BOWMAN, Circuit Judge.
Under the Mineral Lands Leasing Act (MLA), 30 U.S.C. §§ 181-287, before government lands may be leased for oil or gas exploration without competitive bidding, the Secretary of the Interior (the Secretary) must determine that the lands are not within a "known geological structure of a producing oil or gas field" (KGS). Id. at § 226. At issue in this case is whether the Secretary made a proper KGS determination before granting valuable oil and gas exploration leases to Texas Oil and Gas Corporation (TXO) on a noncompetitive basis. The District Court for the Western District of Arkansas
The twenty noncompetitive leases in question, covering lands located on the Fort Chaffee Military Reservation in Arkansas, were issued to TXO on July 1, 1979. Having learned of these leases, Arkla Exploration Company (Arkla) filed an administrative protest against their issuance with the Department of Interior (the Department) on September 17, 1979.
In response to these developments TXO, on November 1, 1979, sought from the D.C. District Court an order temporarily restraining the Secretary from canceling its leases. A hearing on the TRO was scheduled for November 2, 1979. On the evening of November 1, 1979, the Secretary invalidated the leases, reasoning that they had been issued without proper authority, notwithstanding the passage of an amendment to the MLA permitting the granting of leases on acquired military lands such as Fort Chaffee, see infra note 6 and accompanying text, because the lease applications had been filed prior to the effective date of the Department's implementing regulations.
TXO subsequently converted its suit for a TRO to one for permanent relief. The D.C. District Court held in favor of the Secretary. Texas Oil & Gas Corp. v. Andrus, 498 F.Supp. 668 (D.D.C.1980). The court found that the Secretary's decision to invalidate the leases was based on his reasonable interpretation of the Department's regulations and was not the result of improper political motivation.
The Court of Appeals for the District of Columbia Circuit (D.C. Circuit) reversed, Texas Oil & Gas Corp. v. Watt, 683 F.2d 427 (D.C.Cir.1982), rev'g Texas Oil & Gas Corp. v. Andrus, supra, and on July 20, 1982, directed the Secretary to reinstate the leases.
The instant action attacking the KGS determination was commenced by Arkla on August 4, 1982. The State of Arkansas petitioned the court for leave to intervene on August 18, 1982.
In 1975, Congress passed an amendment to the MLA authorizing for the first time
In May 1977, TXO applied to the Bureau of Land Management (BLM) for thirty-eight noncompetitive oil and gas leases on 78,000 acres located in the Fort Chaffee Military Reservation. Departmental procedures assigned to the Area Geologist of the USGS the responsibility for determining whether the lands in question were located within a KGS. For Fort Chaffee, the Area Geologist at that time was Edward L. Johnson in the Tulsa, Oklahoma USGS office. Johnson went to work for USGS in 1956, and had worked in the Tulsa area since at least 1961.
Johnson took the TXO applications and compared them to a map of the Fort Chaffee area. This map displayed the wells drilled in the Fort Chaffee area as reported by the Petroleum Information Co., a petroleum reporting service. Each well, both producing and dry wells, was entered on the map by a draftsperson in Johnson's office. Johnson then would indicate the location of each KGS on the map, including in the KGS, for each well producing in commercial quantities, the section (a section is one square mile) in which the well is located plus the surrounding eight sections. This practice, referred to in the district court as the "one mile stepout," had its roots in Ark.Stat.Ann. § 53-114 (1971 & Supp.1983), which gives the Arkansas Oil and Gas Commission the authority to set spacing units for oil and gas wells in Arkansas, i.e., no wells can be drilled closer than the minimum spacing unit set by the Commission.
