Territory where such losses or deficiencies occur subject to the following restrictions:

(1) No lands mineral in character may be selected by a State or Territory except to the extent that the selection is being made as indemnity for mineral lands lost to the State or Territory because of appropriation prior to survey;

(2) No lands on a known geologic structure of a producing oil or gas field may be selected except to the extent that the selection is being made as indemnity for lands on such a structure lost to the State or Territory because of appropriation prior to survey; and

(3) Lands subject to a mineral lease or permit may be selected * * if none of the lands subject to that lease or permit are in a producing or producible status;

(d) (1) The term "unappropriated public lands" as used in this section shall include, without otherwise affecting the meaning thereof, lands withdrawn for coal, phosphate, nitrate, potash, oil, gas, asphaltic minerals, oil shale, sodium, and sulphur, but otherwise subject to appropriation, location, selection, entry, or purchase under the nonmineral laws of the United States; and lands withdrawn by Executive Order Numbered 5327, of April 15, 1930, if otherwise available for selection.

(2) The determination, for the purposes of this section of the mineral character of lands lost to a State or Territory shall be made as of the date of application for selection and upon the basis of the best evidence available at that time.

The selections considered here were rejected because the lands selected were deemed ineligible under paragraphs (2) or (3) of subsection (a).

One issue involved in many of the appeals, and the sole issue in some, concerns the date as of which the character of the selected land

1 The other appeals considered in this decision are listed in the appendix to this decision. * Paragraph (3) of subsection (a) was amended by the act of September 14, 1960. 74 Stat. 1024, 43 U.S.C. § 852 (Supp. V, 1964), but without any change so far as the issues in these appeals are concerned. A number of the State selections considered here were filed prior to the 1960 amendment; the remainder were filed after the amendment.

October 30, 1964

is to be determined. In the typical situation, the State selects lands mineral in character as indemnity for lands mineral in character lost to it but which, on the date it files its application, are not within the known geologic structure of a producing oil or gas field. However, before they are classified as suitable for State selection, it is determined that the lands are within the known geologic structure of a producing oil or gas field. Consequently, the application is rejected as to them for the reason that under paragraph (2) of subsection (a) such lands can only be selected as indemnity for similar lands lost to the State.

The appellant contends that, since paragraph (2) of subsection (d), supra, provides that the character of the base lands is to be determined as of the time the application for selection is filed, the character of the selected lands is to be determined as of the same date. The decisions below, to the contrary, held that an application for selection is merely a petition for classification which entitles the State to nothing more than having its application considered and that the character of the selected lands may be determined at any time prior to approval of the application for selection.

The legislative history of the act of August 27, 1958, supra, throws no light on the problem.

In general, where the mineral character of public land is an issue in its disposition, the requisite determination is made as of the date the applicant has complied with all the requirements of the pertinent statute and regulations. State of Wisconsin et al., 65 I.D. 265, 272 (1958); see Willcoxson v. United States, 313 F. 2d 884 (D.C. Cir. 1963), cert. denied, 373 U.S. 932 (1963). Among the requirements imposed by the pertinent regulations is one obligating the State to publish notice of its selection in a designated newspaper for a certain period of time and to submit proof of publication. 43 CFR, 1964 Supp., 2222.1-4. There is no indication in the records of the cases on appeal that the State has completed the necessary publication and made the required proof. Until it has done so, it has not met all the obligations imposed on it and it cannot successfully maintain that the date had passed for determining whether the selected lands were within the known geologic structure of producing oil and gas fields.3

a State of California, 60 I.D. 322 (1949), held that until a State seeking an exchange pursuant to section 8 of the Taylor Grazing Act, as amended, 49 Stat. 1976 (1936), 43 U.S.C. 315g (1958), has complied with all the requirements of the statute and the applicable regulations, including publication, it has not acquired rights in the selected land and the United States may withdraw the land if it chooses. In reaching this conclusion, the decision stated:

"The clear implication of the decisions in the New Mexico and Wyoming cases [Payne v. New Mexico, 255 U.S. 367 (1921), and Wyoming v. United States, 255 U.S. 489 (1921)] is

Furthermore, it has long been established that, as a result of the general withdrawals accomplished by Executive Orders Nos. 6910 and 6964 on November 26, 1934, and February 5, 1935, respectively, and the provisions of section 7 of the Taylor Grazing Act, as amended, 49 Stat. 1976 (1936), 43 U.S.C. § 315f (1958), a State in applying for school land indemnity selections merely petitions the Secretary to classify the lands as suitable for State selection and that until he does so the lands are not of the category available for State selection. State of Arizona, 59 I.D. 317, 322 (1946); State of California, 59 I.D. 451 (1947); State of California, 67 I.D. 85 (1960); see also Carl v. Udall, 309 F. 2d 653 (D.C. Cir. 1962); Opinion of Attorney General, 70 I.D. 65, 71 (1963).

that if the States had not fully complied with all the requirements prescribed by the pertinent law and regulations, there would not have been an acceptance by each State of the Government's offer, and the State would not have acquired any rights in the selected land. Hobart L. Pierson, 49 L.D. 436 (1923); cf. State of New Mexico, Robert M. Wilson, Lessce, v. Robert S. Shelton and John T. Williams, 54 I.D. 112 (1932); and State of California, Robison, Transferee, 48 L.D. 384 (1921).

