Boesche v. Udall

PETITIONER:Boesche
RESPONDENT:Udall
LOCATION:Clauson’s Inn

DOCKET NO.: 332
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 373 US 472 (1963)
ARGUED: Feb 25, 1963
DECIDED: May 27, 1963

Facts of the case

Question

Audio Transcription for Oral Argument – February 25, 1963 in Boesche v. Udall

Earl Warren:

Fenelon Boesche, Administrator, Petitioner, versus Stewart L. Udall, Secretary of the Interior.

Mr. BenEzra.

Leon Benezra:

Mr. Chief Justice, may it please the Court.

The question presented in this case is whether the Secretary of the Interior has authority under Section 31 of the Mineral Leasing Act to cancel oil and gas leases by administrative action for failure to comply with the Department’s regulations.

The facts are uncontroverted in this case and briefly stated, they are as follows:

On September 11, 1956, petitioner’s father, N.W.C. Boesche, now deceased, filed application for an oil and gas lease on an 80-tract — 80-acre tract of public land.

On that date an adjoining 40-acre tract was already under application for lease, previously filed by one Thomas Connell.

Also on September 11, 1856, but later in the day, Vincent Cuccia and George E. Conley filed a joint application for a lease on both the 40-acre tract previously filed by Connell and the 80-acre tract previously filed by Boesche.

Subsequently, the manager of the Santa Fe Land Office on December 1, 1956 issued a lease to the 40-acre parcel to Connell.One year later, on December 1, 1957, the manager, after making a determination that Boesche, petitioner herein, was the first qualified applicant for the 80-acre tract, issued a lease to him.

And later on January 24, 1958, the manager rejected the Cuccia and Conley application for a lease on the 80 acres already issued to the petitioner.

Cuccia and Conley then appealed to the Director of the Bureau of Land Management.

And on January 9, 1959, one year and one month after the lease had been issued to the petitioner, the Director held that petitioner’s lease should be cancelled for a failure to comply with the Department’s 640-acre rule.

Boesche, the petitioner, then appealed to the Secretary of the Interior and on August 5, 1959, the Secretary, through his Deputy Solicitor, affirmed the Director’s decision and directed cancellation of the Boesche lease.

Arthur J. Goldberg:

(Inaudible)

Leon Benezra:

My client has done nothing with the lease obviously, because it’s in jeopardy.

But —

Arthur J. Goldberg:

Is there any development in there?

Leon Benezra:

Whatever development there could be has been halted by the Secretary’s administrative cancellation or rather attempted administrative cancellation of the lease because as soon as the Secretary hands down his decision, our client moved to the District Court in an action to prevent the Secretary to cancel.

Arthur J. Goldberg:

That was years before the Secretary entered his final decision, you mentioned the year — the entire period?

Leon Benezra:

Yes.

During this entire period, because of the so-called, “appellate review,” of the Department, knowing full well that there was a review procedure and the fact that the conflicting applicant, Cuccia and Conley had filed an appeal.

My client was unable to do anything with the lease during this period, although he supposedly had a lease for a five-year term, and so long thereafter, this oil and gas was produced.

Arthur J. Goldberg:

Well, would you say this thing has happened before, the proceeding has been brought in the District Court in these terms?

Leon Benezra:

In the District Court, where the land is located?

Not quite, Your Honor, in this respect.

At least the lessor would not have been immediately involved in this situation.

In effect, there is a double jeopardy.

There is the appellate review jeopardy in the administrative procedure and then of course there would be one in a court.

But during all this period, since the Secretary of the Interior issues a lease and upon issuance of the lease, the primary term for five-year commences, you have a double period where the lessee can do nothing with the lease, although he has been given under the lease and under the statute the exclusive right to go on the land, to produce and develop.

Arthur J. Goldberg:

You paid rent on it.

Leon Benezra:

Pardon me?

Arthur J. Goldberg:

You paid rent on it.

Leon Benezra:

Yes.

During this period, we had to pay rent.

And on this score, I might say —

John M. Harlan II:

Do you get that back?

Do you get that — supposing you’re wrong in this case, do you get that back?

Leon Benezra:

If we’re wrong in the case, I think we do get the rent back.

But let me say this, the Secretary has pointed out in his brief that perhaps it might be better not to issue a lease until the conflicting applications right of review has been — has gone through the administrative procedure.

But then he goes on to say, while we wait the relevant considerations and now we’ve decided we’ll issue the lease first and then take up the appellate procedure.

But if my client’s lease had been sustained, Your Honor, in answer to your question, he would have lost one year, eight months, and five days of his lease period.

And during that entire time, he would have had to pay the rental and the rental would not have been turned in.

And actually as we pointed out in our reply brief, the reason why — and the Secretary delicately refrains from stating the real reason, the real reason why they issued the leases first and then take up the appellate procedure, is so that they can collect the rent as soon as the lease is issued.

But the Secretary points out in justification of that that really, you know, in most cases the lease is sustained.

But then in most cases, mind you, and even if my client’s lease had been sustained by the Secretary, during that period, the lease — primary term of the lease would apply and he would have had to pay rental for a period in which he had no use whatever of the land.

Now, Section 17 of the Act says that the lessee shall have a five-year term.

It says nothing about a three-year term or a three-and-a-half-year term or a three years, eight months term.

But in effect, this is what the Secretary has done.

It says he collects the lease rental and the term begins.

And every instance where the lease is sustained, the lessee’s lease is curtailed, whether it would be for a year, a year-and-a-half or two years.

Arthur J. Goldberg:

(Inaudible) you wouldn’t object to that?

Leon Benezra:

Not at all, Your Honor.

But we do object — we do object issuing a lease and then telling the man, “We’ll take your rental but we’re not going to permit you to go on the land to develop that lease.”

And I might say, Your Honor, Your Honors, in this connection, I have the lease here.

I think it’s very interesting because item six of the lease issued to Boesche says, “Offeror’s signature to this office shall also constitute offeror’s signature to an acceptance of this lease.”

The offeror further agrees that this offer cannot be withdrawn in whole or in part unless the withdrawal is received by the land office before this lease has been signed in behalf of the United States.

They tell a man, “Once you sign the lease and one — once the Government has signed the lease, you can’t withdraw it,” this is a contract.

But this doesn’t prevent the Government from immediately moving to cancel a lease.

In other words, it’s a unilateral proposition.

The Government is bound by one set of rules and petitioner is bound by another set of rules.

Leon Benezra:

And I submit that this is contrary to our entire Anglo-Saxon concept of contractual relations and this, this Court has long held in the Sinking-Fund cases that with respect to contractual matters, the Government is as much bound by contracts as individuals.

John M. Harlan II:

You’re not — are you arguing your cons — is your position a constitutional one or statutory?

Leon Benezra:

Yes, it is, Your Honor.

John M. Harlan II:

Constitutional?

Leon Benezra:

Yes.

I think — oh, you mean the due process proposition?

John M. Harlan II:

Well, due process.

Leon Benezra:

I think so.

I mean, a right has been given, a contractual right has been established with the petitioner.

And that cannot be divested without court ruling, especially since the other party is the one that’s acting as the judge in this case.

John M. Harlan II:

Well, you got Section 31 first of all, haven’t you?

Leon Benezra:

Yes, and if I may proceed in this connection, Your Honor.

It is petitioner’s contention that Section 31, that under Section 31, the Secretary of the Interior has no authority to cancel a lease administratively and I think here it might be well to read what the section says.

The text of Section 31 has originally enacted in February 25, 1920.

It provides acceptance to hear as otherwise herein provided any lease issued under the provisions of this Act may be forfeited and cancelled by an appropriate proceeding in the United States District Court for the district in which the property or some thought thereof is located whenever the lessee fails to comply with any of the provisions of this Act or the lease, or the general regulations promul — promulgated under this Act.

Now, thus in its original form, Section 31 expressly provides that judicial proceedings shall govern the cancellation of leases for any violation of the departmental regulations.

