United States Court of Appeals 

for the Federal Circuit ______________________ 

CENTURY EXPLORATION NEW ORLEANS, LLC,

Plaintiff-Appellant,

AND

CHAMPION EXPLORATION, LLC,

Third Party Plaintiff-Appellant,

v.

UNITED STATES,

Defendant-Appellee.

______________________ 

2013-5073

______________________ 

Appeal from the United States Court of Federal 

Claims in No. 11-CV-0054, Judge Lynn J. Bush.

______________________ 

Decided: March 14, 2014

______________________ 

RICHARD K. LEEFE, Leefe, Gibbs, Sullivan, & Dupré, of 

Metairie, Louisiana, argued for plaintiff-appellant. With 

him on the brief were MICHAEL R. GELDER and JAMES K.

STICKER, III. 

GUY E. WALL, Wall Bullington & Cook, LLC, of New 

Orleans, Louisiana, argued for third party plaintiffappellant. 
2 CENTURY EXPLORATION v. US

GREGG M. SCHWIND, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, United States 

Department of Justice, of Washington, DC, argued for 

defendant-appellee. With him on the brief were STUART F.

DELERY, Assistant Attorney General, JEANNE E.

DAVIDSON, Director, and STEVEN J. GILLINGHAM, Assistant 

Director. Of counsel on the brief was MATTHEW T.

BALLENGER, Attorney Advisor, Office of the Solicitor, 

United States Department of the Interior, of Washington, 

DC. 

______________________ 

Before LOURIE, DYK, and WALLACH, Circuit Judges.

DYK, Circuit Judge.

Appellants Century Exploration New Orleans, LLC

(Century) and Champion Exploration, LLC (Champion) 

appeal from a judgment of the Court of Federal Claims

(Claims Court) granting summary judgment to the government on the issue of breach of contract. 

Century and Champion are in the business of oil and 

gas exploration, development, and production. They

jointly leased the mineral rights to land on the Outer 

Continental Shelf from the government. The terms of 

their lease allowed the government to change existing

regulatory requirements under the Outer Continental 

Shelf Lands Act of 1953 (OCSLA), 43 U.S.C. § 1331 et seq. 

The appellants argue the government breached their 

lease because it imposed additional regulatory requirements pursuant to the Oil Pollution Act (OPA), 33 U.S.C. 

§ 2701 et seq. We agree with the Claims Court that the 

government made these changes pursuant to OCSLA, not 

OPA, and we affirm.
CENTURY EXPLORATION v. US 3

BACKGROUND

Appellants Century and Champion obtained an oil 

and gas lease from the government for a 5760-acre tract 

called Block 920, Ewing Bank (EW920) located on the 

Outer Continental Shelf. They made an initial bonus 

payment of $23,236,314 to acquire the lease and have 

paid the government additional rental payments of $9.50 

per acre, per lease year—$54,720 per year—since that 

initial payment. The lease (Lease No. OCS–G 32293) 

became effective on August 1, 2008, and had an initial 

term running through July 31, 2016. Section 1 of the lease 

provided: 

This lease is issued pursuant to the Outer Continental Shelf Lands Act of August 7, 1953, 67 Stat. 

462[,] 43 U.S.C. § 1331 et seq., as amended (92 

Stat. 629), (hereinafter called the “Act”). The lease 

is issued subject to the Act; all regulations issued 

pursuant to the Act and in existence upon the Effective Date of this lease; all regulations issued 

pursuant to the statute in the future which provide for the prevention of waste and conservation 

of the natural resources of the Outer Continental 

Shelf and the protection of correlative rights 

therein; and all other applicable statutes and regulations.

J.A. 88. 

In Mobil Oil Exploration & Producing Southeast, Inc. 

v. United States, the Supreme Court interpreted a lease 

provision that was nearly identical to the one at issue 

here. 530 U.S. 604 (2000).1 In Mobil Oil, the question was 

1 For the lease language of Mobil Oil, see Conoco 

Inc. v. United States, 35 Fed. Cl. 309, 317 (1996), rev’d sub 

nom. Marathon Oil Co. v. United States, 158 F.3d 1253 

(Fed. Cir. 1998), opinion withdrawn and superseded on 

 
4 CENTURY EXPLORATION v. US

whether certain oil company leases were subject to a new 

statute, the Outer Banks Protection Act, 33 U.S.C. 2753 

(1990), 104 Stat. 555 (repealed 1996), which was enacted 

after the leases were signed and changed the requirements applicable to the lessees. Mobil Oil, 530 U.S. at 

611-13. The Court held that the leases were subject to all 

statutes and regulations in existence as of their effective 

date, but, as to future regulations, were subject only to 

OCSLA regulations issued after the effective date of the 

leases. Id. at 615. Thus, the Court concluded that the

government’s imposition of new regulatory requirements

pursuant to the Outer Banks Protection Act breached the 

leases. Id. at 620. Here, appellants similarly claim that 

the government changed regulatory requirements after 

the effective date of their lease pursuant to OPA, not 

OCSLA.

