Century Exploration New Orleans, LLC v. United States
745 F.3d 1168
| Fed. Cir. | 2014Background
- Century Exploration New Orleans and Champion Exploration leased EW920 on the Outer Continental Shelf; lease became effective August 1, 2008.
- Lease required compliance with OCSLA regulations and future regulations to prevent waste and conserve resources.
- After Deepwater Horizon (April 20, 2010) the government imposed new regulatory requirements, alleged by appellants to be under OPA rather than OCSLA.
- OCSLA regulations required worst-case discharge (WCD) calculations and bond during exploration; OPA also had WCD methodology, with some overlap.
- Notice to Lessees 2010-N06 (NTL-06) changed WCD calculation factors for OCSLA purposes, increasing bond from $35M to about $150M.
- Appellants argued NTL-06 breached the lease; government argued changes were made under OCSLA and incorporated OPA methodology.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether NTL-06 breached express lease terms | Century/Champion contend NTL-06 changed WCD calculations, increasing bonds, violating the lease. | Government argues changes were made under OCSLA authority, not APA/OPA breach, and lease authorizes such changes. | NTL-06 changes were made under OCSLA authority; no express breach. |
| Whether government actions breached implied covenant of good faith and fair dealing | Actions reallocate benefits contrary to the contract’s purpose and terms. | Actions were authorized by the lease terms via OCSLA; no breach of implied duty. | No breach of the implied covenant; actions consistent with express lease terms. |
| Whether the Claims Court lacked jurisdiction over APA challenges | APA claims should be reviewable in the Claims Court. | APA challenges fall outside the Court of Federal Claims’ jurisdiction. | Court lacks subject matter jurisdiction over APA challenges. |
| Whether the government is shielded by the sovereign acts doctrine | If breach occurred, sovereign acts doctrine may not apply. | Sovereign acts defense may bar liability. | Court did not reach sovereign acts defense because no breach found. |
Key Cases Cited
- Mobil Oil Exploration & Producing Southeast, Inc. v. United States, 530 U.S. 604 (2000) (lease breaches when new statutes impose burdens after effective date; authority source matters)
- Amber Resources Co. v. United States, 538 F.3d 1358 (Fed. Cir. 2008) (OCSLA lease provisions; changes to regulations under other statutes may breach contracts)
- Lion Raisins, Inc. v. United States, 416 F.3d 1356 (Fed. Cir. 2005) (APA review and sovereign acts considerations in contract disputes)
- Precision Pine & Timber, Inc. v. United States, 596 F.3d 817 (Fed. Cir. 2010) (implied covenant limitations and contract interpretation principles)
- Great American Insurance Co. of New York v. United States, 738 F.3d 1320 (Fed. Cir. 2013) (binding interpretation of contract and regulatory changes in government actions)