"In the present proceeding, there are numerous requirements imposed by section 8 of the Taylor Grazing Act, as amended, and the supplementary regulations which the State of California had not complied with on November 6, 1947. In connection with the publication of the notice required by subsection (d) of section 8, the regulations provide that, after an application has been filed and the necessary investigations have been made by the Commissioner of the General Land Office (now the Director of the Bureau of Land Management), a notice of the exchange will be submitted to the State for publication; and that, after publication of the notice, the State shall submit proof of such publication (43 CFR 147.8, redesignated 43 CFR, 1947 Supp., 147.6). With respect to the conveyance by the State of title to the offered lands, as required by subsection (c) of section 8, the State is required to submit a duly recorded deed of conveyance of the offered lands (unless they are unsurveyed), a certificate that the offered lands have not been sold or otherwise encumbered by the State, a certificate by the county recorder or by an approved abstracter that no instrument purporting to convey or encumber the title to the offered lands is of record or on file in the recorder's office, and, if the offered lands have ever been held in private ownership, an abstract of title and a tax certificate (43 CFR 147.8, redesignated 43 CFR, 1947 Supp., 147.6). None of the steps required of a State in connection with an exchange of lands under section 8 had been taken as of November 6, 1947, by the State of California in the present case, with the exception of the filing of the exchange application. Of course, the notice to be published by the State of California was to be prepared and furnished to the State by this Department, and the Department had failed to perform its part of this procedure as of November 6, 1947. However, I am of the opinion that such failure on the part of the Department could not operate to confer upon the State vested rights in the selected lands under the decisions in the New Mexico and Wyoming cases. [Pages 326-327.]

"In this connection, it should be noted that, under the Supreme Court's construction of the lieu-selection law involved in the New Mexico and Wyoming cases, the Department did not have an option to accept or reject a lieu selection; the Department could only ascertain whether the reqirements for a selection had been met by a State. Nevertheless, the Court did not hold that a State acquired rights in selected land merely upon filing a selection list. Instead, a State's rights in selected land vested under the lieu-selection law only after the State had complied with all requirements of the law and the pertinent regulations. Similarly, it is reasonable to conclude that under section 8 of the Taylor Grazing Act, as amended, a State must fully comply with all the requirements prescribed by the section and the applicable regulations in order to acquire rights in land selected pursuant to section 8." [Page 328.]

October 30, 1964

Thus, at the very least, the character of the selected lands may be determined as of the date of classification and if on that date they are in the known geologic structure of a producing oil and gas field they can be selected only if the lost lands were similarly situated.

The fact that the Congress, in paragraph (2) of subsection (d), selected the date on which the State files its application as the date for determining the mineral character of the lost land does not require a conclusion that the character of the selected lands is to be determined as of the same date. In view of the long-established rulings that the character of the selected lands may be determined as of any time prior to the State's doing all that is required of it to perfect a selection, it would be wholly unreasonable to attribute to the Congress an intent to overrule these holdings in the absence of a clear expression of such intent. No such expression is to be found in the legislative history of the act of August 27, 1958, supra, and it would be wholly unreasonable to glean such intent from the silence of Congress in fixing a date for determining the character of the selected lands. On the contrary, the silence of Congress is far more reasonably to be interpreted as evidencing an intent not to change the established rule.

Accordingly, the selections were properly rejected insofar as they covered lands which have been found to be within the known geologic structure of a producing oil and gas field before the lands were classified as suitable for disposition as school land indemnity or before the State had complied with all the requirements of the statute and regulations.

The same conclusion is applicable to those State selections which were rejected in accordance with paragraph (3) of subsection (a) because they included land in outstanding oil and gas leases which attained the status of producing or producible leases at some time after the selections were filed. The State contends that the status of the leases as producing or producible leases should be determined as of the time the selections were filed and not as of some subsequent time. This contention must be rejected for the same reasons just given as to the State's contention concerning the date of determination of known geologic structures of producing fields.

Another issue raised in many of the appeals is whether the selections were properly rejected under paragraph (2) of subsection (a), which prohibits selection of lands within the known geologic structure of a "producing" oil and gas field unless similar lands were lost to the State, if none of the wells in the field are actually producing.