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TEXACO, INC. v. UDALL

February 7, 1969

TEXACO, INC., Plaintiff,
v.
Stewart L. UDALL, Secretary of the Interior, Defendant



The opinion of the court was delivered by: SIRICA

 This case concerns the boundaries of an oil and gas lease off the coast of Louisiana. It is one phase in the development of a body of law to regulate the exploitation of our undersea resources.

 In 1936, Texaco, Inc. initially leased certain beds and bottoms of water bodies off-shore from Louisiana for gas and oil development. *fn1" The lease covered submerged land in the Gulf of Mexico and included among other areas the Southwest Marsh Island Prospect which is the subject of this litigation. The general agreement with Louisiana was modified in 1943, but plaintiff-petitioner retained the above-mentioned prospect.

 In both the 1936 lease and the 1943 modification agreement, the southern or seaward boundary of plaintiff's leasehold was described not in terms of miles or leagues, but rather as the limit of the territorial sovereignty of Louisiana. The 1943 agreement described the Marsh Island Prospect as follows:

 
BEGINNING at a point in the South Shore line of Marsh Island * * *; THENCE South into the marginal or maritime belt of the Gulf of Mexico to the extreme limit or boundary of the domain, territory and sovereignty of the State of Louisiana; THENCE Westerly along said limit or boundary to a point * * * THENCE North through the Gulf of Mexico to the South shore of Vermilion Parish and the North Boundary of State Mineral Lease No. 340;
 
THENCE Easterly following on and along the South Shore of Vermilion Parish * * * to the place of beginning. *fn2"

 Thereafter the United States Supreme Court held that the states had no rights in or power over the area "lying seaward of the ordinary low water mark on the coast" and "outside of the inland waters of the states." *fn3" These decisions rendered unenforceable all state issued leases, including plaintiff's Louisiana State Lease No. 340, to the extent that they encompassed territory held by the Court to be federal property.

 In response to these decisions and in an effort to foster the development of America's offshore oil reserves, Congress, in 1953, enacted the Submerged Lands Act, 43 U.S.C. § 1301 et seq. (hereinafter cited as: SLA), and the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq. (hereinafter cited as: OCSLA). Under the SLA the United States released to the coastal states all of its right, title and interest to the lands beneath navigable waters for a distance of three miles from the coast line of the state or for such further distance as the state could establish as its boundary at the time it was admitted to the Union. In no event, however, could a boundary be interpreted as extending from the coast line more than three marine leagues [9 land miles] into the Gulf of Mexico. "Coast line" was defined in Section 2(c) of the SLA as "the line of ordinary low water along that portion of the coast which is in direct contact with the open sea and the line marking the seaward limit of inland waters * * *." *fn4"

 In order to provide for a complete development of accessible offshore oil, the provisions of the SLA were supplemented by the Outer Continental Shelf Lands Act, 43 U.S.C. § 1331 et seq. That Act provided that the submerged lands of the Outer Continental Shelf lying seaward of and outside of the area ceded to the state under the SLA were subject to the jurisdiction, control and power of disposition of the federal government, and the Secretary of the Interior was designated to administer all leasing and operations under the Act. Section 6 of the OCSLA provided that leases previously issued by the states would be validated and continued as federal leases insofar as they purported to cover submerged lands of the Outer Continental Shelf. Application to the Secretary of the Interior and the satisfaction of several criteria were statutory prerequisites to validation. *fn5"

 Thereafter on March 12, 1958, plaintiff's Louisiana State Lease No. 340 was validated as Federal Lease OCS 0310 in a decision by the Secretary of the Interior acting through the Director of Land Management (this decision is hereinafter termed the Validation Lease). The Southwest Marsh Island Prospect, among other areas, was encompassed within Federal Lease OCS 0310. The southern or seaward boundary of the lease was designated as three leagues (9 mi.) from the "coast line" of Louisiana. The validation decision expressly recited that the term coast line was being used in Federal Lease OCS 0310 as "defined in Section 2(c) of the Submerged Lands Act." *fn7" The Validation Lease was the last of a series of administrative decisions dealing with the validity of the state lease. *fn8" At that time the location of Louisiana's coast line had not yet been determined by the Supreme Court for the purposes of the SLA and the OCSLA.

 In 1960, the Supreme Court set Louisiana's state boundary at 3 miles while leaving the designation of coast line open. *fn9" On December 13, 1965, the Supreme Court entered Supplemental Decree No. 1 in United States v. Louisiana, *fn10" which decision while leaving unresolved the ultimate location of the coast line of Louisiana within the meaning of the SLA, decided that in the Marsh Island Area, the base line for determining the state's coast line was further seaward *fn11" than the government's shoreline proposal (Chapman Line). *fn12"

 Such is the legislative and judicial background of the litigation presently before the Court. Texaco thereafter decided to commence drilling what has since been designated as well No. 44 in the Gulf of Mexico. It is at a location more than three leagues from the shoreline as defined in the Secretary's brief before the Supreme Court in United States v. Louisiana, *fn13" but within three leagues of the coast line as defined by the Supreme Court's supplemental decision.

 Texaco filed for approval with the Department pursuant to 30 CFR § 250.91(a). Plaintiff's application was successively denied through several administrative steps. Each of the decisions grounded its denial in a construction of the lease validation which set the seaward boundary at three leagues from the Chapman shoreline, rather than three leagues from the coast line as defined ...


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