In reviewing the Secretary's decision to issue the leases without competitive bidding, Judge Waters was faced with an administrative record of approximately 1580 pages. The record consisted primarily of TXO's lease applications, the leases, and a number of articles and reports describing the geology of the Fort Chaffee area, several of which had been written by experts who testified at trial. The record also included some prior KGS determinations on which the clearlisting decision for the TXO leases had been based. In only one of these prior KGS determinations had the Tulsa office extended a KGS farther than the ordinary one-mile maximum from a producing well — the Washburn Anticline KGS determination, made on October 29, 1963. D.R. at 235-39. None of the KGS determinations made after that date extend more than one section beyond a producing well. Indeed, a review of the KGS determinations made under the one-mile stepout procedure gives one little indication of any geologic research or analysis conducted in connection with such determinations. The language of the reports accompanying each successive determination is so similar as to resemble boilerplate.
The administrative record also contains the Girard Report. Prepared by O.W. Girard, a USGS geologist, this report is the official Department internal review of the KGS determination at issue in the instant case. While the report concludes that the KGS determination was correct "in a legal sense," it also concludes that "more comprehensive use" could have been made of the geologic data available to the Tulsa office, "such as constructing a variety of subsurface geological and reservoir engineering maps in order to `geologically' confirm the determination." D.R. at 415-16. The Girard Report also notes the total failure of the Tulsa office to consider exploration interest in the Fort Chaffee area in making the KGS determination and the clearlisting decisions for the TXO leases. Id. at 416-17.
A crippling weakness of the administrative record was the omission of the map used by the Tulsa USGS office in making the clearlisting decisions. By the time this case reached the district court, the map no longer existed. Without this map, it was impossible for Judge Waters to know which wells surrounding the lease area were considered and which were not considered in making the KGS determination and the clearlisting decisions here at issue. In his deposition, Johnson testified that the map could not be recreated because it may have had mistakes in it. Johnson deposition at 76-77.
Judge Waters was confronted with an administrative record that raised many more questions than it answered about the basis of the Secretary's decision. He therefore found it necessary to admit a limited amount of additional information, including testimony from Johnson and his superiors, to determine the true scope of the administrative record and cure its factual deficiencies, particularly the lack of the map used in making the clearlisting decisions.
Even if the administrative record had been complete, Judge Waters was faced with another problem — the highly technical nature of the field of petroleum geology. Judge Waters is not a geologist and, without what amounted to a short course in the subject, given in open court by experts for
562 F.Supp. at 1226-27.
TXO and the Secretary argue for reversal on numerous procedural and jurisdictional grounds: (1) improper venue; (2) lack of standing; (3) unavailability of a cause of action; (4) failure to exhaust administrative remedies; (5) statute of limitations; and (6) collateral estoppel. They also argue that the standard of review applied by the district court was improper and that the Secretary's KGS determination was correct. We address these issues in turn.
On August 13, 1982, TXO, pursuant to 28 U.S.C. § 1404(a), moved the district court to transfer venue in this case to the D.C. District Court. After a hearing before the district judge, TXO's motion for change of venue was denied. TXO and the Secretary argue that denial of this motion was improper.
"A motion for transfer under 28 U.S.C. § 1404(a) is addressed to the discretion of the trial court and its actions will not be disturbed on appeal unless there has been an abuse of discretion." Layne-Minnesota p.r., Inc. v. Singer Co., 574 F.2d 429 (8th Cir.1978). We have examined the record and find that the denial of TXO's motion for change of venue was not an abuse of discretion.
The thrust of appellants' venue challenge is that they may be subjected to two orders — one from the D.C. Circuit and one from this Circuit — that are mutually inconsistent. The D.C. Circuit, however, ruled only on the timeliness of TXO's lease applications under applicable federal statutes and has ordered only that TXO's leases be reinstated "[a]s matters stand...." 683 F.2d at 435. That Court did not consider the KGS issue. Its ruling presupposes that the leases were issued in accordance with the applicable law and that the leased lands are not within a KGS. For our Court to require the Secretary to offer these lands for lease only after a lawful KGS determination does not conflict with the decision of the D.C. Circuit, to which this issue never has been presented. Because we hold these leases invalid notwithstanding the timeliness of TXO's application for them, our mandate necessarily supersedes that of the D.C. Circuit. The parties should not have any doubt that the instant decision now controls this matter.
