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Rocky Mountain Helium, LLC v. United States

United States Court of Appeals, Federal Circuit

November 16, 2016

UNITED STATES, Defendant-Appellee

         Appeal from the United States Court of Federal Claims in No. 1:15-cv-00336-SGB, Judge Susan G. Braden.

          David Bernard Bush, David B. Bush, LLC, Wheat Ridge, CO, argued for plaintiff-appellant.

          Renee Burbank, Commercial Litigation Branch, Civil Division, United States Department of Justice, Washington, DC, argued for defendant-appellee. Also represented by Allison Kidd-Miller, Benjamin C. Mizer, Robert E. Kirschman, Jr.

          Before Prost, Chief Judge, Taranto, and Hughes, Circuit Judges.

          Taranto, Circuit Judge.

         Rocky Mountain Helium, LLC sued the United States in the United States Court of Federal Claims, asserting breach of two contracts concerning Rocky Mountain's potential extraction of helium from beneath federal lands-the 1994 Helium Contract and the 2008 Settlement Agreement (the latter resolving a dispute centered on the former). The Court of Federal Claims found lack of jurisdiction over both claims and, in the alternative, dismissed the Helium Contract claim on the merits. We partly reverse the jurisdictional dismissal of the Helium Contract claim but affirm the merits dismissal of that claim. We reverse the jurisdictional dismissal of the Settlement Agreement claim and remand for further proceedings on that claim.


         In 1994, Rocky Mountain and the United States Bureau of Land Management entered into the Helium Contract, under which the Bureau gave Rocky Mountain the right, for up to 25 years, to extract helium gas from roughly 21, 000 acres of federal lands in Colorado and Utah. The Helium Contract (Federal Helium Contract FLL 94-001) stipulated that Rocky Mountain annually pay to the United States either rent of one dollar per acre (i.e., roughly $21, 000) or royalties based on the helium that Rocky Mountain extracted, whichever was greater. The Helium Contract also gave Rocky Mountain certain preferential rights to enter into a new agreement with the Bureau if the Bureau terminated the Helium Contract. If, within a year of such termination, the United States "elects to enter into an agreement [with another company] for the sale, extraction or other disposition of helium" that would be covered by the Helium Contract but for the termination, Rocky Mountain would have the right to step in and take that deal instead of the other company. J.A. 62.

         Rocky Mountain never extracted helium from the property-which Rocky Mountain alleges was the result of inadequate cooperation from other firms whose oil and gas mining releases helium for collection. For one year, Rocky Mountain paid the rent due to the Bureau, then it stopped paying. J.A. 82 ("In nearly 15 years, [Rocky Mountain] has made no payment on its contract . . . ."). In December 2004, the Bureau informed Rocky Mountain that it had cancelled the Helium Contract due to nonpayment. Rocky Mountain filed an administrative appeal with the Civilian Board of Contracts Appeals (CBCA). On August 29, 2008, before a CBCA decision, the parties entered into a Settlement Agreement.

         Under the Settlement Agreement, within specified periods the Bureau had to direct certain oil and gas lessees of federal land to furnish the Bureau with specified information ("the Data") about gas composition on the federal lands covered by the Helium Contract, and the Bureau then had to provide "the Data" to Rocky Mountain. J.A. 70-71. Within 90 days of receiving "the Data, " Rocky Mountain had to pay $116, 579.90 (representing back rent) to the Bureau. J.A. 70. After those events occurred, the 1994 Helium Contract would be reinstated. Additional provisions specified certain interactions between the Bureau, Rocky Mountain, and the oil and gas lessees to produce cooperation leading to actual helium collection.

         The Settlement Agreement addresses what would happen if Rocky Mountain failed to make the $116, 579.90 payment in the specified time after receiving the contract-specified Data. That failure, the Agreement says, "shall trigger" a "Sunset Provision." J.A. 70. The Sunset Provision, item III.1 of the Agreement, specifies the consequences of such triggering:

[Rocky Mountain] agrees to completely and forever release any and all claims, rights, and/or interest in or arising from Federal Helium Contract FLL 94-001, in their entirety and expressly including any preferential rights detailed therein, and any and all claims against [the Bureau], the Department of the Interior and the United States, relating to Federal Helium Contract FLL 94-001. Furthermore [Rocky Mountain] agrees that upon triggering of the Sunset Provision, [the Bureau] may contract with third parties for Helium recovery on the lands covered by Federal Helium Contract FLL 94-001.

J.A. 73.

         Relatedly, the Settlement Agreement contains a disputes clause, which states: "The parties agree that, except in the event of a triggering of the Sunset Provision described at item III(1) herein, disputes or disagreements arising from operation of this Agreement will be submitted to the Honorable Judge Allan Goodman at the CBCA for ADR [Alternative Dispute Resolution] pursuant to CBCA rule 54." J.A.73. It is undisputed that the cited rule 54 generally provides for CBCA participation in dispute-resolution efforts, which are to be voluntary unless the parties jointly agree to be bound, and that the Settlement Agreement's disputes clause required only voluntary efforts before Judge Goodman, not submission of a dispute for a binding decision.

         Under the Settlement Agreement, the Bureau sought information from oil and gas lessees and provided Rocky Mountain with information on December 5, 2008.[1] Rocky Mountain objected that the information was incomplete, i.e., was not "the Data" required by the Agreement. Thus, Rocky Mountain refused ...

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