The Court does not question the right of the Interior Department to promulgate regulations and to draw leases in such a way that lessees are put on notice that if they do not drill offset wells they will be liable to the assessment of 100% Compensatory royalties. But that is not the situation here. Practical difficulties there may well be in actually estimating drainage, but the Court can only enforce the meaning and effect of the Secretary's own regulations and the lease which the Department approved. In the light of this analysis the Court holds that the Secretary's determination was without reasonable basis in fact.
In lieu of the Secretary's determination Plaintiff urges the Court to adopt its contention that only 3/16 or 18.75% Of the oil recovered by the Star well was drained from the Ella Many Ribs tract. This is based on the 160 acre Spacing Order of the North Dakota Industrial Commission for the location of wells in this field.
It is true that only 3/16 of a 160 acre area surrounding the Star well would be located on the Ella Many Ribs land. Therefore, it is urged, the Spacing Order is evidence that the area of drainage of the Star well would be such that only 3/16 of the oil recovered would have come from the Ella Many Ribs land. The Court rejects this argument. In the first place the Spacing Order is concerned with the efficient exploitation and development of the field, a purpose which encompasses other factors beside the estimated area of drainage. In any event the Court is not persuaded that it has the power to substitute its estimate for that of the Secretary. The Regulation, 30 C.F.R. 221.12 provides that 'The Supervisor shall estimate drainage.' Such an estimation is not a judicial function and even if there were facts in the record from which the Court felt it could come to a determination, it would not be prepared to do so. This is a determination which must originate in the Department of the Interior, subject to judicial review.
In the foregoing circumstances the Court is confronted with the question of the power of the Court and the propriety of the exercise of the power, if it exists, of remanding this matter to the Department of the Interior to make a redetermination of the compensatory royalties owed in light of the principles announced in this opinion. The Court feels it possesses the power to do this. The Interior Department, while performing the action at issue here is an 'agency' within the meaning of that term in the Administrative Procedure Act, (Act of June 11, 1946, 60 Stat. 237, as amended, 5 U.S.C.A. § 1001 ff.); Adams v. Witmer, 9 Cir., 271 F.2d 29, and in the absence of specific legislation is controlled by its provisions where applicable. In similar instances, where the actions of an administrative agency have been controlled by the provisions of the Administrative Procedure Act, the United States Supreme Court, and the United States Court of Appeals for the District of Columbia Circuit have indicated that under Section 10 of the Act, (5 U.S.C.A. § 1009), a District Court, upon finding that an agency determination is erroneous, and being unable on the record before it to make an alternative determination, is empowered to remand the cause for further agency action. United States v. Jones, 336 U.S. 641, 671-673, 69 S. Ct. 787, 93 L. Ed. 938; Pacific Far East Lines, Inc. v. Federal Maritime Bd., 107 U.S.App.D.C. 155, 275 F.2d 184. Taking into account all the facts and circumstances, hereinbefore set forth, the Court concludes that the exercise of the power of remand is justifiable and proper.
It is therefore the Order of this Court that the determination by the Secretary of the Interior be set aside and the matter remanded to the Interior Department for further consideration consistent with the principles of this opinion.
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