TXO and the Secretary argue that neither Arkla nor the State of Arkansas has standing to assert the claims now before the Court. Having reviewed the entire record, we conclude that both parties meet the Article III standing requirements.
In order to have standing:
Belles v. Schweiker, 720 F.2d 509, 513 (8th Cir.1983) (citing Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982)).
The district court accurately characterized the nature of Arkla's rights.
548 F.Supp. at 471. Arkla alleges injury in that these rights were violated with respect to the subject lease land. The injury alleged by the State of Arkansas is the loss of revenue to which it is statutorily entitled.
Availability of Cause of Action
The MLA, 30 U.S.C. § 226-2, clearly contemplates the right of adversely affected parties to seek judicial review of leases awarded by the Secretary. See, e.g., Copper Valley Machine Works, Inc. v. Andrus, 474 F.Supp. 189, 192 (D.D.C.1979), vacated on other grounds, 653 F.2d 595 (D.C.Cir.1981) (recognizing statutory judicial review procedure of § 226-2); Geosearch, Inc. v. Andrus, 494 F.Supp. 978, 979 (D.Wyo.1980) (jurisdiction of court founded on § 226-2). Judicial review must, of course, be sought in a timely fashion, after the avenues of administrative relief have been adequately explored. Arkla and the State of Arkansas meet these requirements and, thereby, have available to them this cause of action.
TXO and the Secretary maintain that neither Arkla nor the State of Arkansas has a cause of action in federal court because no private right of action exists under the MLA. In making this argument, appellants rely on Pullman v. Chorney, 712 F.2d 447, 450 (10th Cir.1983) and Naartex Consulting Corp. v. Watt, 542 F.Supp. 1196, 1202-03 (D.D.C.1982), aff'd 722 F.2d 779 (D.C.Cir.1983). But Pullman and Naartex merely refused to imply a private right of action for damages or other relief against private defendants under the MLA. The existence of an implied private right of action against private defendants is one thing; judicial review of an agency decision is quite another. Arkla and the State of Arkansas have sought only judicial review of final agency action, which is precisely what § 226-2 authorizes.
TXO and the Secretary also argue that KGS determinations are committed to agency discretion by law and thus are unreviewable under 5 U.S.C. § 701(a)(2). This provision of the Administrative Procedure Act (APA) applies only if there is "clear and convincing evidence" of Congress's intent to preclude judicial review. Abbott Laboratories v. Gardner, 387 U.S. 136, 140-41, 87 S.Ct. 1507, 1510-11, 18 L.Ed.2d 681 (1967). We find no such evidence in this case. TXO and the Secretary point out that 30 U.S.C. § 189 gives the Secretary
Exhaustion of Administrative Remedies
The TXO leases were granted on July 1, 1979. On September 17, 1979, Arkla filed a timely protest to the issuance of the leases. The Secretary, on September 20, 1979, ordered the USGS to re-evaluate the non-KGS classification of the leased land. On November 1, 1979, the Secretary invalidated TXO's leases. The BLM then dismissed Arkla's protest as moot. TXO and the Secretary argue that Arkla has failed to exhaust its administrative remedies because it did not appeal the dismissal of its protest. We do not agree.
Without first being an "adversely affected" party, Arkla had no right to an administrative appeal of the dismissal of its protest. See, e.g., 30 C.F.R. § 290.7; 43 C.F.R. §§ 4.21, 4.410. By the time Arkla's protest was dismissed, the TXO leases had been invalidated. Therefore, it cannot be said that Arkla was "adversely affected" by an administrative decision when its protest was dismissed on grounds of mootness. After all, the very result it sought — invalidation of the TXO leases — had been achieved. Under the circumstances, an administrative appeal would have been pointless. Thus, on the particular facts of this case, Arkla has done all that was necessary to satisfy the exhaustion requirement.