On April 20, 2010, an explosion and fire on the Deepwater Horizon oil rig—a semi-submersible drilling rig 

located in the Gulf of Mexico—killed eleven workers and 

resulted in an oil spill that lasted several months. Although the rig was equipped with a blowout preventer—a 

mechanism designed to stop the flow of oil in the event of 

a blowout—this device failed to function after the accident. By the time the drill operator finally managed to 

cap the oil well on July 15, 2010, 87 days after the initial 

blowout, 4.9 billion barrels of crude oil had been released

into the gulf. As a result of the spill, the government 

imposed new regulatory requirements, which the appellants urge increase the cost of their required bond. The 

question is whether these requirements were imposed 

under OCSLA or OPA.

reh’g, 177 F.3d 1331 (Fed. Cir. 1999), rev’d sub nom. Mobil 

Oil Exploration & Producing Se., Inc. v. United States, 

530 U.S. 604 (2000), aff’d sub nom. Marathon Oil Co. v. 

United States, 236 F.3d 1313 (Fed. Cir. 2000). 

 
CENTURY EXPLORATION v. US 5

On January 25, 2011, Century filed a three-count 

complaint in the Claims Court. In its complaint, Century 

asserted that, as a result of these new regulations, “the 

government breached its lease agreement with plaintiffs 

(Count I); that it effected an uncompensated taking of its 

private property in violation of the Fifth Amendment 

(Count II); and that the government’s activities may have 

given rise to other, unspecified causes of action (Count 

III).” J.A. 23. In support of its breach claim, Century 

alleged that the government’s changes to the applicable 

regulations violated various sections of the Administrative Procedure Act (APA), 5 U.S.C. §§ 553, 706, were 

therefore unauthorized, and breached the lease. On 

September 12, 2011, Champion filed a complaint against 

the government, adopting the allegations Century set 

forth in its complaint. Since this appeal is exclusively 

concerned with the appellants’ breach claims, we confine 

our discussion to that issue. 

On July 13, 2012, the government filed a motion for 

summary judgment on the appellants’ breach of contract 

claims. The government argued that it had not breached 

the appellants’ lease. In the alternative, the government 

argued that even if it had breached the contract, the 

sovereign acts doctrine shielded it from liability. The 

appellants filed a cross-motion for partial summary 

judgment, seeking a determination that the government 

was liable for breach of contract. 

In response to these motions, the Claims Court granted summary judgment to the government, holding that it 

did not breach any express term of the lease. The Claims 

Court also found that the government did not breach its 

implied duty of good faith and fair dealing. With respect

to the appellants’ APA challenges, the court held that it 

did not possess subject matter jurisdiction to hear such 

claims. In the alternative, the Claims Court held that the 

government was not liable under the sovereign acts 

doctrine. The Claims Court entered a final judgment 
6 CENTURY EXPLORATION v. US

under Federal Rule of Civil Procedure 54(b) in favor of the 

government, dismissing the appellants’ breach of contract 

claims with prejudice.

Century and Champion timely appealed, and we have 

jurisdiction pursuant to 28 U.S.C. § 1295(a)(3). We review 

the grant of summary judgment de novo. United States v. 

Great Am. Ins. Co. of N.Y., 738 F.3d 1320, 1329 (Fed. Cir. 

2013). The interpretation of the lease is also an issue of 

law that we review de novo. C. Sanchez & Son, Inc. v. 

United States, 6 F.3d 1539, 1544 (Fed. Cir. 1993). 

DISCUSSION

I. Express Breach

The principal issue presented in this appeal is whether the government breached any express term of Century 

and Champion’s lease. As discussed above, the Supreme 

Court considered a nearly identical oil lease provision in 

Mobil Oil. The Court held that the lease should be interpreted to protect the lessees from new statutes, new nonOCSLA regulations, and changes to the text of OCSLA

itself. Mobil Oil, 530 U.S. at 616. But the lessees were 

required to comply with changes in OCSLA regulations. 

As the Court explained:

[t]he lease contracts say that they are subject to 

then-existing regulations and to certain future 

regulations, those issued pursuant to OCSLA [and 

certain other statutes] . . . . This explicit reference 

to future regulations makes it clear that the 

catchall provision that references “all other applicable . . . regulations,” must include only statutes 

and regulations already existing at the time of the 

contract, a conclusion not questioned here by the 

Government. 

Id. at 616 (second omission in original) (internal citation 

omitted). This court followed the Supreme Court’s interpretation of the lease language in Amber Resources Co. v. 
CENTURY EXPLORATION v. US 7

United States, 538 F.3d 1358, 1368 (Fed. Cir. 2008), and 

held that similar lease language only obligated compliance with future changes to OCSLA regulations. Id. at 

1362-63, 1368.

