BP American Production Co. v. Burton

BP American Production Co. (BP) (plaintiff) held a lease to produce gas from federal land, which required that BP pay the government a royalty equivalent to 12.5 percent of the value of gas removed or sold. For years, BP’s predecessor, Amoco Production Co. (Amoco), calculated royalties based on the value of gas when it was produced at the well, a value lower than when the gas was treated to meet certain quality standards. In 1996 the Department of the Interior’s Mineral Management Service (MMS) informed Amoco that the royalty should be based on the gas’s value once treated and ordered Amoco to pay the difference for 1989 through 1996. The assistant secretary of the interior denied Amoco’s appeal. Amoco then sought review in federal district court and the court of appeals, both of which upheld the payment order, rejecting Amoco’s argument that it was barred by the six-year statute of limitations for government-contract actions found in 28 U.S.C. § 2415(a). The Supreme Court granted certiorari. In support of its interpretation that the statute of limitations extended to administrative proceedings, BP cited precedent in which the Supreme Court held that the Clean Water Act allowed recovery of attorney’s fees for administrative proceedings, as well as precedent holding that the Equal Employment Opportunity Commission had authority to award compensatory damages in administrative proceedings. BP also cited various statutes and regulations in which the term complaint was used in the administrative-proceeding context. BP further argued that the government’s interpretation of § 2415(a) would render subsection (i) superfluous, because subsection (i) allowed federal agencies to collect claims through withholding mechanisms, and those mechanisms would be redundant if administrative proceedings were exempt from § 2415(a). Finally, BP argued that the government’s interpretation would be contrary to congressional intent and would frustrate the purpose of the statute, noting by way of example that statutory recordkeeping requirements extend back seven years, making it illogical to allow payment orders going back further in time.