Gulf Oil Corporation v. Morton

No. 72-2449 (9th Cir. March 25, 1974)

On petition for a rehearing, the court partially revises its earlier opinion by ruling that the Secretary of the Interior's order of April 21, 1971, suspending oil drilling in the Santa Barbara Channel, became invalid on October 18, 1972, when the 92nd Congress adjourned. The Secretary's authority to suspend the leases in order to enable Congress to consider particular legislation for their termination vanished after four legislative sessions failed to act on the bill. A more recent suspension order, issued April 18, 1973, is also by implication invalid. Even if the Secretary's authority to order suspension were found not to have expired on October 18, 1972, it clearly ceased no later than November 13, 1973, when the Secretary himself advised Congress that the proposed legislation should not be enacted. The court denies the petition for rehearing, but vacates its earlier judgment and remands the case of consolidation with an action pending in the district court, noting that this represents a route by which this litigation can be terminated. For the court's earlier opinion, see 4 ELR 20086.

Counsel for Plaintiffs
Samuel O. Pruitt
Gibson, Dunn & Crutcher
515 S. Flower Street
Los Angeles, California 90017

Counsel for Defendants
William D. Keller U.S. Attorney
Donald J. Merriman Asst. U.S. Attorney
1100 U.S. Courthouse
312 N. Spring Street
Los Angeles, California 90012

Kent Frizzell Asst. Attorney General
Jacques B. Gelin
Edmund B. Clark
Department of Justice
Washington, D.C. 20530

[4 ELR 20378]

Duniway, J.

Upon consideration of appellees' petition for a rehearing and of appellants' response, we have partially revised our views about this case as follows:

First: The Secretary's order of April 21, 1971, which is under attack in this case, recites that it "shall terminate on January 2, 1973." The order was justified on the ground that its purpose was "to permit the Congress to consider pending legislation for the termination of thirty-five leases. . . ." The 92nd Congress adjourned, sine die, on October 18, 1972 (86 Stat. 1588), without taking any action on the Secretary's proposed legislation. While we continue to be of the opinion that the Secretary's order was valid when made, we now hold that its only raison d'etre vanished on October 18, 1972, and it became invalid on that day. The second session of the 92nd Congress is the fourth session of the Congress to which the Secretary's bill has been presented.Nothing substantial was done at any session to push the bill; no action was taken by the Congress at any session. Four tries are enough. We are therefore also of the opinion, and hold, that the Secretary's authority to suspend the leases to enable the Congress to consider the particular legislation that he had presented to the 92nd Congress vanished on October 18, 1972. The statutes involved do not give the Secretary carte blanche to continue suspending the leases until he finds a Congress that will accept his proposal. The new judgment to be entered should declare the validity of the April 21, 1971 order until October 18, 1972, and that it became invalid thereafter.

Second: The judgment appealed from was stayed by the district court on July 31, 1972. The stay was to terminate on January 2, 1973, or sooner if the judgment became final. Thus, technically, there was no stay after January 2, 1973. However, the Secretary issued a new suspension order on April 18, 1973, which has not been stayed. Thus, as a practical matter, the rights of appellants to drill under their leases have been continuously suspended since April 21, 1971.

The April 21, 1971 order provides:

The term of the foregoing leases shall be extended by a period equivalent to the period of suspension in accordance with 43 CFR 3305a.4. Under the provisions of 43 CFR 3303.5 no payment of rental or minimum royalty will be required for or during the period of suspension.

That provision was valid and was effective until October 18, 1972.

The suspension order of 1973, however, contains no provision extending the terms of the leases. It does provide, however:

No payment of rental or minimum royalty will be required for or during the period of suspension, 43 CFR 3303.5.

The trial court held that, if the Secretary lacks power to suspend operations under the leases under the circumstances, "the Secretary does not have the power to extend the leases in question unless ordered by the Court so to do in order to effect equity." We agree. We have held that the Secretary's power to suspend for the reasons given by him expired on October 18 1972. We hold that equity requires that the original term of each lease be extended by the entire time during which the Secretary's orders have purported to be effective. In addition, by reason of the stipulation of the parties appearing at pages 389-390 of the record, appellees are entitled to an additional extension of 183 days.

We also hold that the quoted provisions of the two orders of the Secretary relating to payment of the minimum rental or royalty should be enforced in the judgment.

Third: As Judge Chambers pointed out in his concurring opinion, the validity of the Secretary's new order of April 18, 1973 is not directly before us. The stipulation referred to in our opinion was made in another case, and was appropriately before us to show that this case is not moot. It appears to us, however, that under the stipulation in the action attacking that order, the effect of our holding is that the Secretary's April 18, 1973 order is also invalid. This litigation ought to be terminated. That can be accomplished by consolidating action No. 73-1302-FCW, pending in the district court, with this action, and entering a single new judgment in the two actions.

Fourth: Although it is unnecessary for us to do so in the light of our holding, we note that appellees have brought to our attention the fact that on November 13, 1973, the Secretary, acting through the Assistant Secretary for Energy and Minerals, advised the Senate Committee on Interior and Insular Affairs that his proposed legislation should not be enacted "at this time." He based this action on the existing energy crisis, on the enhancement of the Department's capability for regulating Outer Continental Shelf Operations, and on improvements in offshore drilling and production technology. If we are in error in holding that the order of April 2, 1971, and the Secretary's power to make such an order, expired on October 18, 1972, it is clear to us that his power to make such an order was fully spent not later than November 13, 1973, when the Secretary himself abandoned the sole basis upon which his orders purported to rest. This is an additional reason why this litigation and the companion case pending in the district court should be terminated.

The petition for a rehearing is denied.

The judgment appealed from is vacated, and the case is remanded to the district court with directions to consolidate this action with action No. 73-1302-FCW pending in that court, and for further proceedings consistent with this opinion.