A 

Initially, some description of OCSLA and OPA is useful. OCSLA provides that the United States, and not the 

individual states, shall have jurisdiction and control over 

the submerged lands of the Outer Continental Shelf.2 43 

U.S.C. § 1332(1); see Barker v. Hercules Offshore, Inc., 713 

F.3d 208, 213 (5th Cir. 2013) (“OCSLA asserts exclusive 

federal question jurisdiction over the OCS.”). Congress 

enacted OCSLA to ensure that a “vital national resource 

reserve held by the Federal Government for the public” 

would be “made available for expeditious and orderly 

2 OCSLA provides the United States with legal jurisdiction over: 

the subsoil and seabed of the Outer Continental 

Shelf and to all artificial islands, and all installations and other devices permanently or temporarily attached to the seabed, which may be erected 

thereon for the purpose of exploring for, developing, or producing resources therefrom, or any such 

installation or other device (other than a ship or 

vessel) for the purpose of transporting such resources, to the same extent as if the Outer Continental Shelf were an area of exclusive Federal 

jurisdiction within a State[.]

43 U.S.C. § 1333(a)(1). OCSLA defines the Outer Continental Shelf as all submerged land that is beyond the 

outer limits of state jurisdiction (three nautical miles from 

shore) and within the limits of national jurisdiction (200 

nautical miles from shore). See 43 U.S.C. §§ 1301(a), 

1331(a); Amber, 538 F.3d at 1362.

 
8 CENTURY EXPLORATION v. US

development, subject to environmental safeguards, in a 

manner which is consistent with the maintenance of 

competition and other national needs.” 43 U.S.C.

§ 1332(3). In furtherance of this objective, the Department 

of Interior (Interior Department) enters into mineral 

leases with private parties. These mineral leases authorize private parties, such as oil companies, to explore the 

Outer Continental Shelf for oil and natural gas and 

extract any reserves that are discovered. Thus, the only 

entities entitled to conduct oil and gas exploration, development, and production on the Outer Continental Shelf 

are lessees of the federal government. See id. §§ 1333(1), 

1334. In enacting OCSLA, Congress was careful to stipulate that

operations in the outer Continental Shelf should 

be conducted in a safe manner by well-trained 

personnel using technology, precautions, and 

techniques sufficient to prevent or minimize the 

likelihood of blowouts, loss of well control, fires, 

spillages, physical obstruction to other users of the 

waters or subsoil and seabed, or other occurrences 

which may cause damage to the environment or to 

property, or endanger life or health. 

Id. § 1332(6) (emphasis added). 

OCSLA vests the Secretary of the Interior (Interior 

Secretary) with the authority to regulate exploration 

under the oil and gas leases, as well as the resulting 

development and production activities. Id. § 1334. Specifically, OCSLA provides that the Secretary

shall prescribe such rules and regulations as may 

be necessary to carry out [the provisions of 

OCSLA]. The Secretary may at any time prescribe 

and amend such rules and regulations as he determines to be necessary and proper in order to 

provide for the prevention of waste and conservation of the natural resources of the outer Continen-
CENTURY EXPLORATION v. US 9

tal Shelf, and the protection of correlative rights 

therein, and, notwithstanding any other provisions herein, such rules and regulations shall, as 

of their effective date, apply to all operations conducted under a lease issued or maintained under 

the provisions of this subchapter.

Id. § 1334(a) (emphasis added). Thus, OCSLA “authorize[s] the [Interior Department], by valid regulations, to 

impose anywhere in the OCS all reasonable development 

and production conditions it deems necessary to its stewardship of the OCS and administration of OCSLA.” Gulf 

Restoration Network v. Salazar, 683 F.3d 158, 169-70 (5th 

Cir. 2012) (citing 43 U.S.C. §§ 1334, 1351; H.R. Rep. 95–

1474, at 115 (1978) (Conf. Rep.), reprinted in 1978 

U.S.C.C.A.N. 1674). Pursuant to this authority, the 

Interior Secretary has promulgated regulations and 

orders that govern a lessee’s oil exploration, development, 

and production activities on the Outer Continental Shelf. 

See 30 C.F.R. pt. 250 (2010).3 

The Oil Pollution Act, 33 U.S.C. § 2701 et seq., is simultaneously narrower and broader in scope than OCSLA. 

In 1990, Congress enacted OPA in response to “rising 

public concern following the Exxon Valdez oil spill.” The 

Oil Pollution Act Overview, United States Environmental 

Protection Agency, http://www.epa.gov/oem/content/

lawsregs/opaover.htm (last visited Feb. 10, 2014). This 

law expanded the federal government’s ability to respond 

to oil spills by imposing strict liability on parties respon3 Unless otherwise indicated, this opinion references the version of the Code of Federal Regulations 

(C.F.R.) that was in effect when appellants acquired their 

lease. The provisions of the C.F.R. governing Outer Continental Shelf leasing, exploration, and development that 

are relevant to this opinion have been relocated from Part 

250 of Title 30 to Part 550 of that title.

 
10 CENTURY EXPLORATION v. US

sible for releasing oil into navigable waters. See 33 U.S.C. 