And this was the understanding of the Secretary himself in 1930, for in 1930 in the case of Melish Consolidated Placer Oil Mining Company versus Testerman, the Secretary said in no uncertain terms quotes, “The lease once granted was beyond recall by the Secretary and is only subject to cancellation in the federal courts,” and he cites Section 31 of the Act of February 25, 1920.

But I want to go on to say that in 1935, the Congress did give the Secretary of the Interior expressed authority to cancel leases upon the failure of lessee to comply with any of the provisions of this lease.

And again, in 1946, the same provision was added to Section 31 at the end thereof and reads as follows: “Any lease issued after August 21, 1935, under the provisions of Section 17 of the Act shall be subject to cancellation by the Secretary of the Interior after 30 days notice upon the failure of the lessee to comply with any of the provisions of the lease unless or until the land covered by any such lease is known to contain valuable deposits of oil or gas.”

There was no violation by petitioner of any of the lease provisions and this is the only basis upon which the Secretary can cancel a lease under the provisions of this Act.

Now, in his brief, the Secretary of the Interior asserts that he has the administrative power to cancel a lease independently of the Mineral Leasing Act and notwithstanding any of its expressed provisions.

And the Secretary implies this authority from Section 441 of the revised statutes of 1875, in which the Secretary of the Interior is given the job of supervising the public business relating to the public lands including mines.

Now, the question before this Court comes therefore in this setting.Congress, by 1935 amendment of the Act and the later 1946 amendment of Section 31 of the Act expressly provided that the Secretary may administratively cancel leases where there has been a violation by the lessee of the terms of the lease.

Otherwise, Section 31 of the Act remains in its original form that the cancellation of an oil and gas lease is to be accomplished by judicial proceedings and not only just judicial proceedings.

Judicial proceedings in an action filed in the United States District Court where the land or any part thereof is located.

Thus, we have a situation that the Secretary has been given expressed powers with respect to the cancellation of leases but it is a limited one.

It is limited to a specific situation and that situation is where the lessee himself has violated the terms of the lease.

And this means in effect that the lessee has violated the contract and therefore since the lessee himself has violated the contract, the Secretary of the Interior can move in and exercise his right to invalidate the contract since there has a violation by the lessee.

If the Secretary has the power to cancel a lease, apart from the provisions of the Mineral Leasing Act, the 1935 Amendment, the 1946 Amendment, the terms of Section 31 in its original form is totally superfluous.

It is rendered absolutely meaningless.

Leon Benezra:

Moreover, we should know that Section 37 of the Act reads that the deposits of coal, phosphate, sodium, oil, oil shale, and gas shall be subject to disposition only in the form and manner provided in this Act.

And yet the Secretary of the Interior notwithstanding this mandatory language of the Act seeks to invoke an authority totally apart from, outside of the scope of the Mineral Leasing Act.

Earl Warren:

When did the Secretary of the Interior first changed his view concerning the — his rights in this regard?

Leon Benezra:

Well, historically, the Secretary in his reply — in his brief had an Appendix B and C in which he cites a number of published and unpublished decisions and if you will — although he claims, although the Secretary claims that his construction of the Act of authority to cancel the lease stems right from the beginning of the Act.

This is not actually so.

First of all, we have this Melish decision that I have cited, where in 1930 the Secretary stated very expressly in and in no uncertain terms we have no authority to administrative cancel — administratively cancel the lease.

And up to 1938, the only cancellation has been for a permit.

But if we refer to Section 26 of the Mineral Leasing Act, we will see that under Section 26, the Secretary was given expressed authority to cancel permits.

So he can hardly claim his cancellation of permits up to 1938 as any of statutory authority for cancelling leases.

Moreover, if the Secretary had — Congress had intended to give the Secretary authority to cancel leases, they would have expressly provided just as they expressly provided that the Secretary could cancel permits.

Earl Warren:

Permits for what?

Leon Benezra:

For — to go and prospect for oil and gas.

There were two distinct forms.

One was a permit and one was a lease.

And these were the two vehicles that were set up by the Congress for the development of the oil and gas on the public domain.

But Congress intended to expressly provide for the administration of this Act and how these things could be cancelled.

And with respect to Section 26, they said the Secretary has authority to cancel permits.

Now, the earliest cancellation of a lease, if you will refer to the appendix is in 1938 and curiously enough it’s the same person, Boesche.

Historically, this is the first cancellation by the Secretary of the Interior of a lease.

And curiously enough, it was not passed, it was canceled solely because the Secretary had no right and the Government had no title within the land.

And after that, the earliest cancellation was in 1947.

But I want to go on to say that the implication by the Secretary of implied authority to cancel leases by the Section 441 of the 1875 Revised Statutes cannot be sustained in view of this Court’s holding in Youngstown versus Sawyer.

In Youngstown versus Sawyer, this Court established the principle that although the executive may imply a general authority in cases where there had been no specific provisions set forth by the Congress with respect to proceedings to be — to be followed.

Once the Congress has specified a cause of action and in this case they said it shall be done by judicial proceedings, the executive cannot ignore, cannot ignore the expressed provisions of the statute.

Earl Warren:

What reasons were those earlier cancellations made, cancellation of leases, the 38 and the 47 one?

Leon Benezra:

Yes.

There was only one cancellation after 1938 and the earliest one was in 1947.

Earl Warren:

And what were those made for?

Leon Benezra:

What were they made for?

Earl Warren:

Yes, what were the reasons to sign for mineral and oil leases?

Leon Benezra:

In — in most cases, in the earliest cases I believe is just a question that the Government had to title to the land at the time.

Earl Warren:

The Government had no title?

Leon Benezra:

No, had no title to the — to the — to the minerals.

That was done in 1938, in Boesche case and the earliest one after that was in 1947.

I think, Your Honors that —

Arthur J. Goldberg:

(Inaudible) is that right?

I’m looking at page 53 of the Government’s brief (Inaudible)

Leon Benezra:

That maybe — I think in this connection that the crux of the matter is this.

We have here the basic question, not of just on oil and gas lease and the question of a right, a copyright that has been vested in the individual.

We have here basically the question of the constitutional division of authority between the Executive and Congress.

And in this connection, I think the statement made by Mr. Justice Frankfurter, speaking for the Court in his concurring opinion in Youngstown versus Sawyer is applicable and applicable here.

In that case, Justice Frankfurter says, “In any event nothing can be plainer that the Congress made a conscious choice of policy in a field full of perplexity and peculiarly within legislative responsibility for choice.”

It is one thing to draw an intention of Congress from general language and to say that Congress would have explicitly written what is inferred where Congress has not addressed itself to a specific situation.

It is quite impossible, however, when Congress did specifically address itself to a problem as it did in this case to find secreted and the antithesis of legislation, the very grant of power which Congress consciously withheld.

To find authority so explicitly withheld is not merely to disregard in a particular instance the clear will of Congress.

It is to disrespect the whole legislative process and the constitutional division of authority between the Executive and Congress.

Hugo L. Black:

What were you reading from?

Leon Benezra:

I’m sorry?

Hugo L. Black:

What were you reading from?

Leon Benezra:

I was reading from Frankfurter’s concurring opinion in the Youngstown versus Sawyer.

Hugo L. Black:

I thought you said the Court’s opinion.

Leon Benezra:

Pardon me?

Hugo L. Black:

I thought you said speaking for the Court?

Leon Benezra:

I said in a concurring opinion.

Hugo L. Black:

I misunderstood it.

Leon Benezra:

The decisions of this Court in the Johnson versus Towsley and West versus Standard Oil Company, established a clear cut line of demarcation between the powers of the executive branch on the one hand and those of the judicial branch on the other hand with respect to cancelation and forfeiture of patents and like instruments.

And in these cases, the patent cases, the Court recognized that the Secretary of the Interior had wide discretion to administer the public lands and to take all action that was absolutely necessary up to the time that patent issue and legal title passed.

And once patent issue and legal title passed, the patent cases have established the principle that thereafter, it is necessary for the Secretary of the Interior or the conflicting applicant who may be agreed to go into a court —

John M. Harlan II:

Of course title hasn’t passed in this case, I don’t know if it makes any difference under the statute.

