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Florida Appeals Court Denies Coastal Petroleum Takings Claim

More than seven years of litigation to prevent the Coastal Petroleum Company from drilling off the coast of Florida culminated December 3, 2003, in a Florida District Court of Appeals decision rejecting the company's claim that denial of an offshore drilling permit entitled the company to a takings claim.

The case began when the Florida Department of Environmental Protection granted Coastal Petroleum an oil-drilling permit in 1996. Earthjustice initiated a lawsuit on behalf of the Florida Wildlife Federation, the Sierra Club, and the Florida Audubon Society to have the permit invalidated on the ground that it violated oil and gas permitting laws. Earthjustice consistently contended that Coastal Petroleum was seeking a permit solely for the purpose setting up a "takings claim" in which Coastal could claim billions of dollars in just compensation from the state if the permit were denied. Although it claims to be an oil company, Coastal Petroleum has never produced a drop of oil from its offshore oil leases and has never made a profit in its 50-year existence.

Coastal's permit was denied on environmental grounds after the plaintiffs convinced the court that on balance the slim prospects of finding any recoverable oil were outweighed by the environmental risks of drilling. Coastal then filed a lawsuit claiming that the lawful denial of the permit entitled it to hundreds of millions of dollars for the "taking" of its offshore lease. The December decision upheld the ruling from the bench that threw out this claim on the grounds that Coastal Petroleum was not guaranteed a permit for drilling under their oil and gas lease.