§§ 2701-2713; Thomas J. Wagner, The Oil Pollution Act of 

1990: An Analysis, 21 J. Mar. L. & Com. 569, 574-76 

(1990). OPA also created the national Oil Spill Liability 

Trust Fund, which can be used to clean up oil spills when 

the party responsible is unknown or refuses to pay. See 33 

U.S.C. § 2712; Oil Spill Liability Trust Fund, United 

States Environmental Protection Agency, 

http://www.epa.gov/osweroe1/content/

learning/oilfund.htm (last visited Feb. 10, 2014). Thus, 

unlike OCSLA, which covers all mineral activity on the 

Outer Continental Shelf pursuant to leases from the 

United States, 43 U.S.C. §§ 1331-1356, OPA is specifically 

designed to govern oil spill prevention, clean up, and 

compensation in all United States navigable waters

whatever the source of the exploration, development, and 

production rights. Inho Kim, Ten Years After the Enactment of the Oil Pollution Act of 1990: a Success of a Failure, 26 Marine Pol’y 197, 197 (2002); Wagner, supra, at

569; Oil Pollution Act of 1990 (OPA), United States Coast 

Guard, http://www.uscg.mil/npfc/About_NPFC/opa.asp

(last visited Feb. 11, 2014). However, the OPA regulations 

involved here only apply to activities on the Outer Continental Shelf. See 30 C.F.R. ch. II, pt. 254, subpt. B. 

Oil and gas companies leasing land on the Outer Continental Shelf must comply with both OCSLA and OPA. 

These statutes contain some overlapping provisions, in 

particular those relating to the remediation of oils spills. 

For example, during the relevant period, both OCSLA and 

OPA regulations required oil companies to submit Oil 

Spill Response Plans. OCSLA regulation 30 C.F.R. 

§ 250.219 required all Outer Continental Shelf lessees to 

provide such a plan. See also Oil and Gas and Sulphur 

Operations in the Outer Continental Shelf—Plans and 

Information, 70 Fed. Reg. 51,478-01 (Aug. 30, 2005). OPA 

regulation 30 C.F.R. § 254.1 required all owners or operators of oil handling, storage, or transportation facilities
CENTURY EXPLORATION v. US 11

“located seaward of the coast line” (that is, on the Outer 

Continental Shelf) to submit a plan. 30 C.F.R. § 254.1.

OCSLA and OPA regulations required these plans to 

ensure that oil and gas companies were prepared to 

respond to any oil spills that might result from their 

activities off the United States coastline. 

Even prior to the execution of the appellants’ lease, 

OCSLA and its implementing regulations required lessees 

to submit an exploration plan to the government before 

commencing any drilling activities. See 43 U.S.C. 

§ 1340(c)(1), (e)(2); 30 C.F.R. § 250.201 (2010). Such an

exploration plan detailed the lessee’s proposed exploration 

activities on the Outer Continental Shelf and required 

government approval before the lessee commenced any 

exploration activity. 30 C.F.R. § 250.201 (2010). Importantly, the regulations required that such an exploration plan include an Oil Spill Response Plan that 

contained a calculation of the volume of oil that would 

result from a worst case discharge scenario. Id.

§ 250.219(a)(2)(iv) (2010). A worst case discharge scenario 

was defined as “the daily rate of an uncontrolled flow of 

natural gas and oil from all producible reservoirs into the 

open wellbore”4 that would result from a blowout, such as 

the one that triggered the Deepwater Horizon disaster. 

Worst Case Discharge Determination, Bureau of Ocean 

Energy Management, http://www.boem.gov/Oil-and-GasEnergy-Program/Resource-Evaluation/Worst-CaseDischarge/Index.aspx (last visited Feb. 11, 2014). Lessees 

were also required to “demonstrate oil spill financial 

4 The wellbore is the hole the lessee or operator has 

drilled for the purpose of exploring or extracting natural 

gas or oil from the earth. In the oil production context, 

reservoirs are subsurface pools of hydrocarbons, such as 

crude oil or natural gas, contained in porous or fractured rock formations. 

 
12 CENTURY EXPLORATION v. US

responsibility for facilities proposed in [their exploration 

plan],” 30 C.F.R. § 250.213(e)(2) (2010), and the appellants elected to comply by posting a bond. See 30 C.F.R. 

§ 253.20 (2010) (describing the different methods of 

demonstrating oil spill financial responsibility). The 

appellants’ bond requirements depended on their worst 

case discharge volume: the greater the worst case discharge volume, the larger the bond required to cover their 

potential liability. See id. § 253.13 (2010) (setting out the 

correspondence between worst case discharge volume and 

bond requirement).5 

OPA did not require oil companies to submit an exploration plan; rather, each company was required to submit 

an Oil Spill Response Plan, which included a worst case 

discharge scenario. As with the OCSLA requirements, 

this only applied to Outer Continental Shelf lessees. 

5 The appellants also argue that their increased 

bonding requirements breached Section 8 of the lease. 

Section 8 reads: “The Lessee shall maintain at all times 

the bond(s) required by regulation prior to the issuance of 

the lease and shall furnish such additional security as 

may be required by the Lessor if, after operations have 

begun, the Lessor deems such additional security to be 

necessary.” J.A. 89. Section 8 refers to 30 C.F.R. 