Leon Benezra:

Yes.

Leon Benezra:

Title has passed to the leaseholder.

John M. Harlan II:

Well, yes.

Leon Benezra:

The manager issued a least for a five-year term and gave the lessee an exclusive right for the full enjoyment of this property.

And I might say that the lease has not as yet been cancelled.

It has been held for cancellation but we still have this lease and that’s what we’re fighting about.

Arthur J. Goldberg:

Mr. BenEzra, would you describe what happened when the agent of the Department of Interior (Inaudible)

Leon Benezra:

Yes, this is — yes, he’s fully aware of this and I might say, Your Honors, I dealt with this matter in our reply brief.

And this is what the Secretary says about this procedure.

It can of course be disputed whether the ideal practice might not be to withhold issuance of the lease until final disposition of any appeals.

But in any event, it is peculiarly a question of internal procedure to be resolved by the Secretary.

They justify this by saying that the likelihood that a sub — subsequent applicant will be able successfully to challenge the prior application is not deemed sufficiently substantial to warrant postponement of the issuance of a lease.

But the Secretary said in the court below that the principal reason why they issued these leases is so that they can get the rentals immediately and therefore what happens even if the lease is sustained, although the party who has received the lease has been denied the use of this leasehold, he has to pay for the full five-year term.

John M. Harlan II:

Suppose the Secretary promulgated a regulation saying that henceforth all leases were to be made conditionally or on a condition subsequent namely that they would have been cancelled and if within period of X days, the Department found that the lease have been improperly issued, would the Secretary have power to do that over the Act?

Leon Benezra:

I don’t think so, Your Honor, for this reason.

This matter was taken into account in Brown versus Hitchcock and in that case, the Supreme Court had before it the question of a patent that have been issued by the Department of the Interior.

Under the law, patents were not supposed to be issue — issued conveying mineral rights in the event that the land is known to be mineral.

In this case, they couldn’t quite make up their mind whether it was agricultural or mineral.

So they wrote into patent that if it’s agricultural, you have the patent — you have the title but if it turns out to be mineral, you don’t have.

And this is what the Court said and I think it’s applicable here.

It says that the only thing that the Secretary is authorized to do is to issue a patent and no uncertain patents are permitted.

You make the determination before do you issue the patent as whether it’s mineral or it’s not mineral.

And in this case, the manager made a determination that the lessee was the first qualified applicant.

If you’re not ready to make a determination and fulfill your executive function of making a determination prior to issuance of a lease or a patent, just don’t issue the lease or patent until you make up your mind.

And there’s nothing to prevent the Secretary of the Interior, especially since they know that there is a conflicting applicant, nothing to prevent him from deferring the issuance of the lease until the appellant procedure is followed through in the Department.

The only thing that’s — that the Government doesn’t like about this it doesn’t collect the money right away.

But I think it may be morally questionable to say to a man, “Look, we’ll issue a lease but this is just tentative and all you have is a precarious type.

But meanwhile you pay your rent.”

Now, the Act says nothing about tentative leases, the Act says nothing about precarious leases.

The Act says under Section 17 that a lease shall be issued for a primary term of five years and so long they’re after as oil and gas is produced in paying funds.

Arthur J. Goldberg:

Mr. BenEzra, I wonder from your contention, could the Secretary ever cancel a lease when a mineral is found there either by administrative or judicial act?

Leon Benezra:

Is this under a patent situation?

Arthur J. Goldberg:

No, under a lease, suppose there’s a lease.

Suppose this portion has been obtained as (Inaudible) go to the Secretary, the land is covering a valuable deposit of oil and gas, what could the Secretary do over those?

Leon Benezra:

The statute clearly says that the Secretary may cancel the lease only for violation for a lease terms and even with respect to this expressed authority to cancel leases it’s limited because if the land is valuable for oil and gas, he has to go into a court.

Arthur J. Goldberg:

(Inaudible) to the language of the statute, could it mean that it’s restricted to the language of the statute in a situation where the value is described?

Leon Benezra:

Well, it seems to me that this is the — the statute itself permits the Secretary to cancel leases only in the event that it is not valuable for oil and gas.

If there hasn’t been discovered in paying quantities, after that he has to go into court.

Arthur J. Goldberg:

But looking at the statute, after that, he can go to the court, lest if we know a violation of the terms of the lease?

Leon Benezra:

I think he can, yes.

Arthur J. Goldberg:

On what statutory language?

Leon Benezra:

Under the — on the — under the Section 31 of the original statute.

Because if there is — if — if it says under the original line of statute under Section 31 that if there is a violation of the statute or the regulations, the Secretary may proceed in the United States District Court.

Arthur J. Goldberg:

(Inaudible)

Leon Benezra:

There again, there again.

Just as in the patent of cases, in the patent cases there were thoughts.

The Secretary of the Interior then could move in the courts in the patent cases and this is what Section 31 provides.

Byron R. White:

(Inaudible)

Leon Benezra:

I think so, Your Honor.

Byron R. White:

(Inaudible)

Leon Benezra:

Well, I believe that it’s — it’s permissible.

If the Secretary finds that there is fraud which pre-exist — pre-exist to the issuance of the lease, the Secretary of the Interior has authority under Section 31 to go into a court to invalidate the lease.

Byron R. White:

What were the terms of this lease?

Leon Benezra:

Pardon me?

Byron R. White:

What were the terms of your — of the federal lease, did you pay so much in a year as the outset of the lease?

Leon Benezra:

Yes, sir.

Byron R. White:

And then delay rentals —

Leon Benezra:

I beg your pardon.

Byron R. White:

Delay rentals or not under the lease?

Leon Benezra:

No.

As soon as the lease is issued, the rental begins.

Byron R. White:

Yes, but what is the rental?

That’s what I’m asking.

Leon Benezra:

What is it?

50 cents an acre.

Byron R. White:

That’s just for the outset?

Leon Benezra:

That’s right.

Byron R. White:

That’s all you have to pay.

No delay rentals each year?

Leon Benezra:

No, annual rentals every year.

Byron R. White:

And you’re on — is your only real objection that the rent started on this lease?

Leon Benezra:

No.

Byron R. White:

It really had cut down to three years or two years or something in that sense.

Leon Benezra:

This is — this is part of my objection.

My objection is that the Secretary of the Interior under Section 31 has no authority to cancel a lease.

But even then when he does cancel, money goes to this appellate procedure even if the lease is sustained, the party whose lease is sustained is his lease period is curtailed.

Byron R. White:

And the same is true if he doesn’t by judicial proceeding under 31.

Leon Benezra:

Except that there is a double aspect of it.

You have both the Department and the judicial proceedings.

Byron R. White:

Yes, but even if — accepting your position that he has no power administrated to cancel the lease, the Secretary would be moved in court.

You would — the lease would be subsequent to the same hazard —

Leon Benezra:

Yes.

Byron R. White:

— that you would still could —

Leon Benezra:

That — you’re right.

Byron R. White:

— rent back than where if you have a stay.

Leon Benezra:

I cannot — I cannot deny that but here the lessor himself sets up a situation like that in every instance.

Byron R. White:

Well, you have notice of the — you have notice of the appeal of Conley and this other fellow to the —

Leon Benezra:

Yes, sir.

Byron R. White:

— and he participated there.

Leon Benezra:

Yes, sir.

Byron R. White:

And did you object to the Secretary’s jurisdictions beforehand?

Leon Benezra:

Well, all we’re saying, Your Honor, is that the statute provides for judicial proceedings in the United States District Court.

Byron R. White:

Well, you made that point (Inaudible).

Earl Warren:

Well, Mr. BenEzra, I was wondering if Section 31 is all inclusive and it provides the only means for cancelling a lease and not being through court action.

How can you read into it that it also provides for cancelling a lease for what happens before the lease is issued?

If you can read that into the Act, why can’t the Solicitor General also read into the Act what he dissolves to?

Leon Benezra:

I would assume, Mr. Chief Justice, that provision in Section 31 which says whenever the lessee fails to comply with any of the provisions of this Act.

