Bass Enterprises Production Co. v. United States

381 F.3d 1360, 34 Envtl. L. Rep. (Envtl. Law Inst.) 20
CourtCourt of Appeals for the Federal Circuit
DecidedAugust 31, 2004
DocketNo. 03-5056
StatusPublished
Cited by4 cases

This text of 381 F.3d 1360 (Bass Enterprises Production Co. v. United States) is published on Counsel Stack Legal Research, covering Court of Appeals for the Federal Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bass Enterprises Production Co. v. United States, 381 F.3d 1360, 34 Envtl. L. Rep. (Envtl. Law Inst.) 20 (Fed. Cir. 2004).

Opinion

GAJARSA, Circuit Judge.

Appellants Bass Enterprises Production Co., Perry R. Bass, Inc., Lee M. Bass, Inc., Sid R. Bass, Inc., Thru Line, Inc., Keystone Inc., Enron Oil & Gas Co., Sid R. Bass, Edward P. Bass, Robert M. Bass, Lee M. Bass, and Reagan H. Legg (collectively “Bass”) appeal from the United States Court of Federal Claims’ decision dismissing Bass’s claim that the Bureau of Land Management’s (“BLM”) delay in approving Bass’s Applications for Permits to Drill (“APD”) oil and gas wells constituted a temporary taking requiring compensation from the Government. Bass Enters. Prod. Co. v. United States, 54 Fed. Cl. 400 (2002). Because the BLM’s delay permitted the Government to critically evaluate whether the proposed wells would cause the release of radioactive material from an underground nuclear waste storage facility, this Court finds that the BLM’s delay was not an extraordinary delay and, moreover, the Penn Central factors were not satisfied. We therefore affirm the Court of Federal Claims’ dismissal of Bass’s takings claim.

[1362]*1362I. BACKGROUND

A. Bass’s ADPs

Bass owns interests in Federal Oil and Gas Lease NMNM-02953C, which was initially conveyed by the Government to Bass’s predecessors-in-interest in 1952. The current dispute concerns Bass’s lease of mineral rights on 320 acres of the South Half of Section 31, Township 22 South, Range 31 East, in Eddy County, New Mexico, near Carlsbad (the “Lease”). The Lease conveys to Bass the “exclusive right and privilege to drill for, mine, extract, remove, and dispose of all oil and gas deposits except helium” in the lands covered by the Lease, subject to “all reasonable regulations of the Secretary of the Interior now or hereafter in force when not inconsistent with any express and specific provision.”

In 1976, the Government withdrew approximately 17,200 acres in Eddy County from appropriation under public land laws and began to study the feasibility of a Waste Isolation Pilot Plant (“WIPP”) to provide for underground storage of nuclear waste. 41 Fed.Reg. 54,994-95 (Dec. 9, 1976). Bass’s Lease is located in the southwestern-most corner of the area set aside for the waste facility. Id. at 54,995. Shortly after the land withdrawal, Bass’s predecessor-in-interest filed an APD for a natural gas well, which was approved. Before drilling could commence, however, the Government condemned the first 6000 vertical feet of the Lease in order to “preserve the integrity” of the proposed waste site. In the condemnation order, the Government stated that Bass’s predecessor could continue the “exploration, development, production or removal of oil and gas by way of entries other than through the aforesaid surface and initial 6,000 feet of subsurface.” Ultimately, in 1982, the owners of the Lease at that time drilled a directional natural gas well outside the condemned property that reached under the WIPP site at a depth below 6,000 feet. Bass acquired its interests in the Lease after the directional well had been drilled.

In 1992, Congress passed the Waste Isolation Pilot Plant Land Withdrawal Act (the ‘WIPP Act”), which established a process for opening the storage facility to receive hazardous waste. Pub.L. No. 102-579,106 Stat. 4777 (1992).

The WIPP Act required considerable interagency coordination to permit the site to open. First, the WIPP Act required the Environmental Protection Agency (the “EPA”) to promulgate disposal and operational regulations for the facility as well as criteria for judging compliance with such regulations. WIPP Act § 8(b)-(c). Next, the Department of Energy (“DOE”) was to submit an application to the EPA outlining how it would comply with the EPA’s regulations. Id. § 8(d). Finally, the EPA was to review the DOE’s application and determine whether the facility could be certified and opened for storage of nuclear waste. Id. § 7(b).

As part of the certification decision, the EPA was also required to consult with the DOE and the Secretary of the Interior to consider whether Bass’s Lease should be acquired to ensure the safety of the waste storage site. Id. § 4(b)(5), § 7(b)(4). The WIPP Act prohibited all manner of mining or oil and gas production, including slant drilling, that could affect the WIPP site with the exception of Bass’s rights under its Lease. With respect to the Lease, the WIPP Act established a consultative process to evaluate whether to condemn Bass’s property:

(5) MINING.—
(A) IN GENERAL. — Except as provided in subparagraph (B), no surface or subsurface mining or oil or gas production, including slant drilling [1363]*1363from outside the boundaries of the Withdrawal, shall be permitted at any time (including after decommissioning) on lands on or under the Withdrawal.
(B) EXCEPTION. — Existing rights under Federal Oil and Gas Leases No. NMNM 20953 and No. NMNM 02953C [the Lease] shall not be affected unless the Administrator determines, after consultation with the Secretary and Secretary of the Interior, that the acquisition of such leases by the Secretary is required to comply with the final disposal regulations or with the Solid Waste Disposal Act (42 U.S.C. 6901 et seq.).

Id. § 4(b)(5) (emphasis added). The WIPP Act did not otherwise change the administrative process associated with receiving a drilling permit. The BLM remained responsible for issuing ADPs until the EPA made a determination as to whether condemnation would be required. To effectuate the purposes of the WIPP Act, however, BLM entered into a series of memoranda of understanding (“MOUs”) with the DOE relating to the BLM’s permitting procedures on or near the nuclear waste disposal site.

In March 1993, inspired by the passage of the WIPP Act and the possible threat that the Secretary would acquire its Lease pursuant to the WIPP Act, Bass filed eight ADPs to drill directional oil wells that would reach below 6000 surface feet and extract oil from underneath the area covered by the WIPP Act. Upon receiving the ADPs, the BLM contacted the DOE pursuant to the first MOU between the agencies. The MOU required the BLM to (1) withhold approval of ADPs until it received comments from the DOE and (2) not approve any ADP that may “affect the integrity of the WIPP site.” After being put on notice of Bass’s ADPs, the DOE notified the EPA of the proposed wells, noting that the grant of the ADPs “may have long-term ramifications, if not addressed thoroughly.”

In May 1994, the DOE notified the BLM that, while both the EPA and the DOE had not found any indication that the wells would impact the waste facility, the EPA had not yet determined whether to acquire the Lease pursuant to the WIPP Act. The DOE therefore requested that the BLM delay its ADP decision until the EPA was able to make an informed decision regarding the need for condemnation.

In July 1994, the BLM circulated an internal document recommending that the ADPs be approved. By the end of the month, however, the BLM reconsidered its position and recommended denial of the ADPs because of new concerns over rein-jection wells and water flooding for secondary recovery. In addition, BLM had signed a new MOU with the DOE that emphasized the importance of preserving the WIPP site.

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Bass Enterprises Production Company v. United States
381 F.3d 1360 (Federal Circuit, 2004)

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Bluebook (online)
381 F.3d 1360, 34 Envtl. L. Rep. (Envtl. Law Inst.) 20, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bass-enterprises-production-co-v-united-states-cafc-2004.