Supreme Court Rules Against BP in Royalty Case

The Supreme Court unanimously handed the government a victory Monday in a dispute with the oil-and-gas industry over whether a six-year statute of limitations applied to efforts to collect royalties for petroleum production on federal land.

In a 7-0 decision, the court ruled in BP America Production Co. v. Burton the six-year limit on bringing "action for money damages" applies "only to court actions and not the administrative proceedings involved in this case."

The case stems from a dispute over royalties owed on coalbed methane gas produced in New Mexico's San Juan Basin. The Interior Department's Minerals Management Service issued BP's predecessor, Amoco Production Co., an order in 1997 to pay additional royalties for the period between 1989 and 1996.

MMS, according to the ruling, had said royalties should be determined "based not on the value of the gas at the well, but on the value of the gas after it was treated to meet quality requirements for introduction into the Nation's mainline pipelines."

MMS a decade ago had ordered BP America Production Co. and ARCO to pay $4.1 million and $780,000 respectively to cover royalty deficiencies on the coalbed methane, according to the Associated Press.

Chief Justice John Roberts and Justice Stephen Breyer did not participate in the decision.

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