§ 250.213(e)(1)’s “appropriate bond” requirement, also 

known as the performance bond requirement. As the 

Claims Court accurately explained, “[i]n order to demonstrate a breach of section 8 of the lease, plaintiffs must 

establish that they are now required to furnish a bond 

that exceeds the bond required under the regulations in 

effect when the lease was executed.” J.A. 40. Because the 

appellants’ performance bonding requirement has not 

changed, there has been no breach of Section 8 of the 

lease.

 
CENTURY EXPLORATION v. US 13

The OCSLA regulations borrowed and incorporated 

the OPA regulation’s method of calculating worst case 

discharge volume and the assumptions for that calculation. Thus, Outer Continental Shelf lessees were required 

to follow § 254.27’s methodology when calculating worst 

case discharge volume for OCSLA purposes, and all oil 

and gas operators were required to follow § 254.27’s 

methodology when calculating worst case discharge 

volume for OPA purposes. Finally, § 250.103, an OCSLA 

regulation, enabled the government to issue Notices to 

Lessees and Operators (NTLs) that “clarify, supplement, 

or provide more detail about certain requirements,” id., of 

the OCSLA statute and regulations. As the Interior 

Department has explained, it “issues NTLs to explain and 

clarify its regulations.” Oil and Gas and Sulphur Operations in the Outer Continental Shelf—Plans and Information, 70 Fed. Reg. 51,478-01, 51,478 (Aug. 30, 2005). 

The OPA statute and the OPA regulations thereunder 

made no provision for the issuance of NTLs. 

The appellants contend that the NTLs in this case are 

equivalent to new regulations within the meaning of the 

lease provisions. Even assuming the NTLs are new regulations, however, they were issued pursuant to OCSLA, 

and thus do not breach the lease. 

B 

The change at issue here concerns the worst case discharge calculation and the bond requirement that corresponds to that calculation. The government issued Notice 

to Lessees No. 2010–N06 (NTL-06) and related documents 

on June 18, 2010, after the effective date of the lease. This 

order and the various documents explaining it required 

lessees to make changes to the way they calculated worst 

case discharge volume. See infra Slip. Op. at 14-16. The 

only identified consequence of this alteration was to alter 

the lessees’ bond requirement.
14 CENTURY EXPLORATION v. US

The appellants argue that the government’s issuance 

of NTL-06 breached their lease because: (1) it changed the 

worst case discharge scenario, thereby imposing additional bonding costs, and (2) the change was made pursuant 

to OPA, not OCSLA. There appears to be no dispute as to

the first question. At oral argument, the appellants clarified that, in their view, NTL-06 resulted in four principal 

changes to the worst case discharge calculation, which 

increased their corresponding bond requirement.6 First, 

and most importantly, after the effective date of the lease, 

the government sent an email to Century7 stating that 

under NTL-06, the appellants must “[i]ncrease the length 

of time [of] the uncontrolled blowout response from 30 to 

120 days.” J.A. 1432. Prior to NTL-06, the OCSLA regulations, by reference to OPA regulation 30 C.F.R. 

§ 254.47(a)(3), only required oil company lessees to assume that oil would flow from their wells for 30 days 

6 In addition to these four principal changes, NTL06 also rescinded an older order, NTL-08, which had 

waived certain regulatory requirements for particular 

lessees. As the appellants conceded at oral argument, the 

rescission of NTL-08 is not relied on in the complaint. 

Therefore, we do not discuss NTL-08 here. 

7 The government sent this email to Century directly, instead of both Century and Champion, because Century was the designated lease operator. As the lease 

operator, Century was in charge of submitting the appellants’ exploration plan, meeting the bond requirements, 

and applying for permits to drill. See 30 C.F.R. § 250.105

(2013) (“Operator means the person the lessee(s) designates as having control or management of operations on 

the leased area or a portion thereof. An operator may be a 

lessee, the BSEE-approved or BOEM-approved designated agent of the lessee(s), or the holder of operating rights 

under a BOEM-approved operating rights assignment.”); 

J.A. 88.

 
CENTURY EXPLORATION v. US 15

during a blowout when calculating their worst case discharge volumes. The government email to Century explained that the appellants should revise their OCSLAmandated exploration plan in light of NTL-06 and now 

assume that oil would flow from their well for 120 days 

when calculating the worst case discharge volume. 

Second, prior to the issuance of NTL-06, lessees did 

not have to include all reservoirs that a drilling operator 

might pass through to reach its intended drilling location

in the calculation of the uncontrolled flow that could 

result from a blowout. The parties do not specify the 

source of this obligation. However, the frequently asked 

questions document (FAQ document) accompanying NTL06 apparently modified this requirement. Under NTL-06, 

lessees must “consider all reservoirs, not just where 

you’re drilling to, but anything you might pass through” 

when calculating worst case discharge volume. Oral 

Argument 5:57-6:02, available at 

http://www.cafc.uscourts.gov/oral-argumentrecordings/all/century-exploration.html. More specifically,

lessees must now “determine the daily rate of an uncontrolled flow from all producible reservoirs into the open 

wellbore.” J.A. 663 (emphasis added). 

