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March 6, 1964

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office to cancel the appellant's noncompetitive oil and gas lease, Colorado 064794, and to issue a lease to Jack J. Grynberg, if he is otherwise qualified to receive a lease.

The appellant filed its offer on May 22, 1961, to lease 640 acres pursuant to section 17 of the Mineral Leasing Act, as amended, 74 Stat. 782 (1960); 30 U.S.C. $ 226 (Supp. IV, 1963). A lease was issued, effective January 1, 1962, for the N12SW14 and the SE14 SW14 sec. 20, T. 1 N., R. 101 W., 6th P.M., Colorado, containing 120 acres.

The Division of Appeals found that another 120 acres of the 640 acres described in the appellant's offer were included in the undefined limits of the known geologic structure of the South Rangely Field and were, therefore, not available for noncompetitive leasing. It further found that there was other adjacent land available for leasing and that the offer did not meet the requirement of the oil and gas regulation that an offer must describe not less than 640 acres unless the land described is surrounded by lands not available for leasing. 43 CFR 192.42(d).

The appellant contends that its offer met the requirements of that regulation and that, even if the offer did not satisfy the requirements of the regulation, the Department has no authority to cancel a lease administratively for noncompliance with a regulation prior to issuance of the lease.

The latter contention has been settled by the Supreme Court in the case of Boesche v. Udall, 373 U.S. 472 (1963), which upheld the authority of the Secretary to cancel an oil and gas lease issued in violation of the Mineral Leasing Act, 41 Stat. 437, as amended, 30 U.S.C. $ 181 et seq. (1958), and the regulations promulgated thereunder. Since that case involved a lease issued in violation of the 640-acre regulation, the Bureau had authority, in this instance, to cancel the appellant's lease if it was initially issued in error.

The appellant's principal argument depends upon the interpretation placed upon 43 CFR 192.42(d), which provides in pertinent part that:

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No offer may be made for less than 640 acres except * * * where the land is surrounded by lands not available for leasing under the act.

The appellant contends that the 120 acres within the known geologic structure, although not available for noncompetitive leasing,

1 Grynberg iled lease offer Colorado 064795 on the same date that the appellant's offer was filed. His offer included, among other lands, the land covered by the appellant's lease. Grynberg appealed to the Director of the Bureau of Land Management from the rejection of his offer by the land office and the issuance of the appellant's lease.

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are, nevertheless, available for competitive leasing under the Mineral Leasing Act and should be included in the acreage necessary to satisfy the regulation. It further contends that there is a possibility that land within an undefined area of a known geologic structure may, at any time, be determined not to be in the structure and may become subject to noncompetitive leasing without notice to any prospective applicants. Since such land might, in fact, be available for leasing, the appellant argues, it should not be deducted from the leasable acreage contained in the offer.

The rule is well established that in determining whether or not an offer describes 640 acres of land, as required by 43 CFR 192.42(d), only those lands which are available for leasing on the date that the offer is filed may be considered. R. S. Prows, 66 I.D. 19 (1959); Janis M. Koslosky, 66 I.D. 384 (1959); J. Penrod Toles, 68 I.D. 285 (1961). That "available for leasing” means "available for noncompetitive leasing" is clear from the usage of the term in innumerable departmental decisions as well as from its use in regulation 43 CFR 192.42, which pertains solely to noncompetitive leasing. There is no rational or conceivable reason why the Department would have intended in the regulation to have the phrase "available for leasing" mean "available for leasing on a noncompetitive or competitive basis.” The clear intent of the regulation is that an offeror is to be excused from having to include 640 acres in his offer only when the land applied for is surrounded by other land not available for noncompetitive leasing. Accordingly, the appellant's contention that lands which may be leased competitively only are available for leasing within the meaning of 43 CFR 192.42(d) is without merit.

The appellant contends, however, that land shown on the records of the land office to be within a known geologic structure may nonetheless be subject to noncompetitive leasing.

Section 17 of the Mineral Leasing Act, supra, permits the leasing of lands within a known geological structure of a producing oil or gas field only after competitive bidding. Therefore, a noncompetitive oil and gas lease offer which includes lands that are found to be within a known structure must be rejected as to those lands. In this respect, lands in a known geological structure are similar to lands which are already under lease or lands that are withdrawn from mineral entry.

The Department has held that a definition of the known geologic structure of a producing oil or gas field is, in effect, a withdrawal of the lands included within the boundaries of such structure

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March 6, 1964

from noncompetitive leasing, and while the lands remain so defined, they may be leased only by competitive bidding. H. A. Hopkins, 50 L.D. 213 (1923); Lincoln-Idaho Oil Company, 51 L.D. 235 (1925); George C. Vournas, 56 I.D. 390 (1938); W. Nelson Shell, A-26623 (June 1, 1953).

In the Shell case the Department said:

A definition of the known geologic structure of a producing oil or gas field is, in effect, a withdrawal of the lands included within the boundaries of such structure from noncompetitive leasing. Lincoln-Idaho Oil Company, 51 L.D. 235 (1925). While the lands remain so defined, they may be leased only by competitive bidding. George C. Vournas, 56 I.D. 390 (1938). Mr. Shell's application, having been filed at a time when the land was still defined to be within the structure was, therefore, properly rejected.

Furthermore, it is well settled than an application for land filed while the land is withdrawn from entry is invalid ; that the revocation of a withdrawal during the pendency of an applicant's appeal from the rejection of his application does not validate the application; and that an application relating to withdrawn land may not be suspended to await the lifting of the withdrawal and then considered as if filed at the instant that the land is restored to entry. D. Miller, 60 I.D. 161 (A-24692, April 15, 1948): Charles W. Trounson, 60 I.D. 182 (A-24583, May 27, 1948). Hence, where an application for a noncompetitive oil and gas lease is filed covering lands which are at the time of the filing of the application within the known geologic structure of a producing oil or gas field, it may not be suspended to await action by the Department on the redefinition of the boundaries of the structure.

