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STEWART CAPITAL CORP. v. ANDRUS

April 18, 1979

STEWART CAPITAL CORPORATION, Plaintiff,
v.
Cecil D. ANDRUS, Secretary of the Interior, Murphy Oil Corporation and Ocean Production Company, Defendants



The opinion of the court was delivered by: POLLACK

DECISION AND OPINION

This is a suit for a declaratory judgment and an injunction against the Secretary of Interior by the highest bidder for an off-shore oil and gas lease which was awarded to the lower bidders because of a presumed defect of the higher bid submitted, in that an attestation by an Assistant-Secretary was allegedly required by the corporation's own resolutions (not by the Secretary of Interior) but not supplied with the plaintiff's bid.

 The suit was heard at a bench trial and the action on the merits was advanced and consolidated with the hearing of the application for a preliminary injunction. Fed.R.Civ.P. 65.

 This action arises under the laws of the United States and the jurisdiction of the Court is based on §§ 4(b) and 23(a)(1) and (3) of the Outer Continental Shelf Lands Act, 43 U.S.C. §§ 1333(b) and 1349(a)(1) and (3); 28 U.S.C. § 1331; and § 10 of the Administrative Procedure Act, 5 U.S.C. § 702. The amount in controversy exceeds $ 10,000 exclusive of interest and costs.

 The plaintiff, Stewart Capital Corporation, is a Delaware corporation with its principal place of business in New York. The defendant, Cecil Andrus, is the Secretary of the Interior of the United States. The defendant, Murphy Oil Corporation, is a Delaware corporation with a principal place of business in Arkansas and the defendant, Ocean Production Company, is a Delaware corporation with its principal place of business in New Orleans, Louisiana.

 On January 29, 1979, the Department of the Interior published in the Federal Register a notice of sale of oil and gas leases on the Outer Continental Shelf off New Jersey, pursuant to § 8 of the Outer Continental Shelf Lands Act and the regulations issued thereunder. 43 C.F.R. part 3300; 44 Fed.Reg. 5716-28 (1979) (the "Notice of Sale").

 The Notice provided Inter alia that a tract of submerged land numbered 49-125 in the so-called "Baltimore Canyon" area off New Jersey would be among the Tracts offered for competitive bidding and that sealed bids would be received thereon until 9:30 A.M. on February 28, 1979, in the office of the Manager, New York Outer Continental Shelf Office, Bureau of Land Management ("BLM" hereafter). The bids were to be opened at 10:00 A.M. on that day.

 The Notice required all bids to be submitted in accordance with applicable regulations. It prescribed the form of bid, which form included a specific requirement of signature by the bidder on each bid. Bidders were required to submit with each bid one-fifth of the amount of the bid, either in cash or by check payable to the order of the BLM.

 Plaintiff submitted a bid on Tract 49-125 in the amount of $ 213,000 and enclosed a certified check of the corporation signed by its Assistant-Secretary, Irene Rose Robinson, for $ 42,600 in accordance with the Notice of Sale. The bid was signed by the plaintiff's president. The defendants Murphy and Ocean also submitted a joint bid on Tract 49-125 in the amount of $ 212,000.

 The bids were opened and read on February 28, 1979. The check signed by the Assistant-Secretary submitted with the bid signed by the president of the plaintiff in the amount of $ 42,600 was deposited for collection in a bank with the endorsement of the BLM for credit to the Treasurer of the United States.

 On March 29, 1979, the defendant Andrus announced a decision to award the lease on Tract 49-125 to defendants Murphy and Ocean and plaintiff was notified by the Secretary of the Interior that its bid contained a technical deficiency, namely that the signature of the plaintiff's president on its bid was not attested by its Assistant-Secretary. Because of this supposed defect the defendant Andrus characterized the bid as "deficient" and "legally unacceptable" in reliance on an analysis submitted to him by the Solicitor of the Department dated March 19, 1979, and despite the fact that the bid form set out in the Notice of Sale makes no provision for attestation or other form of authentication of the signature to the bid. The plaintiff requested reconsideration of the decision to reject its bid, which was denied. Pursuant to the Andrus decision, the defendants have executed a lease on Tract 49-125.

 This suit was filed on April 4, 1979, charging that the decision of the defendant Andrus to award the lease to defendants Murphy and Ocean was arbitrary, capricious, an abuse of discretion, not in accordance with law, in excess of statutory jurisdiction of authority and without observance of procedure required by law. The plaintiff sought a temporary restraining order enjoining the issuance of and any proceedings under the lease to the defendants Murphy and Ocean and such an order was entered on consent of all parties and the case was set for prompt trial of the application for a preliminary injunction.

 The relief requested in this suit is a declaratory judgment that the defendant Andrus unlawfully awarded the lease on Tract 49-125 to the defendants Murphy and Ocean, a permanent injunction against the defendants from performing such a lease, a declaration that plaintiff is entitled to the lease on Tract 49-125, and a mandatory injunction requiring the Secretary to issue a lease on Tract 49-125 to the plaintiff.

 43 C.F.R § 3302.4 entitled "What must accompany bids", identifies the items a corporate entity such as plaintiff must ...


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