Third, NTL-06 changed assumptions regarding what 

could be treated as being in the wellbore when calculating 

worst case discharge volume. Previously, lessees counted 

the fact that certain equipment, such as drillpipe, logging 

tools, and drill bits were in the wellbore, thereby reducing 

total discharge volume, when they calculated worst case 

discharge volume. Again, the source of this requirement is 

unclear. However, the FAQ document explained that 

lessees “should [now] assume that the wellbore is free of

drillpipe, logging tools, or other similar equipment.” J.A. 

665 (emphasis added). Thus, under NTL-06, lessees “no 

longer consider anything being in the wellbore.” Oral 

Argument 5:47-5:51, available at 
16 CENTURY EXPLORATION v. US

http://www.cafc.uscourts.gov/oral-argumentrecordings/all/century-exploration.html. 

Fourth, NTL-06 prohibits lessees from including the 

presence of a blowout preventer (the mechanism that 

failed to contain the Deepwater Horizon blowout) in their 

worst case discharge calculation. As the appellants explained at oral argument, “for years beforehand you 

counted the fact that you had a blowout preventer on the 

well when you determined worst case discharge.” Id. at 

17:52-18:02. Once again, the source of this requirement is 

not specified. However, the FAQ document stated that 

lessees should now assume that a blowout preventer is 

not connected to the wellhead. 

Prior to the issuance of NTL-06, the appellants’ worst 

case discharge volume was 1,500 barrels and their corresponding bond requirement amounted to $35 million. The 

appellants contend, and the government does not contest, 

that NTL-06 and the various documents explaining that 

order increased their worst case discharge volume to 

142,977 barrels per day and their corresponding bond 

requirement to $150 million.

C 

While not disputing the existence of the changes or 

their impact, the government urges that the changes were 

made pursuant to OCSLA, not OPA. The appellants argue

that they were made pursuant to OPA. More precisely,

appellants argue that because NTL-06 and related documents changed the assumptions lessees must follow when 

calculating their worst case discharge volume, and the 

regulation governing the worst case scenario calculation 

is an OPA regulation, NTL-06 effectively changed an OPA 

regulation. In response, the government explains that the 

OCSLA regulation outlining what oil spill information 

lessees must include in their exploration plans, 

§ 250.219(a)(2)(iv), simply incorporates the OPA methodology for calculating worst case discharge volume through 
CENTURY EXPLORATION v. US 17

reference. The government points out that NTL-06 did not 

change the text of the OPA regulation itself. Rather, in 

the government’s view, it altered only OCSLA regulatory 

requirements. 

We agree with the government. Initially, it is important that OCSLA authorized the government to adopt 

regulations concerning blowout protection and worst case 

discharge scenarios; the government did not need to act

under the authority granted by OPA. Pursuant to Section 

1 of the lease, the government could issue new OCSLA 

regulations which provide for the “prevention of waste 

and conservation of the natural resources of the Outer 

Continental Shelf” by the lessees. J.A. 88. This lease 

provision can be traced directly to § 1334 of OCSLA: “The 

Secretary may at any time prescribe and amend such 

rules and regulations as he determines to be necessary 

and proper in order to provide for the prevention of waste 

and conservation of the natural resources of the outer 

Continental Shelf, and the protection of correlative rights 

therein . . . .” 43 U.S.C. § 1334 (emphasis added). 

The case law interpreting § 1334 gives a broad scope 

to the phrase “prevention of waste and conservation of the 

natural resources,” making clear that it extends to environmental protection. See, e.g., Pauley Petroleum Inc. v. 

United States, 591 F.2d 1308, 1325 (Ct. Cl. 1979) (explaining that a new regulation imposing absolute liability on 

lessees for any pollution resulting from their activities 

would be “lawful and reasonable” because OCSLA provides “‘[t]he Secretary may at any time prescribe and 

amend such rules and regulations [] in order to provide 

for the prevention of waste and conservation of the natural resources of the outer Continental Shelf’” (quoting 43 

U.S.C. § 1334(a)(1) (1970))); Get Oil Out! Inc. v. Exxon 

Corp., 586 F.2d 726, 729 (9th Cir. 1978); Union Oil Co. of 

Cal. v. Morton, 512 F.2d 743, 749-50 (9th Cir. 1975) 

(stating that the phrase “conservation of the natural 

resources of the outer Continental Shelf” “encompasses all 
18 CENTURY EXPLORATION v. US

the natural resources of the shelf, not merely the mineral 

resources” (citations omitted)); Gulf Oil Corp. v. Morton, 

493 F.2d 141, 145 (9th Cir. 1973) (“[I]n authorizing the 

Secretary to issue regulations, [OCSLA] speaks of ‘conservation of the natural resources of the outer Continental Shelf,’ not just of conservation of oil, gas, sulphur and 

other mineral resources. . . . Its natural meaning would 

encompass all such resources, not just oil and gas, sulphur and other minerals.” (quoting 43 U.S.C. § 1334(a))). 

Thus, the case law supports a finding that OCSLA endows the government with the authority necessary to

regulate worst case discharge scenarios and to require 

adequate bonding. See also 43 U.S.C. § 1337(a)(7)(A)

(authorizing the Interior Secretary to require lessees to 

post a bond in accordance with the applicable regulations).

