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Decided January 27, 1964

Oil and Gas Leases: Cancellation-Alaska: Land Grants and Selections— Alaska: University of Alaska Grant

Where an oil and gas lease offer was filed prior to enactment of the Alaska Statehood Act on July 7, 1958, a selection for the land was filed thereafter by the Territory of Alaska pursuant to the grant for the University of Alaska, and a lease was subsequently issued in response to the offer and prior to the admission of the State of Alaska on January 3, 1959, it is error to cancel the lease because of the filing of the selection and it is immaterial that subsequent to the admission of the State the land was patented to the State pursuant to the selection.


Standard Oil Company of California has appealed to the Secretary of the Interior from a decision dated September 18, 1961, of the Division of Appeals of the Bureau of Land Management which affirmed a decision of the land office at Anchorage, Alaska, canceling its noncompetitive oil and gas lease because the land had been selected by the State of Alaska.

The oil and gas lease offer in question was filed by Jack V. Walker in the Anchorage land office on May 8, 1957, when the Territory of Alaska was authorized to file selections on behalf of the University of Alaska for nonmineral land. On July 7, 1958, subsections 6(i) and 6(k) of the Alaska Statehood Act (72 Stat. 339, 342, 343) made provision for confirmation and transfer to the State of Alaska of the grant of 100,000 acres of nonmineral land to the University of Alaska made on January 21, 1929 (48 U.S.C., 1958 ed., sec. 354a), and, to the

1 The offer superseded an earlier offer including the same land which was filed by Walker on August 15, 1955. Walker elected to file a new offer rather than to have the lease issued on the earlier offer amended to include the land in question.

71 I.D. Nos. 1 & 2


723-875-64- -1

extent that the full acreage had not been selected on behalf of the University, made mineral land available for selection. These provisions became effective on January 3, 1959, when Alaska became a State. Associate Solicitor's opinion M-36567 (June 10, 1959). Meanwhile, the Territory of Alaska had filed an application, Anchorage 046163, on October 15, 1958, to select all of the land then covered by Walker's offer. Following the filing of the selection, a lease was issued to Walker, effective December 1, 1958. Thereafter the selected land for patented to the State on April 27, 1961, and later the land office on May 5, 1961, canceled the Walker lease, which had since been assigned to Standard.

The land office noted that the selection application filed by the Territory of Alaska on behalf of the University was confirmed and transferred to the State of Alaska pursuant to the Statehood Act and that the original grant was enlarged to include mineral land effective as of the date when statehood was achieved on January 3, 1959. It then concluded that oil and gas lease offers pending when the Statehood Act was adopted and conflicting with State or Territorial selections should be rejected to the extent of conflicts and that its failure to reject the Walker offer should be corrected by cancellation of the lease.

The Division of Appeals affirmed for the same reason.

The Bureau decisions were based on the assumption that if no action had been taken on the offer prior to January 3, 1959, when the State selection was broadened to include mineral lands, the offer would have had to be rejected. Associate Solicitor's opinion M-36567, supra. The Bureau therefore concluded that the lease was invalid and subject to cancellation.

This reasoning is faulty because it does not consider whether there was any bar to issuing the lease at the time when it was actually issued. The Walker offer was converted into a lease at a time when the selection application of the Territory was unacceptable because it included mineral land. The existance of an unacceptable selection application could not invalidate the offer. Therefore, at the time when the lease was issued, there was no bar to leasing the land. Accordingly, it was erroneous to cancel the lease on the ground that it was issued when a selection for the land was pending. It follows that when a patent

2 On June 3, 1959, revised regulations governing grants to Alaska were issued which in effect provided that offers for oil and gas leases filed prior to a State selection for the University of Alaska would be rejected upon approval of the selection. 43 CFR 76.12(b); J. L. McCarrey, Jr., et al., A-28436 (November 14, 1960). The regulations were adopted well after the issuance of appellant's lease, and, in any event, no opinion is expressed as to whether a lease issued in violation of the regulation would be invalid for that reason alone.

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