## Facts

- The Department of the Interior conducted an Outer Continental Shelf (OCS) oil-and-gas lease sale (Sale No. 40) that included Tract 49-125 in the Baltimore Canyon area off New Jersey.
- The Notice of Sale required sealed bids to be submitted in accordance with applicable Interior regulations and provided a prescribed bid form with signature requirements, but it did not require an attestation to the bid form signature.
- Interior also required corporate bidders to submit (1) a check for a portion of the bid and (2) corporate authorization documents (such as a corporate resolution) showing that the person signing the bid was authorized to bind the corporation; those authorization documents had to include an attestation by the corporate secretary or assistant secretary.
- Stewart Capital Corporation (SCC), a Delaware corporation, submitted a bid for Tract 49-125 on the prescribed form, signed by SCC’s president.
- SCC’s bid form did not include a separate attestation of the president’s signature by SCC’s corporate secretary or assistant secretary.
- SCC did submit attested corporate authorization documents showing that SCC’s president was authorized to execute the bid and that SCC’s assistant secretary was authorized to attest documents, and SCC’s assistant secretary attested the check submitted with the bid.
- SCC submitted the highest bid for the tract.
- Cecil D. Andrus, Secretary of the Interior, rejected SCC’s bid as “nonresponsive,” reasoning that SCC’s own corporate authorization materials contemplated attestation by an assistant secretary and that the absence of attestation on the bid form invalidated the bid.
- Interior accepted a lower joint bid submitted by Murphy Oil Corporation and Ocean Production Company and awarded the tract to them.
- SCC sued in the Southern District of New York for declaratory and injunctive relief under the Outer Continental Shelf Lands Act (OCSLA) and the Administrative Procedure Act (APA). The court consolidated the preliminary-injunction hearing with a bench trial on the merits.

## Issues

1. Whether Interior could reject the highest bid as nonresponsive because the bid form lacked a corporate attestation when the Notice of Sale and governing regulations did not require attestation on the bid form and the bidder supplied properly attested corporate authorization documents.
2. Whether the Secretary’s decision to reject SCC’s bid and accept a lower bid rested on an unlawful, extra requirement and was arbitrary, capricious, or otherwise not in accordance with law under the APA.

## Decision

- The court ruled for Stewart Capital Corporation.
- The court held that SCC’s bid complied with the requirements stated in the Notice of Sale and the applicable regulations, and that attestation of the bid-form signature was not a stated condition of responsiveness.
- The court concluded that Interior could not treat SCC’s internal corporate formality as a sale-dispositive requirement where the governing notice and regulations did not impose it and SCC’s authority to bid and be bound was adequately documented through the attested corporate papers.
- The court granted declaratory and injunctive relief setting aside the rejection of SCC’s bid and the award to the lower bidders, and directing Interior to proceed on the basis that SCC’s bid was valid.

## Legal Principles

- Agency decisions under OCSLA lease-sale procedures are subject to judicial review under the APA.
- A bid’s responsiveness is measured against the published Notice of Sale and the agency’s regulations governing the sale; the agency may not disqualify a bid based on a condition not found in those controlling materials.
- When a corporate bidder submits properly attested documents showing the signatory’s authority to bind the corporation, the agency may not reject the bid solely for the absence of an additional attestation on the bid form itself if the notice and regulations do not call for it.
- Rejecting the highest bid on a hypertechnical ground unrelated to the government’s ability to hold the bidder to its offer, and not required by the controlling sale terms, is arbitrary and not in accordance with law under the APA.

## Conclusion

Stewart Capital Corp. v. Andrus held that Interior acted unlawfully in rejecting SCC’s highest OCS lease bid for lack of an attestation on the bid form where neither the Notice of Sale nor the regulations required that attestation and SCC otherwise supplied properly attested corporate authorization materials; the court set aside the rejection and the award to lower bidders and ordered relief recognizing the bid’s validity.


Stewart Capital Corp. v. Andrus, 468 F. Supp. 1261 (1979)