The U.S. Supreme Court case Pan American Petroleum and Transport Company et al. v. United States in 1926 revolved around the issue of whether or not the government had a right to lease oil-rich public lands to private companies for exploration and production purposes, specifically focusing on naval petroleum reserves in California and Wyoming. The plaintiffs, Pan American Petroleum among them, argued that such leases violated their rights under the Due Process Clause of the Fifth Amendment as they were not given an opportunity to bid for these leases competitively. However, the court ruled against them stating that Congress has broad powers over public lands including leasing it out without competitive bidding if deemed necessary for national security reasons (in this case ensuring a steady supply of fuel for Navy). The decision upheld federal control over natural resources on public land.

The dissenting opinion in the case of Pan American Petroleum and Transport Company et al. v. United States argued that the government did not have a valid claim to oil reserves located beneath privately owned land, even if it was once public domain land. The justices contended that when the government sold or granted this land, it relinquished all rights to any resources contained within it unless explicitly stated otherwise in the deed or grant agreement. They believed that under common law principles, ownership of surface rights generally includes subsurface rights as well (the ad coelum doctrine). Therefore, they disagreed with majority's interpretation of an 1865 statute which suggested federal retention of mineral rights on certain lands sold by U.S., arguing instead for its narrow application only to coal deposits rather than extending it broadly to include oil and gas reserves too.