Nevertheless, the appellants point out that the mere 

existence of government authority to act under OCSLA 

does not immunize the government from liability for 

regulatory changes. To avoid liability for changes, the

government must also have acted pursuant to OCSLA

authority. In Mobil Oil, the government argued that, 

irrespective of the statutory change at issue in that case, 

the government could have undertaken the exact same 

action pursuant to OCSLA. 530 U.S. at 615-16. The 

Supreme Court rejected this argument, recognizing that 

the new requirements were “created by [the Outer Banks 

Protection Act], a later enacted statute,” Mobil Oil, 530 

U.S. at 616, not an OCSLA regulation. The court explained that “[t]he fatal flaw in [the government’s] argument [] arises out of the Interior Department’s own 

statement—a statement made when citing the Outer 

Banks Protection Act to explain its approval delay.” Id. at 

617-18. Thus, even though OCSLA may have permitted 

the government to require the exact same actions the 

Outer Banks Protection Act required, because the government cited the Outer Banks Protection Act as the 
CENTURY EXPLORATION v. US 19

authority for carrying out these actions, the Court found 

that the government effectuated them pursuant to the 

Outer Banks Protection Act and was liable for breach. In 

reaching this conclusion, the Supreme Court emphasized 

the government’s chosen source of authority: the government cited the Outer Banks Protection Act, not OCSLA 

regulations. Id. 

We confirmed this approach in Amber. In Amber, 

Congress amended the Coastal Zone Management Act to 

impose new regulatory requirements. 538 F.3d at 1366. 

Thus, Amber turned on whether these new requirements 

breached the oil companies’ contracts. Id. Relying on 

Mobil Oil, we reasoned that “[b]ecause the 1990 [Coastal 

Zone Management Act] amendments . . . imposed significantly more burdensome requirements for granting lease 

suspensions, the new statute in this case breached the 

lease agreements in the same way as the new statute in 

Mobil Oil.” Id. at 1371. The government argued that it 

could have undertaken the exact same action pursuant to 

the OCSLA regulations in effect at that time. Id. at 1372. 

Nevertheless, because the government imposed new 

requirements based on the new statutory changes to the 

Coastal Zone Management Act, not existing OCSLA 

regulations, we held that these requirements breached the 

contract. Id.

Here, we reach a different conclusion. Although, as 

discussed above, both the OCSLA and OPA worst case 

discharge scenario regulations are limited to OCS lessees, 

we conclude that the government changed the appellants’ 

worst case discharge calculation pursuant to OCSLA. 

First, NTL-06 itself identified OCSLA regulation 

§ 250.103 as its source of authority. NTL-06 only referenced and discussed OCSLA regulations and requirements. As NTL-06 explains, OCSLA regulations § 250.219 

and § 250.250 required “all [OCSLA exploration] plans” to 

be “accompanied by information regarding oil spills, 

including calculations of [the lessee’s] worst case dis-
20 CENTURY EXPLORATION v. US

charge scenario.” J.A. 657. Although OCSLA regulation 

§ 250.219(a)(2)(iv) instructed lessees to calculate their 

worst case discharge volume according to the OPA regulation methodology, NTL-06 never mentioned the OPA 

regulations. NTL-06 simply augmented the factors lessees 

must consider when calculating their worst case discharge 

scenario for OCSLA purposes.8

Second, there has been no showing or even suggestion 

that the NTL-06 changes applied outside the OCSLA 

context. Critically, NTL-06 states that it only changes a 

lessee’s worst case discharge scenario “required by 

[OCSLA regulation] 30 C.F.R. § 250.219(a)(2)(iv).” J.A. 

658. NTL-06 did not change the text of the relevant OPA 

regulation, § 254.47, and nothing suggests that NTL-06 

altered any part of the OPA regulation. Indeed, the appellants do not claim that NTL-06 changed the text of relevant OPA regulation. NTL-06 merely changed the way an 

OCSLA regulation incorporates an OPA calculation. 

Moreover, for three out of the four alleged alterations to 

the worst case discharge calculation, it is not even clear 

that the original requirement was an OPA requirement. A 

change to an OCSLA regulation does not breach the 

express terms of the lease language as interpreted by the 

Supreme Court in Mobil Oil and this court in Amber.9

8 At oral argument, the appellants also contended 

that the changes NTL-06 brought about were made pursuant to OPA because a later issued NTL, NTL No. 2012-

N06, altered OPA regulation § 254.47(b). Issued on August 10, 2012, after the appellants filed their complaint 

and after the government moved for summary judgment, 

NTL No. 2012-N06 is irrelevant to this appeal, and we 

decline to discuss it. The same is true of NTL 2013-N02. 9 The appellants suggest that in adopting OCSLA 

regulation 30 C.F.R. § 250.219, the Interior Department 

recognized that the worst case discharge calculation was 

 
CENTURY EXPLORATION v. US 21

included in the OCSLA regulation merely as a “streamlined” means to comply with OPA. Century’s Reply Br. 12 

(quoting Oil and Gas and Sulphur Operations in the 

Outer Continental Shelf—Plans and Information, 70 Fed. 

