Cleaning Up the Muck: A Takings Analysis of the Moratorium on Deepwater Drilling

In light of President Joe Biden’s announcement yesterday that he was considering blocking oil development in the Gulf of Mexico, we should revisit what the legal ramifications were the last time this occurred under the Obama administration. Probably a violation of the “Takings Clause” of the US Constitution.

“The impact of Tahoe-Sierra on takings jurisprudence cannot be overemphasized. For example, its effect can clearly be discerned from the two opposing decisions reached by the United States Court of Federal Claims in Bass Enterprises Production Co. v. United States. The litigation commenced in Bass Enterprises after the Bureau of Land Management denied the plaintiff lessees’ application to explore and drill for oil and gas on their leased property for forty-five months while the Environmental Protection Agency (EPA) determined the environmental impact that such development posed. The Court of Federal Claims initially found a temporary (but per se) taking, stating,

‘Plaintiffs have not been permitted to use their leases for a substantial period of time. Their loss during that period was absolute.’

The court cited Lucas, explaining that the limited duration of the regulation did not bar constitutional relief, and ordered damages in the amount of the interest that the plaintiffs would have earned on the oil and gas profits during the delay period.

Originally published here at Brooklyn Works in 2012 and for greater context see here from the Heritage Foundation.


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