Now, you may have a broad situation as we had in the Pan American case.

Certainly, a broad situation occurs not after the lease is issued but before the lease is issued.

And therefore someone of them comes to the Department and fraudulently claims that he’s a qualified person, this is a situation that amputates the issuance of the lease and the statute specifically provides that if there has been a violation of the provisions of the Act, the procedure shall need to go to the United States District Court.

Earl Warren:

Well the — the Solicitor General as I understand it here, does contend that there was a violation of the Act, not on your part but on the part of the Government because a lease of this kind could not be issued to you because you did not claim — you did not seek to lease also the adjoining land it being under 640 acres.

Leon Benezra:

That — that is true, Your Honor in this respect.

In any administration of any — any governmental function whether it would be a matter of a contract, where Government is so tremendously large, there has to be a delegation before it.

The War Department delegates authority for a contracting officer to enter into a contract.

And what you have is a situation here that the manager has been invested with the Secretary’s authority and it’s just the same as though the Secretary himself issued the lease.

He signs in behalf of the United States and it is assumed and it is correct that prior to the time that the lease is issued, the manager is supposed to examine the qualifications, it’s suppose to apply the departmental regulations.

And he makes a determination as he did in this case the petitioner was the first qualified applicant.

And once that determination is made, he has fulfilled his functions, he has issued a lease but which —

Earl Warren:

Regardless — regardless of whether he’s authorized under the Act to do so or not?

Leon Benezra:

What we have in question here is the question of whether or not there has been a violation of the regulation.

And I would say, Your Honor, that it is possible to construe this regulation in the way the petitioner construed the regulation.

Yes sir?

John M. Harlan II:

But your argument — you have to assume the purpose of your argument because of our limited grant of certiorari that the administrative interpretation, the underlying question is correct?

Leon Benezra:

That is right because the petition limits it and I want to — I want to say that I regret getting into this question.

I had not intended but Mr. Chief Justice’s discussion led me into it.

I just want to say this, I want to emphasize, somewhere along the line when you deal with the Government, an employee of the Government has to be in a position to make a determination.

This is so not only in the Government but so in the business as well.

The top man can’t make every determination and if you invest a man with authority to enter in the contact on behalf of the United States and it says here, you know the petitioner couldn’t withdraw from this contract during the first year, he was stuck with the rental.

It says right here and if the petitioner is going to be bound, why shouldn’t the Government be bound?

The time for the man to make his mind up is before he issues the lease.

And this is the only way you can carry on business because someone above disagrees with the manager.

Leon Benezra:

There’s no reason why a contract with the United States Government shouldn’t be worth the patent —

John M. Harlan II:

Let’s take a more extreme case.

Leon Benezra:

Yes.

John M. Harlan II:

Your position would be, I take it, that if it is prove beyond peradventure that the lessee who walked in and offer to bribe to an underling of the Department of Interior, Department of Land notwithstanding that the Government wanted to cancel that lease and that they would have a legal right to it.

It had to be done through a court action.

Leon Benezra:

I think —

John M. Harlan II:

Isn’t that your position?

Leon Benezra:

No, I would still say, I would still say although it sounds terrible.

I would still say that the Secretary has to go into a court.

John M. Harlan II:

That’s what I am saying.

Leon Benezra:

Yes.

Yes, because this is the only place that you can have an evidentiary hearing.

As a matter of fact, in the appellate procedure provided by the Secretary of Interior, counsel doesn’t even make an oral argument.

He may — he may petition the Secretary to make an oral argument on appeal but this — the times when a lawyer for a petitioner is permitted to make an oral argument to the appellate procedure are very rare and not an imperative one.

Byron R. White:

Mr. BenEzra —

Leon Benezra:

Yes.

Byron R. White:

We do — I think we do have to consider this case on the assumption or it gets to — or against the idea that this lease really was beyond the power of the Secretary to issue.

Leon Benezra:

Not at all, Your Honor.

Byron R. White:

Well, your rule —

Leon Benezra:

I would say —

Byron R. White:

— is simply — you’ve just observed that you would — I thought you would apply this rule right across the board —

Leon Benezra:

Yes.

Byron R. White:

— once the lease is issued, it doesn’t make any difference whether it’s beyond his power or not.

Leon Benezra:

I — I —

Byron R. White:

You must go into court to cancel.

Leon Benezra:

Forgive me.

I understood, Your Honor, to say that it is beyond his power to issue.

If he said beyond his power to cancel —

Byron R. White:

Well, that it’s beyond his power to issue a valid lease on the — in these circumstances.

Let’s assume that it was.

Byron R. White:

You would still apply your rule.

Leon Benezra:

That’s right.

Byron R. White:

That must be your position.

Leon Benezra:

That’s right.

Byron R. White:

And in this case the issue would be whether this lease was issued beyond — that this was a lease that was beyond the power of the Secretary to issue.

That would be under the Act and under his regulations.

That is the issue as you are providing.

Leon Benezra:

I would say that —

Byron R. White:

In a court proceeding or before him, before the Secretary.

Leon Benezra:

If he in fact has issued a lease that was beyond his power to issue, let him go into court and assert that.

That’s my position.

Hugo L. Black:

You are urging that he has to go into the court to try that case itself.

Leon Benezra:

That’s right.

Hugo L. Black:

Whether it is beyond his power?

Leon Benezra:

That’s right, Your Honor.

This is what the statute plainly states.

Earl Warren:

Suppose there were two, two people applying for the lease and it was first given to one and he went into possession and was producing and later through some administrative error, the lease was given to the second one.

Leon Benezra:

Yes.

Earl Warren:

Would you have a right to go into court to have that decided or would the — or would the Secretary of the Interior have the right to cancel that second lease?

Leon Benezra:

If I — I would say that the person who has aggrieved and the patent case has point this out and Brown versus Hitchcock states very plainly, Johnson versus Towsley states very plainly, the person aggrieved can go into a court and in an equity procedure, ask the court to have the — and impress a trust on the person who has received the lease in derogation of his prior rights.

Earl Warren:

But you would think even under those circumstances you would have no right to cancel your second lease.

Leon Benezra:

That’s right.

Earl Warren:

Yes.

That’s all —

Leon Benezra:

That’s right, Your Honor.

Earl Warren:

That’s all I was asking.

Leon Benezra:

The same problem came up in the patent cases and there were certainly as many patents issued as there are leases issued today.

And this Court said, very, very plainly in these cases for what we do affirm and reiterate, I’m quoting from Brown versus Hitchcock ,173 U.S. 473.

Earl Warren:

Is that what you read us a moment ago?

Leon Benezra:

Did I?

Earl Warren:

You did.

Leon Benezra:

I did, Your Honor?

Earl Warren:

Yes.

You read from Brown versus Hitchcock awhile ago.

Leon Benezra:

Thank you very much.

Earl Warren:

Mr. Solicitor General.

Archibald Cox:

Mr. Chief Justice, may it please the Court.

The issue in this case, as we see it, is a very simple but a very practical one.

When a mistake is made by someone in a local land office in granting one of the thousands of applications for leases that come requiring almost monthly, a mistake that violates the Department’s regulations and that defeats the prior right of another applicant, may the Secretary correct the mistake as soon as it’s brought to his attention, refund the rental and give the lease to the person entitled thereto.

Now, the court below held that he may, petitioner argues that he may not either, I’m not quite clear on this, either because there is no power at all to cancel a lease once issued which some of his argument had seem to lead to or because it must be done in judicial proceeding.

In either event, we submit, that the Secretary has the administrative power.

Because this is a question of great housekeeping or at management importance to the Interior Department, and because it has a very pragmatic argument, I would like to emphasize first the nature of the land office’s business and the way these questions arise.

The management of the public domain involves thousands, literally thousands of repairing decisions taken almost daily.

Upon claims, surveys, inquiries, applications of various arts requirements and also applications for leases.

The transactions have to be handled initially by one of the scattered local land offices around the county, who would keep the tract books, the serial registers and other records pertaining to the land and the various claims against it.