Reg. at 51,486). This is not correct. The OCSLA regulation in question states that lessees may provide, as an 

alternative to an individual Oil Spill Response Plan 

(OSRP), “[r]eference to [an] approved regional OSRP (see 

30 C.F.R. 254.3) [that must] . . . include: . . . [1] The 

calculated volume of your worst case discharge scenario 

(see 30 C.F.R. 254.26(a)), and [2] a comparison of the 

appropriate worst case discharge scenario in your approved regional OSRP with the worst case discharge 

scenario that could result from your proposed exploration 

activities.” 30 C.F.R. § 250.219(a)(2)(iv) (2010). 

The comment in the Federal Register on which the 

appellants rely was directed to the second aspect of the 

regulation. The Interior Department’s summary of the 

comment reads: “With respect to paragraph (a)(2)(iv), [the 

Offshore Operators Committee] inquires regarding the 

purpose of providing a comparison between the site specific worst case discharge and that in the regional OSRP.” 

The Interior Department’s response to the comment was 

similarly limited: “No change. . . . MMS uses the information required under paragraph (a)(2)(iv) as a streamlined means to ensure compliance with requirements of 

the Oil Pollution Act of 1990.” Oil and Gas and Sulphur 

Operations in the Outer Continental Shelf—Plans and 

Information, 70 Fed. Reg. 51,478-01, 51,486 (Aug. 30, 

2005) (codified at 250.219(a)(1)(iv) (2010)). Neither the 

comment nor the response concerned the requirement to 

provide a worst case discharge scenario. See Summary of 

the Offshore Operators Committee’s Comments on Subpart B Proposed Regulation at 35-40, Bureau of Safety 

and Environmental Enforcement (on file with Bureau of 

Safety and Environmental Enforcement).

 
22 CENTURY EXPLORATION v. US

II. Implied Breach and Administrative Procedure Act 

Challenges

We have considered the appellants’ other arguments 

and find them to be without merit. Appellants cannot rely 

on the implied covenant of good faith and fair dealing to 

change the text of their contractual obligations. As this 

court recently clarified in Metcalf Construction, Inc. v. 

United States, 

the ‘implied duty of good faith and fair dealing 

cannot expand a party’s contractual duties beyond 

those in the express contract or create duties inconsistent with the contract’s provisions.’ . . . 

[O]ur formulation means simply that an act will 

not be found to violate the duty (which is implicit 

in the contract) if such a finding would be at odds 

with the terms of the original bargain, whether by 

altering the contract’s discernible allocation of 

risks and benefits or by conflicting with a contract 

provision. The implied duty of good faith and fair 

dealing is limited by the original bargain: it prevents a party’s acts or omissions that, though not 

proscribed by the contract expressly, are inconsistent with the contract’s purpose and deprive 

the other party of the contemplated value. 

No. 2013-5041, Slip Op. at 10 (Fed. Cir. Feb. 11, 2014) 

(quoting Precision Pine & Timber, Inc. v. United States, 

596 F.3d 817, 831 (Fed. Cir. 2010)); see also Precision 

Pine, 596 F.3d at 829-31 (Fed. Cir. 2010) (“The government may be liable for damages when the subsequent 

government action is specifically designed to reappropriate the benefits the other party expected to obtain from 

the transaction, thereby abrogating the government’s 

obligations under the contract.”); 13 Samuel Williston & 

Richard A. Lord, A Treatise on the Law of Contracts 

§ 63:22 (4th ed. 2000) (“As a general principle, there can be 

no breach of the implied promise or covenant of good faith 
CENTURY EXPLORATION v. US 23

and fair dealing where the contract expressly permits the 

actions being challenged, and the defendant acts in accordance with the express terms of the contract.”). We 

hold that the government has not breached its implied 

duty of good faith and fair dealing because the lease 

expressly authorized the government action at issue here: 

changes to OCSLA regulatory requirements.

We also affirm the Claims Court’s holding that it is 

without subject matter jurisdiction to decide the appellants’ APA challenges. See Lion Raisins, Inc. v. United

States, 416 F.3d 1356, 1370 n.11 (Fed. Cir. 2005) (“Of 

course, no APA review is available in the Court of Federal 

Claims.”).10 Because we have found no breach in this case, 

we need not reach the government’s sovereign acts defense.11

AFFIRMED

10 The appellants also argue that the term “other 

applicable statutes” in Section 1 of the lease should be 

interpreted to incorporate the APA. Appellant Century’s 

Br. 8, 28. However, as the Claims Court correctly concluded, the APA is not an applicable statute in the sense of 

the lease language. 11 In arguing that the government breached its implied duty of good faith and fair dealing, the appellants 

mention other post-Deepwater Horizon changes to the 

regulatory requirements such as two separate government-issued moratoria on drilling, a new Drilling Safety 

Rule, and another NTL (NTL-10). We do not discuss these 

changes because the appellants have not articulated a 

theory under which they form a basis for breach liability.