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Supreme Court Decision Update - BP America Production Co. v. Burton

The Supremes gave us two new decisions yesterday and this first one is, for lack of a better word, simply fascinating. Seriously, trust me on this. BP America Production Co. v. Burton (PDF of the opinion) is about statutory interpretation and the statute of limitations as it relates to a specific type of Governmental administrative claim. Good times, good times.

QuizLaw Analysis:This case relates to a very specific statutory provision regarding the statute of limitations for contract claims brought by the government. And it more specifically relates to whether that provision applies to a specific type of administrative proceeding relating to payment orders made by the Minerals Management Services. And the Court says it doesn’t. So there you go. Now, I don’t blame you for jumping ship here, although I will tell you there’s a nice little Latin lesson for you, if you stick around. You know, if you’re into that sort of thing.

As quick as possible, can you fill me in on this case? A while back, Amoco Production Co. leased some land from the government, and used that land to produce oil and gas, and that lease was later passed over to BP America Production Co. Now back in 1996, the Minerals Management Services (the “MMS”), which is part of the Department of the Interior, audited the payments BP was making to the government per this lease. They determined that BP was improperly valuing the gas, and since the lease payments were based off of the gas value, the MMS said BP had been underpaying. So the MMS issued a payment order, requiring additional royalty money to cover the period from 1989 to 1996.

Now there’s a general statutory section that sets up a six year statute of limitations for contract actions brought by the Government. So BP appealed the payment order saying that order was barred, in part, by the six year statute of limitations (i.e., BP could only be ordered to pay royalties for a six year period, and not for anything further back). The Assistant Secretary of the Interior told BP to take a hike, and so did the D.C. District Court and Appellate Court.

Seems pretty straightforward - why did the Supremes agree to hear this? Back in 2001, the Tenth Circuit ruled differently from the Court of Appeals for the District of Columbia, so the Supremes decided to settle the matter.

Now, it should be noted that the only issue here is whether the six year statute of limitations applies to MMS payment orders issued before September 1, 1996. This is because a new Congressional act relating to oil and gass leases became effective on that day, and it clarified the issue of statute of limitations here. So the outcome of this case is really narrow in scope.

So who’s on what side here? We’ve actually got a nice little unanimous opinion, penned by Justice Alito. Although Chief Justice Johnny and Justice Breyer didn’t play on this case at all, so it’s only a 7-0 case, not a 9-0 case.

And what’s Alito got to say for himself? He affirms the lower rulings, finding that the six year statute of limitations doesn’t apply in this case. First, he looks at the clear language of the statute of limitations, which applies when the Government files a “complaint” for an “action for money damages.” “Action” and “complaint” generally refer to judicial proceedings, as opposed to administrative proceedings, and nothing suggests that this language is intended to be broader in this instance. And here, we’re talking about administrative proceedings, so a basic language reading says the statute doesn’t apply. While BP tries to prove that “action” is often used in connection with administrative proceedings, Alito says BP is messed up on this point because all of the language it cites to includes something modifying “action” to clarify that it applies to administrative proceedings, but here we’ve got language using “action on its own.”

Next, Alito says that a letter and payment order from the MMS isn’t even a “complaint,” since a complaint is generally and primarily understood to be the starting of a civil litigation. Which isn’t what the MMS payment order does. Not to mention the fact that the MMS payment order doesn’t even have the necessary parts of a complaint.

BP also tried to argue that this ruling would make another section of the same statute superfluous, and that would go against a rule that you shouldn’t read a statute in a way which makes another part of it redundant. But Alito poo-poo’s this argument because that other provision came along many years after the statute of limitations provision, to provide clarification of a point unrelated to this case. And it would still serve that purpose, regardless of the Court’s ruling. Similarly, Alito isn’t buying the argument that the Court’s interpretation somehow makes the statutory scheme as a whole something odd or peculiar - instead, Alito says BP’s way of doing things would make the statute lack symmetry and harmony. In other words, “buzz off, BP.”

What about that Latin lesson? Ah yes. Alito explains that, if there was any doubt here, BP would be screwed anyway, because there’s a rule about statutes of limitation that says they should be construed as narrowly as possible against the government. And this ruling provides just such a narrow interpretation.

See, there’s this old rule, “quod nullum tempus occurrit regi,” which means that “time does not run against the King.” And a corollary to that rule is a rule that “when the sovereign elects to subject itself to a statute of limitations, the sovereign is given the benefit fo the doubt if the scope of the statute is ambiguous.” So any ambiguity here goes against BP anyway. Again, “buzz off, BP.”