Florida Appeals Court Denies Coastal Petroleum Takings Claim

More than seven years of litigation result in denial of takings claims for petroleum company


David Guest, Earthjustice, (850) 681-0031
Cory Magnus, (202) 667-4500

More than seven years of litigation to prevent the Coastal Petroleum Company from drilling off the coast of Florida culminated today 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 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. Today’s 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.

“The trial court got it absolutely right. Coastal Petroleum isn’t really an oil company and there never really was an oil and gas prospect,” said Earthjustice attorney David Guest. “All they wanted was to get their permit was denied so they could get hundreds of millions of dollars from the state. It didn’t work.”

“This is a great victory for Florida. Coastal Petroleum has yet to produce a drop of oil from the offshore lease and has never seen a profitable year in their 50-year existence,” said Manley Fuller of the Florida Wildlife Federation. “This was about a company trying to get a permit to put forth a takings claim.”

Under the takings law, companies or individuals may claim that they deserve financial compensation if the government takes or renders useless private property. Many cases have been brought by landowners seeking payment for compliance with environmental laws, and the courts have increasingly granted such claims. In the case of Coastal Petroleum, the courts agreed with arguments that the denial of the permit under these circumstances did not equate with a taking.

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