The State of Arkansas never had an opportunity to pursue administrative remedies. It was not an interested party until 1981, when Congress amended the MLA to entitle the states to share in revenues derived from the lease of public lands. See supra notes 5 and 9. At that time, there was no reason for any administrative challenge to these leases because the Secretary had invalidated them. When the D.C. Circuit then issued a mandate ordering the Secretary to reinstate the leases, it became highly improbable that the State of Arkansas could ever obtain relief in the context of an administrative proceeding. "[I]f the agency's limited power to grant relief or the agency's hostile attitude makes it impossible or highly improbable that the litigant will obtain the relief [it] seeks," exhaustion will not be required. West v. Bergland, 611 F.2d 710, 719 n. 11 (8th Cir.1979), cert. denied, 449 U.S. 821, 101 S.Ct. 79, 66 L.Ed.2d 23 (1980).
"The doctrine of exhaustion of administrative remedies is not a strict jurisdictional requirement, but rather a flexible concept which must be tailored to the circumstances of the particular case." South Dakota v. Andrus, 614 F.2d 1190, 1192 n. 1 (8th Cir.), cert. denied, 449 U.S. 822, 101 S.Ct. 80, 66 L.Ed.2d 24 (1980). Because of the circumstances mentioned above, we hold that the doctrine of exhaustion of administrative remedies is not a bar to this action.
Statute of Limitations
"No action contesting a decision of the Secretary involving any oil and gas lease shall be maintained unless such action is commenced or taken within ninety days after the final decision of the Secretary
Arkla's original suit challenging the July 1, 1979 leases was filed in the D.C. District Court on September 21, 1979. Thus Arkla brought its initial action within the ninety-day statutory period. On November 1, 1979, the leases were invalidated by the Secretary. Arkla's original lawsuit later was dismissed without prejudice. See supra note 3.
Once the Secretary invalidated TXO's leases, there did not exist a situation adverse to Arkla. Moreover, such a situation did not arise until July 30, 1982 when the D.C. Circuit directed that the leases be reinstated. Consequently, Arkla could not have taken any action contesting these leases during the time between the dismissal of its original suit and the D.C. Circuit ruling. One cannot, after all, challenge something that is non-existent. With the issuance of the mandate of the D.C. Circuit, there was a judicial order adverse to Arkla. The present action was commenced within a few days thereafter, on August 4, 1982.
"Limitations periods are intended to put defendants on notice of adverse claims and to prevent plaintiffs from sleeping on their rights." Crown Cork & Seal Co. v. Parker, 462 U.S. 345, ___, 103 S.Ct. 2392, 2396, 76 L.Ed.2d 628, 635 (1983). The Secretary has known since September, 1979 of Arkla's opposition to these leases. Furthermore, Arkla has not slept on its rights. It has acted promptly and has done everything to protect its interests in this matter that reasonably could have been expected of it. We hold that the statute of limitations is not a bar to this action.
TXO and the Secretary maintain that the validity of the leases has been conclusively determined through litigation in the D.C. District Court and an appeal to the D.C. Circuit. They argue that the present action therefore is precluded under the doctrine of collateral estoppel.
In this Circuit, use of collateral estoppel is appropriate when:
Oldham v. Pritchett, 599 F.2d 274, 279 (8th Cir.1979). We need go no further than the first requirement set forth above.
Standard for Reviewing the KGS Determination
The Secretary's KGS determination may be set aside if it is arbitrary, capricious, or contrary to law or to the Secretary's regulations. 5 U.S.C. § 706(2)(A). The reviewing court must ascertain if the Secretary's decision was based on a consideration of the relevant factors, and in so doing must conduct a "thorough, probing, in-depth review" of the record. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 415, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).
Id. at 239 (citations omitted, emphasis added).
