BP America Production Co. v. Burton

PETITIONER: BP America Production Co., successor in interest to Amoco Production Co., et al.
RESPONDENT: Rejane Burton, Act Assistant Secretary, Land and Minerals Management, Department of the Interior, et al.
LOCATION: United States Court of Appeals for the Ninth Circuit

DOCKET NO.: 05-669
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the District of Columbia Circuit

CITATION: 549 US 84 (2006)
GRANTED: Apr 17, 2006
ARGUED: Oct 04, 2006
DECIDED: Dec 11, 2006

ADVOCATES:
Daryl Joseffer - argued the cause for Respondents
Jeffrey A. Lamken - argued the cause for Petitioners

Facts of the case

The Department of the Interior (DOI) leases the rights to the mining of natural resources on federal lands to private companies like BP America Production (BP) in return for royalty payments. BP obtained a lease for the mining of coalbed methane gas, a natural gas that requires removal of excess carbon dioxide from the gas in order to make in marketable. In 1996, the Minerals Management Service (MMS) of the DOI issued an administrative order clarifying that the companies themselves must bear the full cost of removing the carbon dioxide. BP had been deducting the removal cost from its royalty payments, so the MMS ordered BP to pay more than $4 million in past royalites. BP cited 28 U.S.C. Section 2415(a), which establishes a six-year statute of limitations for government actions for monetary damages. BP argued that the government could not claim past royalties from more than six years before the 1996 administrative order, because the six-year time limit had expired.

The DOI Assistant Secretary rejected BP's arguments and ruled for the government. A District Court affirmed the decision, ruling that an agency administrative order was not a government action for monetary damages, so the statute of limitations did not apply. On appeal, the Court of Appeals for the D.C. Circuit upheld the lower court's ruling. The Circuit Court ruled that the government would have had to file a complaint in court in order for the statute of limitations to take effect; an agency administrative order did not activate the time limit.

Question

Does the six-year statute of limitations for government actions for monetary damages in 28 U.S.C. 2415(a) govern the issuance of administrative orders, as opposed to the government's filing of a complaint in court?

Media for BP America Production Co. v. Burton

Audio Transcription for Oral Argument - October 04, 2006 in BP America Production Co. v. Burton

Audio Transcription for Opinion Announcement - December 11, 2006 in BP America Production Co. v. Burton

John G. Roberts, Jr.:

Justice Alito has the opinion of the court in BP America Production Company v. Burton.

Samuel A. Alito, Jr.:

This case comes to us on writ of certiorari to the United States Court of Appeals, for the District of Columbia’s Circuit.

Contract actions brought by the United State’s government are generally subject to the six years statute of limitations setout in 28 U.S.C Section 2415(a).

The question in today’s case is whether administrative payment orders issued by the Department of the Interiors, Minerals Management Service assessing royalty underpayment on oil and gas leases followed in that statute, we hold that Section 2415(a) does not apply to these administrative payment orders, and we therefore affirm.

Section 2415(a) provides that “every action for money damages brought by the United States shall be barred unless the complaint is filed within six years.”

As ordinarily understood the key terms in the statute action and complaint principally concerned judicial not administrative proceedings.

Section 2415(a) in fact expressly distinguished between judicial and administrative proceedings providing that an action must commence “within one year after final decisions have been rendered in applicable administrative proceedings.”

To the extent that any doubt exists as to the appropriate understanding of the scope of Section 2415(a) it is erased by the rule that statutes of limitations are construed narrowly against the government.

Petitioners argue the reading of section 2415(a) so as not to apply to administrative payments orders renders Subsection ‘I’ of the same statute superfluous.

Section 2415(i) provides that nothing in Section 2415 shall prevent United States from collecting any claim by means of an administrative offset, under the reading the Court adopts today this provision is not redundant before section 2415(a) was enacted administrative offsets have been understood by the department of justice as a form of prejudgment attachment device attendant to a judicial action.

Section 2415(i) makes clear that even when viewed in this manner, administrative offsets remain available to agencies.

The decision of the Court of Appeals for the District of Columbia is affirmed, this opinion is unanimous.

Chief Justice Roberts and Justice Breyer took no part in the consideration or disposition of this case.