Bass Enterprises Production Co. v. United States

45 Fed. Cl. 120, 144 Oil & Gas Rep. 86, 1999 U.S. Claims LEXIS 243, 1999 WL 817967
CourtUnited States Court of Federal Claims
DecidedOctober 12, 1999
DocketNo. 95-52 L
StatusPublished
Cited by7 cases

This text of 45 Fed. Cl. 120 (Bass Enterprises Production Co. 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
Bass Enterprises Production Co. v. United States, 45 Fed. Cl. 120, 144 Oil & Gas Rep. 86, 1999 U.S. Claims LEXIS 243, 1999 WL 817967 (uscfc 1999).

Opinion

OPINION AND ORDER

HODGES, Judge.

We ruled in a May 1996 Opinion and Order that plaintiffs’ oil and gas leases were taken permanently by the United States when the Bureau of Land Management denied their application to drill “at this time.”1 BLM informed plaintiffs that the denial was a final appealable decision. After plaintiffs filed suit in this court, BLM issued a “supplemental decision” stating that it was “prepared to give [the] proposal further consideration when the EPA has certified DOE compliance with its solid transuranic waste disposal regulations.” BLM said it did not necessarily mean that the earlier ruling was final. EPA’s role was to decide whether environmental dangers existed, and if so to advise the Department of Energy that it should condemn the leases in federal district court. BLM was not dependent on or bound by such review by EPA.

On appeal, the Federal Circuit ruled that a permanent taking could not have occurred because Congress “mandated [an] end to the regulatory process [which] will result in a decision whether or not to condemn the leases.” Bass Enterprises Production Co. v. United States, 133 F.3d 893, 896 (Fed.Cir.1998). It remanded the case to the trial court to determine whether plaintiffs suffered a temporary taking.

DISCUSSION

Defendant takes the position on remand that the dispositive issue in a temporary takings analysis is whether an extraordinary delay occurred in the regulatory process. If so, did such delay deprive plaintiffs of substantially all economically viable use of their property during the temporary taking period. Specifically, the question posed by defendant was whether BLM’s delay until EPA ruled on condemnation was unreasonable.

Plaintiffs argued that such a standard does not apply here, and they did not offer any evidence of unreasonable delay. Rather, “BLM’[s] decision to prohibit development of plaintiffs’ lease despite its exemption under the WIPP2 Land Withdrawl Act... resulted in the United States’ de facto acquisition of plaintiffs’ property for the sole public purpose of protecting the integrity of the WIPP site.” Thus, the taking occurred when BLM, the only agency authorized to act on plaintiffs’ applications, denied them. We characterized the argument as a per se temporary regulatory taking.

A. The Regulatory Process

The Federal Circuit held that “denial of the permits is at best a temporary taking. The statutorily mandated end to the regulatory process will result in a decision whether or not to condemn the leases.” Bass, 133 [122]*122F.3d at 896. The Federal Circuit recognized that plaintiffs’ applications were denied, not just delayed.

The record in this case establishes that the permitting process was completed. Bass could take no other steps to obtain approval of its applications. The denial letter issued in May 1994 stated that “DOE requested BLM delay any decisions until after December 1996....” BLM found it “necessary to deny approval of [the] eight proposed wells, at this time.” Defendant cannot escape the consequences of a permit denial by using the phrase, “at this time.” BLM had three options after review of plaintiffs’ permits. It could deny the permits, grant the permits, or delay action. Bass, 35 Fed.Cl. 615, 618 (1996). BLM chose to deny the permits. The denials were an absolute prohibition of plaintiffs’ right to possess, use, and dispose of the oil and gas under the lands subject to the lease.

BLM had final decision-making authority over Bass’ applications.3 EPA’s role was to evaluate whether the WIPP site complied with EPA’s standards for the disposal of radioactive waste. EPA had nothing to do with oil and gas development or Bass’ applications for development. EPA’s process of determining whether to certify the WIPP site was a separate regulatory process, leading to a decision of whether to recommend that the Department of Energy condemn plaintiffs’ leases in an eminent domain proceeding.

B. Temporary Takings Analysis

To prevail on a temporary takings theory, plaintiffs must demonstrate that but for the Government’s action, they would have undertaken development efforts. See Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 1033, 112 S.Ct. 2886, 120 L.Ed.2d 798 (1992) (Kennedy, J., concurring) (petitioner must have had the intent and capacity to develop the property and failed to do so because the State prevented him). These plaintiffs intended to develop the subject property when they submitted their applications to the Bureau of Land Management. The Division Production Manager for Bass Enterprises testified that Bass was ready to drill the wells. The Exploration Department approved geological prognoses that “illustrate our readiness to drill these wells.” He admitted that the approval was not final, but rather “essential approval ... to drill the well.” These prognoses were sent to the Texas Division Manager and then to the Drilling Group for preparation of the applications to drill.

Defendant argued at trial that plaintiffs were not ready to drill the wells because the Authorization for Expenditure form was not filled out. This is an internal Bass document that is used to signify final management approval of the project. The Division Production Manager stated, however, that he did not ask his staff to start the authorization for expenditure process because he was unsure of the time it would take to get approval for the applications to drill. He testified that there were indications that the locations would be productive. Bass “had the staff.... the money.... All we needed was the authority....” Plaintiffs had the intent and capacity to drill the eight wells for which they submitted applications to drill.

The Supreme Court set out two categories of regulatory action that are compensable “without case-specific inquiry into the public interest advanced in support of the restraint.” Lucas, 505 U.S. at 1015, 112 S.Ct. 2886. The first is regulations that cause a property owner to suffer a physical invasion of his property. Id. The second is regulations that deny a landowner all economically beneficial or productive use of his land. Id.; See also Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 65 L.Ed.2d 106 (1980). “[T]he Fifth Amendment is violated when land-use regulation ‘does not substantially advance legitimate state interests or denies an owner economically viable use of his land.’” Lucas, 505 U.S. at 1016, 112 S.Ct. 2886 (emphasis added) (quoting Agins, 447 U.S. at 260, 100 S.Ct. 2138).

[123]*123Bass’ property interest was a federal oil and gas lease issued pursuant to the Mineral Leasing Act of 1920. Under the terms of the lease, Bass had the “exclusive right to drill for, mine, extract, remove and dispose of all the oil and gas (except helium) in the ... lands ... together with the right to build and maintain improvements thereupon....” Yet plaintiffs could not undertake any activity on the property after BLM denied the permits. They were denied all economically beneficial use of their leases during that period.

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Cite This Page — Counsel Stack

Bluebook (online)
45 Fed. Cl. 120, 144 Oil & Gas Rep. 86, 1999 U.S. Claims LEXIS 243, 1999 WL 817967, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bass-enterprises-production-co-v-united-states-uscfc-1999.