Under the — under the statute including the Mineral Leasing Act, the Land Offices Act really as real estate managers, keeping charge of this property.

Under the Mineral Leasing Act, they process applications or issue leases, or approve or disapprove request for the assignment of leases and extensions of the term, they supervise their performance, the drilling and so forth.

On June 30, 1960 for example, there were 139,000 leases outstanding under the Mineral Leasing Act alone, not taking into account all the leases under Taylor Grazing Act, other mineral claims, homestead entries and the like.

Only this two is only a part of the local land offices business.

For example, one land office received 10,000 applications in a single month for leases under the Mineral Leasing Act.

I think that is not a representative month but it does show the volume of business.

There were 50,000 leases issued in a three-year period.

During six months recently, there were 6,000 leases issued.

So that you can see the volume of the transactions just under the Mineral Leasing Act which is part of the business that this local land offices carry on.

Now, in the conduct of (Inaudible) applying in enterprise, some mistakes are bound to occur and the question arises, how are those mistakes to be corrected?

Usually, by some superior officer to whose attention the facts are later brought.

The common sense answered given by both experience and history is that the Secretary of the Interior should have the power to correct the mistake by canceling the improper action in the local office.

The power has been used to cancel improper mining clients, homestead entries, timber entries, improper survey, improper lieu land selections, improper leases under the Taylor Grazing Act and the improper leases under the Mineral Leasing Act.

In the three-year period 1958, 1960, there were 1,100 administrative cancellations of leases under the Mineral Leasing Act.

This was about 2%–

Earl Warren:

In what period — in what period of time.

Archibald Cox:

In the three-year period.

Earl Warren:

Three-year period.

Archibald Cox:

1,100.

That was about 2%, Mr. Chief Justice, of the leases that were issued during that period, so the other 98% were free to go ahead.

John M. Harlan II:

Were those — any of those contested, Mr. Solicitor General?

Archibald Cox:

I don’t have the breakdown but I’m sure that some of them were, yes.

Because they went — some of them went to reported decisions so they must have been contested.

I suspect but I cannot speak of knowledge, I suspect that a great many of them, everyone acknowledge a mistake and that’s a fact because the power has been repeatedly exercised for at least 15 years.

Arthur J. Goldberg:

Is this power also exercised in additional events where the Secretary could violate the statute?

Archibald Cox:

But of course the statute was enacted at the time mineral leases were set up.

The statute as I shall develop a little later, Mr. Justice Goldberg, the provisions in the statute were intended to give the Secretary a no indifferent power that he would not otherwise have had.

There are quite in our view, quite clearly edited.

You will recall that at common law, a lessor does not have the right to forfeit a lease for a breach of the covenants, the failure performance by the lessee.

And what the statute is concerned within this provision, is overwhelmingly causes that would arise in the future performance of the lease.

So this gave, in our view, a substantive power that he would not otherwise have had in a forum in which to perform.

It added to what was already there.

It was not intended to be exhausted and I take in the context of the common law, it makes perfectly a good sense.

You have to add otherwise you wouldn’t have had it.

Byron R. White:

(Inaudible)

Archibald Cox:

No, no.

There were about — my priority is taking the general law of landlord and tenant that there isn’t, unless you reserve it in the lease or unless there’s a state statute, you’ll recall there’s no power to cancel for failure to pay rent, for failure to perform the covenants there.

Byron R. White:

Before this Act was being (Inaudible)

Archibald Cox:

Under the Placer Mining Act, placer mining claims.

Byron R. White:

The placer claims.

Archibald Cox:

These were all placer claims and that was resulting in great ways of the public domain.

Byron R. White:

(Inaudible)

Archibald Cox:

And mineral entries were characteristically cancellable in the Department of Interior.

Yes.

Earl Warren:

Mr. General, you mentioned leases under the Taylor Grazing Act.

Archibald Cox:

Yes.

Earl Warren:

And other — other kinds of leases (Voice Overlap)

Archibald Cox:

Of the two that I’m familiar were Taylor Grazing Act and Mineral Leasing.

Earl Warren:

Is there any specific statute that gives the right to the Secretary of the Interior to do this under the Taylor Grazing Act or –?

Archibald Cox:

The best of my knowledge, there is not.

Earl Warren:

Or is that, that’s done —

Archibald Cox:

I’m informed there is not.

Earl Warren:

That’s done on the same principle or theories that you’re —

Archibald Cox:

That all these cancellations, —

Earl Warren:

— asserting in.

Archibald Cox:

— Mr. Chief Justice, the power to cancel any adverse claim against the public land has been recognized for centuries, so long and under the general statutes creating the Department of the Interior.

So long as the land is part of the public domain and this land, as Mr. Justice Harlan suggested earlier, remains in the public domain.

So that we think that the claim here is no different than of placer mining claim was under the old law, homestead entry, swamp land selection, other adverse claims.

Now, once the land passes wholly out of the public domain as it does in the case of a patent then we would have to concede that the Secretary’s remedy, in a case of fraud or mistake was to go to court.

But as the Court had said in the Cameron case and which was quoted in Mr. Justice Douglas’ opinion in Best against Humboldt Mining.

The general authority of the Secretary has been held to constitute the land office or the Land Department and ultimately the Secretary as the head of that Department, as a tribunal not just a lessor but a tribunal for adjudicating all claimed interest in lands that are part of the public domain and these lands remained part of the public domain.

John M. Harlan II:

What effect do you give to the first part of Section 31 then which is always been in the statute, as I understand it, that certainly covers a situation where the lease was made in excess of authority which was —

Archibald Cox:

In a lease issued under the provisions of this Act may be forfeited and canceled by an appropriate proceeding in the United States District Court, whenever the lessee fails to comply with any of the provisions of this Act of the lease or of the general regulations promulgated under the Act.

I think that the mind of the Congress was overwhelmingly focused on the obligations that were being created by the Act with respect to future performance by the lessee and with respect to regulations relating to future performance by the lessee.

And that the provision was put in as I suggested a moment ago for the purpose not of curtailing the Secretary’s power but for the purpose of giving him this additional power to forfeit for causes arising after the lease was executed which he would not have had either under the general land law applicable to the Department of Interior or under the general principles applicable to the rights of landlord and tenant.

And now, the language is a little broader and happens to overlap with a power under the general statute, I think that does not destroy the force of my argument because I think I’ve shown the situation toward which this was direct.

John M. Harlan II:

With the additive language as you call it was — that’s a separate provision.

Archibald Cox:

But the one I just read is not — it’s what I was describing as the additive language, isn’t that the first time here?

John M. Harlan II:

Yes.

But the one I thought to which you regard as the additive language is what appears in the second paragraph.

Any lease issued after August 1935.

Archibald Cox:

Oh, no.

Let me — let me go back and explain that that isn’t what I meant by the additive power.

John M. Harlan II:

I misunderstood you.

Archibald Cox:

May I back up a little and get this in context because I think that’s part of the reason that’s given.

Archibald Cox:

As I indicated a moment ago, we find the source of this power in the general statutes creating the land office and the Department of the Interior.

As 43 U.S.C. Section 2, gives the Secretary of the Interior power to perform — he shall perform all executive duties appertaining to the surveying and sale of the public lands of the United States or in anywise respecting such public lands and also such as relates to private claims of land and so forth.

Now, we say that under that and the other general statute for century, it has been held at the Department of the Interior, it is the tribunal for determining all claims of interest in public land.

And if for more than a century, the Secretary has held — been held to have power to correct mistakes and to cancel adverse interests that were based on improper action.

And this it seems as to us is sustained by the language from the Cameron case quoted in our brief and also quoted here in Best against Humboldt Mine.

So it’s a —

Earl Warren:

So as the counsel said that it’s late as 1930 and never before the Secretary of the Interior had taken it for granted that the only power that he had was through the courts?

Archibald Cox:

May I come to that in chronological sequence?

Earl Warren:

In your own time please.

Archibald Cox:

I will come to this preferably in mind.