The district court's admission of explanatory evidence served to help the court understand the complex nature of petroleum geology. It also served the related and equally important purpose of educating the court as to the kinds of scientific, technical, and economic data that are relevant to a legally correct KGS determination. Without supplementary evidence of the kind the district court admitted, the court hardly could be expected intelligently to determine whether the Secretary adequately considered all the factors that go into a proper KGS determination. Both plaintiffs and defendants brought in experts to educate the court and to illuminate the administrative record, not to substitute the court's judgment for the Secretary's. We do not find any error in the scope or methodology of the district court's review of the Secretary's decision.
Validity of the KGS Determination
The Secretary and TXO argue that the lands in question were properly classified as non-KGS. But the Department, in making the KGS determination, did not consider pertinent geologic information that readily was available to it or actual competitive interest that had been shown in the Fort Chaffee area. Instead, the Department made its determination under an arbitrary one-mile stepout rule. These actions ignore Congressional intent in enacting the MLA and are inconsistent with that statute. Therefore, because the Department applied an arbitrary mileage rule without even considering geologic information or competitive interest, we hold that the KGS determination is unlawful.
The Department's treatment of the lease applications in this case brings to mind the legend of the tribesmen who sold Manhattan Island for a few trinkets and a small quantity of strong drink. In the words of Lorenz Hart,
The analogy is not perfect, however, because the Department in this case probably had far more insight into the value of what
Prior to his cancellation of the leases, the Secretary ordered the USGS to conduct a review of the Tulsa USGS office's KGS determination. The result was the Girard Report, which thus far has been the only official administrative review of the KGS determination for the TXO leases. D.R. at 392-433. The covering memorandum to the report from the Director of USGS makes the following statement with regard to USGS policy on KGS determinations in the Fort Chaffee area:
Id. at 393-94. This statement helps to explain the "criticism" received by Johnson for attempting to make KGS determinations beyond the one-mile stepout. The USGS feared court challenge, but the fear of being sued is no excuse for a failure to implement Congressional intent. The USGS, which by its own admission never has had a KGS determination reversed for being too broad, had every reason to believe that, if challenged, its proper judgment would be sustained. Instead, it bowed to industry pressure by using an arbitrary mileage standard, which surely never would be challenged as being over-inclusive, since the State of Arkansas used it as a minimum spacing unit for producing wells.
A. Congress and the MLA
The MLA, passed in 1920, forms the basis of the Secretary's authority to lease mineral rights on federal lands. Though the MLA originally applied only to lands in the public domain as part of federal sovereignty, it later was extended to cover virtually all lands owned by the federal government. The broad purpose of the MLA was to provide incentives to explore new, unproven oil and gas areas through noncompetitive leasing, while assuring through competitive bidding adequate compensation to the government for leasing in producing areas.
A major controversy in the Congressional hearings arose over where the line should be drawn between competitive and noncompetitive lands. Review of the legislative history of the MLA reveals that several arbitrary mileage rules for identifying lands to be leased competitively were considered but that all were rejected.
Concededly, KGS is a broad term, and the Secretary has authority to determine its meaning. Even so, this authority must operate within the confines of Congressional intent, not to mention common sense. These confines were exceeded when, based on a map nearly void of pertinent information other than one-mile sections around producing wells, the Secretary disposed of valuable public resources at fire sale prices. This was no substitute for the use of proper procedures to determine if the lands to be leased are within a KGS. That an arbitrary mileage rule was used by the Tulsa USGS office as the sole KGS determinant in itself clearly demonstrates that the KGS determination in this case was at odds with the express intent of Congress.
