Union Oil Company of California v. The Honorable Rogers C. B. Morton, Secretary of the Interior of the United States of America

Four major oil companies brought this action to set aside an order of the Secretary of the Interior denying them permission to construct a drilling platform in the Santa Barbara Channel which they allege is necessary for full exercise of their rights under a federal oil and gas lease. The companies also seek to enjoin the Secretary from further interference with enjoyment of their lease rights. The district court held that the Secretary’s order was within his statutory authority and was not arbitrary, capricious, or an abuse of discretion, and dismissed the complaint. We vacate the decision of the district court and remand for futher proceedings.

Factual Background

In February 1968, the four companies (hereinafter “Union”) paid over $61 million for oil and gas rights on tract OSC — P 0241. The leased tract lies on the continental shelf in the Santa Barbara Channel, beyond the jurisdiction of the State of California. The Interior Department granted the lease under the authority of the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq.

The lease gives Union the right to erect floating drilling platforms, subject to the provisions of the Act and to “reasonable…