The things that were clearly exercised did not include, for a reason I’ll explain in a moment, mineral leases but they did include to the best of my knowledge, every kind of claim then existing which could be made against lands still in the public domain and the expressions say that the Secretary loses his power only when the land passes out of the public domain.

And it’s been applied.

I listed in the various kinds of things.

So I think the first part to be emphasized, Mr. Justice Harlan is that we think the question is misstated by petitioner.

The question is not whether the Secretary has power under Section 1 of the Mineral Leasing Act, we find the power in the general statute and once it is established that the Secretary has that power under the general statute then Section 31 becomes relevant only if it in someway takes away the power that would otherwise exist.

Now, I’ll come directly —

Hugo L. Black:

Where is the general statute in your brief —

Archibald Cox:

The general statutes appear —

Hugo L. Black:

(Inaudible)

Archibald Cox:

Beginning at page —

John M. Harlan II:

43.

Archibald Cox:

43 of our brief.

The Mineral Leasing Act which was adopted in 1920 said — set up what was then an entirely no system with respect to the disposition of mineral lands because contrast — conservation is appreciated that they were being wasted away under the old statute.

Our theory of Section 31 which was originally enacted, Mr. Justice Harlan, only with that first paragraph in it, is that that first paragraph is additive that it gives the Secretary — gives the Secretary as plaintiff, the right to go into court to cancel a lease for breach of covenant or for breach of the provisions of the Act of which lay duties on the lessee much as if the were a covenant.

They apply overwhelmingly not exclusively.

I don’t want to state it but overwhelmingly to duties resting on the lessee after the lease has been executed and that causes for forfeiting the lease.

William J. Brennan, Jr.:

Well, I gather (Inaudible)

Archibald Cox:

No, no because there are duties put on the lessee in the statute.

William J. Brennan, Jr.:

(Inaudible)

Archibald Cox:

That are not in the, not in the lease but they relate to future performance.

Archibald Cox:

The provisions —

William J. Brennan, Jr.:

Is it necessary there, that it’s added entirely — notwithstanding the —

Archibald Cox:

I think the question would be open to argument that a lease, the normal rule was that the lessee’s nonperformance of obligations unless the lessor was given the power of forfeiture somewhere that it was not existing.

William J. Brennan, Jr.:

I thought the regulation they make is the term —

Archibald Cox:

Those are regulations that refer to regulations to be issued under the statute.

Of course there were not at the time Congress referred to and used the word, “regulation.”

Again, I would say that the use of the word, “regulations,” was necessary to cover violations of the regulations in the future after the lease had been issued.

I think, as I said earlier, I don’t want to overstate it.

I think that there is some overlapping.

Now, we say not only does this make sense as something additive giving the Secretary an additional power.

But that the petitioner’s reading obviously proves too much as the Court brought out in the questioning.

Suppose that the Secretary leases land, which has been set aside for an executive order for the Indians or for a reservoir something like that by mistake.

Suppose this was suggested during the argument that somebody in the local land office is bribed and issues a lease to valuable oil lands within a known geological structure.

And by a simple noncompetitive lease in violation of the statute regulation instead of after competitive bidding as the statute requires in the case of land within a known geological structure.

If you — if the Secretary is confined to the power given by Section 31, it is — not only could he not cancel but it seems to me that in some of those cases no one could cancel.

In other words, if you’re going to read a negative fragment into Section 31, it requires taking away from the Secretary a power to cancel for fraud, for bribery, for other overreaching, or inadvertent waste of the public land or whether it isn’t any violation of the statute, or where you would have to read a great many undertaking into this statute or limitations into the statute that aren’t there in so many terms.

Arthur J. Goldberg:

Mr. General in that connection, I presume exclusively implying to what statutory scheme that fraud is (Inaudible)

Archibald Cox:

Well, I would find it — I would think that what quite would be — could be in cause.

But I would think the more natural thing to do was to say that Congress when it enacted this statute, put it down into an existing legal framework and one of the rules of the existing legal framework is that you can cancel a lease for fraud or that you cancel it for coercion, or for bribery, other brief in (Inaudible).

Now I say here by exactly parallel reason that one of the things in the existing legal framework was a power to cancel all less than fee interest for mistake, especially a mistake by a subordinate in — officer in the issuance.

Arthur J. Goldberg:

Can I ask you this question?

Is they tried (Inaudible)

Archibald Cox:

It would.

I guess it would depend as a practical matter, would it not, whether he had surrendered possession.

Arthur J. Goldberg:

Yes (Inaudible)

Archibald Cox:

Now, of course, with these cases, the Secretary does, even if he’d go into court, he would have to take some preliminary step to determine when he would go to court and when he wouldn’t go to court.

And it seems to me that all the arguments about the inconvenience of the lessee are just as serious where he goes to the court — announces he is going to court, as they are where he announces and administered to cancellation.

I might make it plain at this point what I hope to say earlier in claiming the power to cancel of course we do not claim that this is an untrammeled discretion.

The Secretary is bound by his own rules.

There is also provision to a very considerable judicial review.

Archibald Cox:

So that this is really, may he in the first instance, wipe out this mistake.

Now, Justice Harlan, let me come to the second part of Section 1.

And there I think that I can deal with that and with the problem of history of the administrative interpretation about which the Chief Justice asked at the second time or at least it was on sequence.

As the Act was originally enacted in 1920, there were so far as oil lands are concerned, really two kinds of transactions in which private citizens were interested.

One, was the lease.

The lease was used for lands — primarily for lands that did have petroleum reserves.

The other thing you might get would be an exploration permit.

A power to go on the land and explore and the reason that second paragraph of Section 31 was not in the original Act, Justice Harlan, it is because you didn’t have the kind of noncompetitive lease before oil is discovered, at least not to the same extent but you did have asked in 1935.

You simply have the exploration permit.

Now, with respect to exploration permits, the original statute gave the Secretary power to cancel an exploration permit for failures with Section 26, for failure to exercise due diligence in the prospecting work in accordance with terms and conditions stated in the permit.

And the same question might have arisen then about Section 26 which has been raised now about the first paragraph of Section 31.

Is this exclusive?

Does this mean that they say impliedly through a negative fragment that the Secretary may not cancel an oil prospecting permit for any other reason than for failure to exercise due diligence in prospecting work, not for fraud, not for mistake, etcetera?

Well, the fact is that I come now to the administrative interpretation, that from 1920 until 1935 as long as prospective permits were issued, the Secretary did assert the power to cancel prospective permits.

I’m afraid in my brief I was guilty of that — some of our argument.

We equated permits and leases and during the 1920, 1935 period we should not.

But the permits were regularly cancelled during that period.

There were during that same period, Mr. Chief Justice, a number of leases issued for where those lands where there was known to be oil.

I’m making a rough division here.

I don’t pretend it’s precisely accurate but it’s substantially.

There were a number of leases issued.

The best of my knowledge, the only — the question of cancellation was mentioned in only one case, the Melish case for which my brother quote.

In fact, the Secretary determined in that case that there was in any event no cause for cancellation that was wronged and deterred.

There is, as I read it, but my friends in the Department of Interior disagree, what I would call a dictum to the effect that there was no power to cancel an oil lease, which meant a lease that now corresponds to the lease after competitive bidding.

But in any event, that’s the only expression up to that time that I think we should acknowledge there is a dictum that certainly looks against this but it was a clear dictum.

Also, I cannot claim that as to that time, the power to cancel leases was exercised.

In 1935, provision was made to cancel, to do away with the system of exploration permits and it was at that time, Justice Harlan, that there was put into the statute, this second paragraph of Section 31 which was intended to give the Secretary a power with respect to none — bad conduct in the future, if I may put it colloquially.

With respect to the noncompetitive leases are only a part of that leases where no oil and gas had been discovered.

Corresponding to his power to cancel a permit for failure to exercise due diligence was brought somehow but I think it was essentially the same thing.

It came in at that time.

Archibald Cox:

Now, we say that it is — it seems to me really quite unthinkable that Congress by that second paragraph had any intention to deny the Secretary with respect to noncompetitive leases.