This well established rule makes it plain that the land in Empire's application which was within the known geologic structure of a producing oil and gas field was not available for leasing and cannot be counted in determining whether it complied with the 640-acre rule.

In other decisions in which the 640-acre rule was involved the Department has reached a similar conclusion. Lands embraced within an outstanding oil and gas lease and lands withdrawn from all forms of appropriation under the public land laws, including the mining and mineral leasing laws, are not available for leasing under the Mineral Leasing Act and cannot be counted toward the 640 acres necessary to satisfy the regulation. J. Penrod Toles, supra; Janis M. Koslosky, supra.

On the other hand, lands which are covered by outstanding lease offers, but for which a lease has not been issued, are available for leasing, and such lands may be counted toward the required 640 acres. Boesche v. U dall, supra; Natalie Z. Shell, 62 I.D. 417 (1955).

2 See also Max Barash, The Texas Co., 63 I.D. 51, 63 (1956), reversed on other grounds, Barash v. McKay, 256 F. 2d 714 (D.C. Cir. 1958); but cf. Udall v. King, 308 F. 2d 650 (D.C. Cir. 1962).

Land which is included within a homestead entry for which acceptable final proof has been filed and for which the entryman has met all other requirements is to be considered as available for oil and gas leasing within the meaning of the 640-acre rule even though a patent may be issued subsequent to the filing of a lease offer without reservation of oil and gas, thus requiring rejection of the offer as to that land. Standard Oil Company of California, 70 I.D. 422 (1963).

In all of the foregoing situations, the information upon which a determination is made as to whether or not the lands are available for leasing is a matter of record in the Bureau of Land Management and is discernible to any prospective lease offeror. This is not necessarily so with respect to lands within a known geologic structure. As to such lands, the pertinent regulation provides that:

* * * if the producing character of a structure underlying a tract of land is actually known prior to the date of the Department's official pronouncement on that subject, it is the date of the ascertainment of the fact, and not the date of the pronouncement, that is determinative of rights which depend upon whether the land is or is not situated within a known geologic structure of a producing oil or gas field. Ernest A. Hanson, A-26375 (May 29, 1952), and cases cited therein. All determinations are subject to change at any time upon receipt of further information through the drilling of wells and other sources. Accordingly, lessees or applicants for leases should not rely upon the maps, diagrams, determinations or notices thereof, as currently controlling documents. 43 CFR 192.6(c).

Before any noncompetitive oil and gas lease is issued, a report is requested from the Geological Survey as to whether any of the lands described in the lease offer are within a known geologic structure. If any of the lands are reported to be within a structure, the availability of those lands for noncompetitive leasing will depend not upon the date that the determination was made that they were in such a structure but upon the date on which facts became known upon which a determination was subsequently made. If those facts were known prior to the date on which the lease offer was filed, the offer will be rejected as to such lands even though there was no information in the land office records which indicated that the lands were within a known geologic structure, and no report to that effect had been made by the Geological Survey. If the facts became known after the filing of the lease offer, the lands may still be leased noncompetitively. John P. Dever, 67 I.D. 367 (1960); John J. King, A-28543 (October 13, 1960); 3 Columbian Carbon Company, A-28706 (October 10, 1962).

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3 Affirmed by the United States Court of Appeals for the District of Columbia Circuit in Udall v. King, supra, note 2.

March 6, 1964

It is, also, possible that lands which have previously been reported to be within the limits of a known geologic structure, and are so shown by the Bureau's records, may subsequently be determined to lie outside of that structure. Upon a proper showing that lands presently included in a known geologic structure should be excluded, those lands may be leased noncompetitively. However, only after the lands have been restored from a defined structure may a noncompetitive lease offer be accepted for those lands. As we have seen, a noncompetitive offer filed while the lands are included in a defined structure may not be suspended to await action by the Department on the redefinition of the boundaries of the structure but must be rejected without affording the offeror any priority of filing. H. A. Hopkins, supra; W. Nelson Shell, supra. The distinction

; drawn by the regulation (43 CFR 192.6(b)) between “structures defined" and "structures undefined" is for administrative purposes, and the regulation sets forth the manner in which notice will be given of each class of structure but does not differentiate the terms by which each may be leased.

It is apparent, therefore, that when the regulation states thatlessees or applicants for leases should not rely upon the maps, diagrams, determinations or notices thereof, as currently controlling documents, it is not saying that a determination that land is within a known geologic structure is ineffective to withdraw the land from noncompetitive leasing until a redetermination is made of the facts thay may be currently controlling, nor is the Department inviting prospective offerors to file noncompetive offers for lands within known geologic structures upon the possibility that redefinition of the structures will exclude those particular lands. Rather, the offeror is put on notice by the regulation that even though the Bureau's records may show that lands are available for noncompetitive leasing, there is a possibility that geological information, not yet reflected by any Bureau records, may necessitate the rejection of the offer.

From the foregoing, I conclude that a determination that lands are within a known geologic structure, whether defined or undefined, if it is reflected by the Bureau's records, makes those lands unavailable for leasing within the meaning of 43 CFR 192.42(d). Where the Bureau's records indicate that lands are available for noncompetitive leasing at the time a lease offer is filed, a subsequent determination that the lands were, in fact, known to be in a producing structure at that time will not prevent the inclusion of those lands in determining whether or not the 640-acre requirement has been met,

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