B. Geologic Information
A great deal of geologic information was available to the Tulsa USGS office, including National Gas Policy Act determinations,
The Secretary argues that Johnson was an experienced geologist and that his use of the one-mile rule was a result of his familiarity with the geology of Fort Chaffee acquired during his long tenure with the Tulsa office of the USGS. No one disputes Johnson's expertise as a geologist or his familiarity with the Fort Chaffee area. Johnson applied the one-mile rule in this case not because of geological expertise, but because he previously had received criticism from his superiors for attempting to deviate from the rule. Johnson deposition at 62-63, 197. If in fact Johnson had been allowed free rein to use his knowledge in interpreting all the available data, this case may never have arisen. In any event, for the Department to fix the boundaries of a "known geological structure" without first considering pertinent geologic information that readily was available to it is plainly inconsistent with the MLA. Equally inconsistent is the Secretary's decision to grant the TXO leases based upon such a KGS determination.
C. Competitive Interest
Perhaps even more serious than the Secretary's failure to make use of the available geologic data and expertise is his failure to consider actual competitive interest in the Fort Chaffee area shown by Arkla and other oil companies. Arkla had made numerous inquiries to BLM about obtaining leases on Fort Chaffee. D.R. at 352-70. Prior to the issuance of the leases in question, Arkla had bid on various drainage leases within Fort Chaffee. In one sale, Arkla's bids of $151.51 per acre on two sections within the Fort were rejected as too low. These sections were but one section away from the TXO lease area, 562 F.Supp. at 1219-20, which was leased for only $1 per acre.
Furthermore, while the Girard Report concludes that the KGS determination was correct "in a legal sense," a thorough reading of the report damns that conclusion with faint praise. In a telling passage, the report notes the failure of the Tulsa USGS office to consider exploration interest:
Id. at 416-17. Thus, the USGS's own study reveals that competitive interest and risk of exploration were not considered in making the Fort Chaffee KGS determinations. Because relative risk of exploration and exploration interest lie at the heart of
The Department eventually took steps to correct the deficiencies in its KGS determination procedures that the Girard Report and subsequent internal reviews revealed. As evidence of this shift, this Court takes judicial notice of BLM Instruction Memorandum No. 84-35 (October 14, 1983)
Id. at 1 (emphasis added).
IM 84-35 goes on to outline a procedure for KGS determinations strikingly similar to that advocated by Arkla and mandated by the district court. This procedure calls for consideration of shows of gas or oil, acknowledges that stratigraphically controlled accumulations may be very extensive, states that a closed anticline may be assumed to be presumptively productive, and that a structure may be proven with very few wells. Id. at 1-2. IM 84-35 also states that a KGS normally will include at a minimum the nine sections surrounding a producing well. As the record in this case reveals, the Tulsa USGS office only once extended a KGS beyond nine sections. See supra p. 352.
In short, the Department did not do its homework before it classified the Fort Chaffee lands as non-KGS under an arbitrary mileage rule and granted these leases. These actions were taken without consideration of such "relevant factors," see Citizens to Preserve Overton Park v. Volpe, supra, 401 U.S. at 416, 91 S.Ct. at 823, as available geologic data and actual competitive interest. Based on our review of the administrative record as amplified and explained by the proceedings in the district court, we hold that these Secretarial actions were unlawful.
The judgment of the district court is affirmed.
JOHN R. GIBSON, Circuit Judge, dissenting.
The court's opinion today has much appeal. It affirms the necessity for competitive bidding for the oil leases in question and will result in substantial income for Arkansas schools. See 30 U.S.C. §§ 191, 355. The court, however, paints with too broad a brush, substantially exceeding our proper narrow scope of review, and I must respectfully dissent.
I find it hard to conclude that the district court did anything other than conduct a de novo hearing and substitute its judgment for that of the Secretary. The hearing extended over four days; ten witnesses testified in person and three by deposition. The hearing transcript totaled 837 pages and the deposition testimony totaled 338 pages. The district court in its order made some eighty findings of fact dealing with the geologic issues. See Arkla Exploration Co. v. Watt, 562 F.Supp. 1214, 1218-24 (W.D.Ark.1983) (Findings of Fact 37-113, 119-22). There was testimony and findings of expert opinions contesting the method upon which Johnson clearlisted the leases as being non-KGS.