A power that he had been exercising with respect to their predecessor’s exploration permits for roughly 15 years and the power that he had been exercising with respect to every other kind of interest of land still in the public domain, land not patented for at least a century.

To read that much negative fragment, it seems to me to go contrary to the whole history of our notion that the Department of Interior is the special tribunal for dealing with public lands where there are many rapid transactions in an administrative capacity.

Now, let’s —

Arthur J. Goldberg:

(Inaudible)

Archibald Cox:

There is nothing in the legislative history that throws as far as I know that throws any light on that.

I find that the approaching date of oral argument has a way of sharpening one’s mind, Mr. Justice Goldberg.

The legislative history, if I may, I’d like to deal for just a moment with the legislative history and then if I may come back to the practicalities of this situation and then I’ll be done.

There’s certainly nothing in the legislative history contrary to our interpretation.

Now, Mr. BenEzra cites in his brief, a little snippet from the legislative history, where Senator Lenroot said that the Secretary has a right or authority under the bill — under the bill to cancel a lease and it’s true, he did utter those words.

But if you will go to the context in 58 Cong. Rec. 4168, you’ll find that it really throws no light at all on this problem.

Now, the colloquy arose because Senator Walsh of Massachusetts was concerned about two things.

In the first place, he wondered whether somebody shouldn’t have authority to fix the price for oil and gas coming from Government leases.

And in the second place, he was worried about what would happen when the Secretary exercised his power to cancel a lease for the reason stated in Section 31, in other words, for future nonperformance.

And with respect to the second, he said, well, why shouldn’t the Secretary — may I ask the Senator — addressing Senator Lenroot and Senator Smoot, state whether he has any objection to an amendment, giving the Government authority to operate a well where there’s a lease in existence which the Secretary of Interior cancel it.

Mr. Lenroot said, which he has can — which he has cancelled because of a violation of its terms, Mr. Walsh, yes.

Mr. Lenroot, I have no objection but Mr. Smoot said he did have objections and that there was already a provision of the bill dealing with it.

And he said the bill already takes care of this, I don’t want to add, Senator McKellar asked what it is and there was further discussion about who should do what and then Mr. Lenroot said who had sort of dropped out of the conversation.

I should like to suggest to both Senators that the Secretary of Interior has no right or authority under the bill to cancel a lease.

Well, all he was doing was saying that you’ve been discussing this section on the assumption that the Secretary does it but he doesn’t, it’s the court.

I don’t think he was expressing any opinion and certainly no conscious opinion as to the effect of this bill on the general existing power of the Secretary over the lands of the public domain.

Hugo L. Black:

Which bill was that?

Archibald Cox:

This is the bill that became the Mineral Leasing Act of 1920.

Hugo L. Black:

1920?

Archibald Cox:

Yes.

I see that by —

Earl Warren:

General, I like to — I’d like to have you get to the practicalities of it for just a, just a minute and — and the way you acquire the interpretation of the Taylor Grazing Act and these other — these other acts that backbones —

Archibald Cox:

The point — the point that I was seeking to develop at the beginning Mr. Chief Justice, was the very large volume of transactions, necessarily undertaking in the local land offices in grabbing applications of various kinds whether under the Taylor Grazing Act or the Mineral Leasing Act.

And that mistakes — you’re just human to make mistakes, 2% of mistakes in a transaction of this kind, of this volume is perhaps a little larger than it should be but it’s within human nature I think to do.

Now, sometimes the power to correct the mistake is of great importance in the public interest.

Archibald Cox:

This would certainly be true if valuable oil lands were given out by mistake under a noncompetitive lease.

It’s certainly would be true if it was bribery or corruption of some kind.

It would seem to be true with reserve lands, Indian lands, somebody else’s land were given out.

Some power quickly and expeditiously to correct mistakes must exist to protect public interest.

The other side of it is that there are additional cases in which the power quickly to correct mistake is of great importance to competing private interest and it was that Mr. Chief Justice if I could just take a minute to develop.

Because this case illustrates how the problems arise and why some reviewing authority is necessary.

There are as I said large volume of leases left under the Mineral Leasing Act.

It’s not possible to give a lease either under the Mineral Leasing Act or the Taylor Grazing Act in the same manner that you’re awarded television channel or a certificate for an air route.

There are thousands of them to be done over and over again.

And there is no opportunity at that stage without delaying the whole public business for a hearing noticed to opposing claimants and opportunity for argument and appeal.

As a practical matter, what is done and I think it’s about as good a system that one could device.

What is done is the local office gets these thousands of applications pouring in and it goes through them in chronological order.

It knows there are other applications there, there’s no doubt about that, but it doesn’t know quite what other applications or what land they have.

And it takes up the first application in point of time.

It was defective for some reason, the applicant is notified and you go on to the next.

Presently, you come to the application — an application where the land is available or the applicant is qualified, the application meets the statute or regulation and then it’s granted in the local office then and there.

Now, that’s what happened in this case, except that the local office made a gross error, the writ that is paid in this case, Justice White was 50 cents an acre for the first year.

In other words, $40, nothing for the second year, nothing for the third year, 25 cents for the fourth and fifth year and then it’s renewed the lease in order to halt.

It’s been found out that this is within a known geological structure.

That’s why you got this case.

Byron R. White:

(Inaudible)

Archibald Cox:

Because the application and therefore the applicant did not conform to the regulations, it was a —

Byron R. White:

(Inaudible)

Archibald Cox:

It didn’t apply for the required size.

Yes.

Byron R. White:

And therefore occasionally acquired the gas or —

Archibald Cox:

I — I think this could be brought in under those terms.

As I’ve said earlier, I don’t think that that is fairly what they’re directed at.

Byron R. White:

(Inaudible)

Archibald Cox:

It was the regulation, yes.

Archibald Cox:

Therefore, he was not the first qualified applicant.

So you see the lease went out to him and then the manager in the local land office, he keeps on going through in chronological order.

And what —

Byron R. White:

(Inaudible)

Archibald Cox:

Well, I think it’s just a — to everyone’s advantage to get it done and get on with it.

I don’t — also our brief in the court below stressed that it was important to begin getting the royalties.

I find that a little hard to take it seriously, 98% of the leases are beyond question.

Let’s get on with the show.

Byron R. White:

(Inaudible)

Archibald Cox:

No.

Now you see it goes on along in chronological sequence and in due course, he came to Cuccia and Conley’s application.

It was filed just 19 minutes after Boesche’s.

The volume of business was that you can get to it for seven or eight weeks, I think.

But then he got Cuccia and Conley and he saw according to his record that the land was no longer available because it had been granted to Boesche.

This is all down in the local office desk.

So he notified Cuccia and Conley as he is required to by the regulation that their application was denied because the land had been leased, he has to state this under the regulation.

Because the land had been leased on an application number such and such filed in such and such term.

Now, this is the first formal opportunity Cuccia and Conley had to know that there was another fellow who claimed to be the first qualified applicant.

They may have known it by gossip earlier but there is no — there is no machinery which would enable either them or the local manager to know before he came to that application that there were other competing applications for this land.

Now, the draftsmen of the departmental regulation envisage this in fact I think they withdrawn to make this regular part of the appellate procedure.

The regulations provide that when an application is denied, as happened in Cuccia and Conley, you have an opportunity to appear within 30 days and when you take the appeal you’re required to give notice to the prior fellow, Boesche who got the application.

In other words, it is at this higher stage to the Bureau of Land Management that this becomes in its nature an adversary proceeding and someone looked for the first time to determine which of this competing applicant really is entitled to this land.

In this case, it appeared that it was Cuccia and Conley that had the prior statutory right to this land.

If Boesche had had evidence that he wished to introduce that the probation and the regulation for requesting a hearing is evidenced, the regulations are discretionary but it may well be the segment of the opportunity and one might include that some kind of a hearing would be required in such a case.

Arthur J. Goldberg:

Mr. General, it is very unique to say and this would be out of the question.

What is the main practical disadvantage (Inaudible)

Archibald Cox:

Simply — simply time and cumbersomeness extends to both parties and of course we would be very greatly concerned about any such decision because it would — we would wonder doesn’t it affect the Taylor Grazing Act?

