Barlow & Haun, Inc. v. United States

118 Fed. Cl. 597, 183 Oil & Gas Rep. 487, 2014 U.S. Claims LEXIS 1028, 2014 WL 4802941
CourtUnited States Court of Federal Claims
DecidedSeptember 26, 2014
Docket1:08-cv-00847
StatusPublished
Cited by14 cases

This text of 118 Fed. Cl. 597 (Barlow & Haun, Inc. v. United States) is published on Counsel Stack Legal Research, covering United States Court of Federal Claims primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barlow & Haun, Inc. v. United States, 118 Fed. Cl. 597, 183 Oil & Gas Rep. 487, 2014 U.S. Claims LEXIS 1028, 2014 WL 4802941 (uscfc 2014).

Opinion

Trial; Suspension of Oil and Gas Leases; Concurrent Development of Oil and Gas and Trona; Resource Management Plans; Breach of Contract; Fifth Amendment Taking; Jurisdiction; Statute of Limitations; Justiciability; Ripeness; Standing; Repudiation

OPINION AND ORDER

SWEENEY, Judge

This ease concerns twenty-six leases for oil and gas deposits in southwestern Wyoming. Defendant, as lessor, has simultaneously acknowledged valid existing rights and indefinitely suspended operations and production under the leases. This indefinite suspension, plaintiffs contend, excuses their obligation to seek the required permits from defendant to develop the leases, and amounts to either a breach of the leases or an uncompensated taking of the lessee’s rights under the leases. Defendant counters that the court is precluded from considering plaintiffs’ claims on jurisdictional and justiciability grounds, but that even in the absence of such bars, plaintiffs cannot prevail on the merits. The court held a trial on all liability and damages issues, after which the parties submitted post-trial briefs and presented closing arguments. As set forth below, the court concludes that plaintiffs’ takings claim is unripe, that three of the four plaintiffs lack standing to assert a claim for breach of contract, and that the remaining plaintiffs breach-of-contract claim fails on its merits.

FACTS

This section contains the court’s findings of fact as required by Rule 52(a)(1) of the Rules of the United States Court of Federal Claims (“RCFC”). 1

1. Statutory and Regulatory Background

The leases at issue in this ease, which are described in the appendix to this decision, are subject to the federal government’s statutory and regulatory authority. Jt. Stip. ¶¶ 24-25. Of particular relevance are the statutes and regulations pertaining to the commencement of oil and gas operations on land owned by the government, as well as the statutes and regulations related to the government’s development and revision of land use plans. 2

A. Federal Oil and Gas Leasing

The Mineral Leasing Act, 30 U.S.C. §§ 181-287 (2012), originally enacted in 1920, provides the statutory framework for the disposition of mineral deposits, and the lands *602 containing such deposits, owned by the United States. Id. § 181. Further guidance is contained in the rules and regulations that the Secretary of the United States Department of the Interior (“Secretary”) is authorized to promulgate to carry out the Act’s provisions. See id. § 189. The Secretary has delegated this authority to the Bureau of Land Management (“BLM”). 43 C.F.R. § 3160.0-3 (2013). The Secretary has also authorized the BLM “to issue Onshore Oil and Gas Orders when necessary to implement and supplement” the BLM’s regulations; these orders apply to existing and future oil and gas leases. Id. § 3164.1; see also Onshore Oil and Gas Order Number 1, 72 Fed.Reg. 10,308 (Mar. 7, 2007). The regulations issued by the BLM contain the following general requirement:

The [operator] 3 shall comply with applicable laws and regulations; with the lease terms, Onshore Oil and Gas Orders, [and notices to lessees and operators]; and with other orders and instructions of the authorized officer. These include, but are not limited to, conducting all operations in a manner ... which protects other natural resources and environmental quality; which protects life and property; and which results in maximum ultimate economic recovery of oil and gas with minimum waste and with minimum adverse effect on ultimate recovery of other mineral resources.

43 C.F.R. § 3162.1(a) (footnote added); accord id. § 3162.5-2(a); see also id. § 3162.5-1(b) (requiring operators to “exercise due care and diligence” to ensure against “undue damage to surface or subsurface requirements”); id. § 3162.5-2(d) (requiring operators to “isolate ... other mineral-bearing formations and protect them from contamination”); id. § 3162.5-3 (requiring operators to “take all precautions necessary to provide adequate protection for the health and safety of life and the protection of property”); 72 Fed.Reg. at 10,335 (requiring operators to “minimize adverse effects to surface and subsurface resources” and to “protect the public from any hazardous conditions resulting from operations”).

To commence operations under a lease, an operator must submit an Application for Permit to Drill (“APD”). 43 C.F.R. § 3162.3-1; 4 72 Fed.Reg. at 10,330. To be considered administratively and technically complete, an APD must include a drilling plan, a surface use plan of operations, evidence of bond coverage, and “[s]uch other information as may be required by applicable orders and notices.” 43 C.F.R. § 3162.3-1 (d); accord 72 Fed.Reg. at 10,330-33. The required drilling plan must contain “a description of the drilling program, the surface and projected completion zone location, pertinent geological data, expected hazards, and proposed mitigation measures to address such hazards,” 43 C.F.R. § 3162.3-l(e), and “must be in sufficient detail to permit a complete appraisal of the technical adequacy of, and environmental effects associated with, the proposed project,” 72 Fed.Reg. at 10,331. Indeed, the drilling plan must include, among other items:

a. Names and estimated tops of all geologic groups, formations, members, or zones.
b. Estimated depth and thickness of formations, members, or zones potentially containing usable water, oil, gas, or prospectively valuable deposits of other minerals that the operator expects to encounter, and the operator’s plans for protecting such resources.
c. The operator’s minimum specifications for blowout prevention equipment and diverter systems to be used, including size, pressure rating, configuration, and the testing procedure and frequency....
d. The operator’s proposed easing program, including size, grade, weight, type of *603 thread and coupling, the setting depth of each string, and its condition....
e. The estimated amount and type(s) of cement expected to be used in the setting of each easing string....
g.

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Bluebook (online)
118 Fed. Cl. 597, 183 Oil & Gas Rep. 487, 2014 U.S. Claims LEXIS 1028, 2014 WL 4802941, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barlow-haun-inc-v-united-states-uscfc-2014.