While the district court finds that there was no rational basis underlying the application
The testimony was clear that Johnson had long experience and detailed geological knowledge of the area in question. The court overlooks testimony that this knowledge was utilized in making the conclusion that the one-mile stepout in this particular area was desirable. Nor does the record reflect that Johnson's policy of stepping out one section was totally automatic. If the well was not a good one or had a thin sand, it might be included in the adjacent section. Johnson deposition at 62. If the well had a particular kind of sand or was expected to have high production, it could be expanded to take in all adjacent sections. It would be a judgment call. Id. at 195-96.
While the court dismisses the Girard report as damning the determination with faint praise, the report gives further support for the determination. In his letter that accompanied the report from the USGS Director, the Secretary stated "[i]t is my conclusion that the KGS determinations are appropriate, given our understanding of the geology and the legal definitions that have been operative in making such determinations." D.R. at 392. The report itself states:
Id. at 393. It further concludes that "[e]xcept as noted above, none of the spacing units (sections) can be tied to a producing well. Therefore, the negative KGS determination was properly made." Id. at 416.
All of the foregoing testimony demonstrates that there was a rational basis for the use of the one-mile stepout from each of the posted wells. With such a rational basis, this court should not conclude that the determination was arbitrary and capricious.
The court bases its decision on the failure of the Johnson method to meet the statutory requirement, looking essentially to the legislative history. This history demonstrated, however, that when Congress was considering this statute in 1918 the question was whether an arbitrary distance measure of ten or twenty or fifty miles should be used, or the more general geological description. To say that the rejection by Congress of the ten-mile or longer distance measures makes the present determination contrary to this statute is again to overlook the geological testimony of the small gas traps in this particular area that made the use of the one-mile stepout particularly appropriate.
The opinion of the court today should be compared with First National Bank of Fayetteville v. Smith, 508 F.2d 1371 (8th Cir.1974). There we recognized that more than mere error is necessary to meet the test and that administrative action may be regarded as arbitrary and capricious only where it is not supportable on any rational basis. Id. at 1376. Further, evidentiary conflicts should be weighed in favor of the administrative action. Id. at 1378. In First National Bank the district court independently weighed the evidence and decided to give greater weight to the testimony of the protestant's expert and focused exclusively on the testimony most favorable to that view rather than the evidence that would support the finding of the agency. The opinion of the court today in affirming the district court takes the same approach as that taken by the district court and properly reversed in First National Bank.
While the court may feel that a poor job was done in the processing of these leases and that Johnson could have been more thorough, our task is simply to determine whether the actions of the Secretary, acting through Johnson, were arbitrary or capricious. If there is a rational basis for the actions, we do not set them aside. The rational basis exists. I would reverse the judgment of the district court.
The one-section stepout used by the Tulsa USGS office employed the basic section township and range platting of the State of Arkansas. Thus, assuming that the maximum stepout was used, a KGS extension for a given well might appear as depicted below.
548 F.Supp. at 472.
The Secretary now contends that the Department's regulations limit a KGS to known traps or pools of oil or gas, and that each separate trap or zone of production is a separate KGS. 43 C.F.R. § 3100.0-5(a) (1970). This fairly recent redefinition of the term KGS does not comport with Congressional intent that the term KGS be construed as domes and anticlines. Moreover, even the Department does not always follow this new definition. In Nola Grace Ptasynski, 19 I.B.L.A. 125 (March 5, 1975), the Department upheld a USGS determination that all of an area which produced gas from numerous intervals of sand was one KGS, even though each interval was separate. The instant situation is similar to that in Ptasynski. Not less than fourteen different levels of producing sands have been identified in or near Fort Chaffee. Four producing wells have been drilled on the Biswell Hill Anticline, which underlies approximately 50 per cent of the leased area. These wells are located on the lower parts of the anticline. Normally such production indicates production on upper parts of the anticline as well. Tr. at 834-35.