Doesn’t it affect various other kinds of entries and claims?

Doesn’t it throw doubt on this power that the Department of Interior has exercised for a century?

Arthur J. Goldberg:

Is that the general concern, (Inaudible) in most similar statute that’s built under the Grazing Act.

Archibald Cox:

I don’t believe — either I didn’t understand the question or misspoke myself in the answer.

Arthur J. Goldberg:

I thought your answer to Mr. Chief Justice when he asked you whether it’s comparable (Inaudible)

Archibald Cox:

Well, in that event, I misled the Chief Justice.

It had something else — had something else I mind.

I believe I’m right in saying that leases under the Taylor Grazing Act are cancelled administratively in the same manner as these.

That — that’s a direct statement.

Hugo L. Black:

I was misled by that area.

Does the Taylor Grazing Act, which provide this execution so far as the Grazing Act, contain provisions like this preserved expressly giving the Secretary authority and power to cancel on such a lease?

Archibald Cox:

I think — not like this.

Not like this.

Hugo L. Black:

To the Court.

Archibald Cox:

No, not like this, Mr. Justice Black.

No, they’re not like this.

Hugo L. Black:

In that connection, you’re time is up but I just — you said several times that the Secretary has a right to cancel for fraud despite the interrogation.

Now, what is the advantage, scope of the advantages for the public and so forth as the speed, fraud as typically as judicial question, the corresponding effect is exceedingly important that man has a lease.

He has something wholly.

They’d be very valuable or frequently maybe sometimes too valuable for the consideration of failing.

But what are the arguments in favor of failing that where statute authorizes with cancellation by fraud, we should read in to that a power to do it by the Secretary and so the court.

I frankly find it hard to make that ballot come out right.

Archibald Cox:

First, I submit, Your Honor, that there is nothing in the statute that grants the power to cancel for fraud.

Hugo L. Black:

They’re going to the courts?

Archibald Cox:

It does — the statute doesn’t say anything about it.

Hugo L. Black:

I understand it doesn’t but I’ll say, isn’t it bold enough to cover that?

Archibald Cox:

I wouldn’t think that the statute designed that as a reason, no.

Hugo L. Black:

What is that?

Archibald Cox:

I think not.

I think that you have to resort to some general power in the background outside of the statute.

Now, as I suggested to Justice Goldberg either, earlier I suppose you can draw it in by saying we assume that Congress must have intended it.

It seems to me cleaner to say that they intended to put it down in an existing legal framework but I say once you start that then the part of the legal framework is this notion that the Department of Interior is a land tribunal as well as simply a lessor.

Hugo L. Black:

Well, I would suppose that without statutory, there would be a sort of power to go into the court and the tract of covenant is something (Voice Overlap) for fraud.

Archibald Cox:

Well I think — I think so too.

I’m simply —

Hugo L. Black:

That I find it is hard — I find it a little difficult to reach a conclusion that you cannot easily find that that shall be submitted to the Secretary of the Interior as an administrative matter to determine these important questions that go to the root of the controversy, is it fraud?

Who finds it?

What happened with reference to those findings?

Archibald Cox:

Well, in using fraud as an illustration and an important one, perhaps I’ve misled the Court as to the causes of cancellation.

Fraud is statistically a very minor cause of cancellation.

Most of the causes of cancellation go to mistakes such as that the land was under a prior lease, that it was part of an Indian reservoir, that it was under lands that have been patented, that it was — should’ve gone under a competitive lease instead of noncompetitive lease, and importantly, to the prior qualified applicant.

Because remember here, Mr. Justice Black, this is not just a quarrel between Boesche and the Government.

There’s Cuccia and Conley here.

There’s somebody else’s statutory right was taken away from him by the mistake way down by the local manager in the land office and he as fast as he could through the procedure set up to the departmental regulation carried this up to the boss, the Secretary of Interior and said, “Look your local manager has denied me a statutory right to this lease,” and when the Secretary discovered that, he said as was the case that’s where it comes it here, “Yes, my local manager denied you your statutory right.”

What’s he going to do with that point?

It would seem to me that the proper thing for him to do is to say, “Well, as far as we’re concerned, I have to correct this mistake.

I’m going to give Boesche back his money.

I’m going to give you the lease.

I recognized that there’s been some inconvenience or possibly more but certainly some inconvenience because of the mistake that my fellow made.

But nevertheless, I’m going to correct it and make it right as fast as I have found about it under the established departmental procedure.

Hugo L. Black:

We treated that casually with reference to any cancellation, such time in memorial so far as we’re concerned, the Courts have tried cases like these that had been reluctant on the part of many people to extend that trial, extend the trial to try controversy just like that, administrative agency because it’s more convenient and can be done more seriously.

Archibald Cox:

Mr. Justice Black, if this were — if this were mining claims, if they were homestead entries, if they were swamp land selection, if they were surveys made by the Department, all these determining who would be the fellow who would get the land and get more rights to this exploration for a century they have been determined in the Department of Interior.

This is not —

Hugo L. Black:

They didn’t have this power?

Archibald Cox:

A new power that we are saying.

Hugo L. Black:

I recall in the opinion of Mr. Justice Douglas wrote, why then there was no act such as this has come in and prescribed ways for the Secretary to cancel which whether limited or not limited, certainly required him to go to the court and cause forfeit.

As I recall it that question was not in Mr. Justice Douglas’ case.

Archibald Cox:

It’s quite true that in those cases there were not statutes dealing with the problem of cancellation.

I was simply seeking to emphasize that this is not a noble or extraordinary expansion of administrative power that we’re arguing before you.

It’s a very familiar type of power that whether it exist in this case requires one to go back to the analysis of the statute that I’ve already done, we think the court below was right on that point.

John M. Harlan II:

Could I ask you one question before you sit down?

Assuming your position is accepted, would there be judicial review of the administrative determination?

Archibald Cox:

Unquestionable, unquestionable.

Archibald Cox:

There’s no — I should have — there’s no doubt about that.

I suppose in some ways you might almost say that the question here is whose going to be the one to take it to court that sometimes I thought it almost comes down to that except I think —

John M. Harlan II:

That’s where I answer the point of my question.

What’s the difference?

Archibald Cox:

I think — well a lot of them will never go to court is the difference.

A great many surely will never go to court.

This man has laid out a $120 that we’re fighting over (Inaudible).

Hugo L. Black:

There is more difference, isn’t it?

One of them is a complicated judicial review, very complicated in many instances.

Why you almost compel to accept findings and they were investigated judicially and it may get bad or a feeling that someone may have about not going too far and substituted an executive action with judicial action.

Archibald Cox:

Your Honor’s qualification about the difference that is to what is open to the Court is quite right.

Although the judicial review, as I read the cases, does seem to me to be rather considerable, although there’s some limits on the facts.

Arthur J. Goldberg:

Mr. General, suppose the development parts of the — in terms of (Inaudible) were those are business models?

Archibald Cox:

I am told — I asked this question of the Bureau of Public Lands and I’m told that this problem has never come up.

The reason, as it’s explained to me Justice Goldberg is that these leases are usually small expected relief and that for the first period of any lease, I am told that what usually happens is the man who gets the lease, spends his time running around trying to find somebody else who will come and drill on the land.

And that therefore, would be the unusual case in which any cause would occur.

I suppose another limiting factor is that it certainly must be the unusual case where you’re dealing as we are with prior competing applicants.

That the question isn’t raised within a rather short time, two or three months, here it is two.

I suppose it might run on several, I don’t know.

Now, fraud and things like that of course might go undiscovered land.

Arthur J. Goldberg:

But instead, would there be an action in the Court of Claims (Inaudible)

Archibald Cox:

Well, I would suppose the most — most likely a source of suit would be not in the Court of Claims but I should think under the Court of Claims Act.

But I don’t — I think I must state that we might raise the argument that it was an exercise of the discretionary function by the local land office manager.

I don’t — there would be problems.

I don’t think there are any clear remedies.

I say, this apparently has never happened at least so I am informed.

Thank you.