Florida does not owe Coastal Petroleum - judge
Date: 10-Oct-02
Country: USA
Author: Michael Peltier
Florida Circuit Judge J. Ralph Smith rejected the Apalachicola-based company's argument that it was owed for potential earnings from untapped energy reserves in the region covered by one of the leases.
The lawsuit did not specify a dollar amount, which would have been determined later by a jury only if the judge had upheld the right to compensation.
Coastal Petroleum is a majority-owned subsidiary of Coastal Caribbean Oils & Minerals Ltd .
Company officials said they would appeal Smith's ruling, the latest chapter in a decades-long legal battle between the state and Coastal, which holds two leases in the Gulf of Mexico.
One covered 400,000 acres (160,000 hectares) of state-controlled submerged lands from Apalachicola in the Florida Panhandle south to Tampa. The other covered a similar-sized parcel from Tampa south to Naples on the southern Gulf Coast.
Under a contract hammered out with the state in 1947, Coastal had exclusive rights to explore for oil and gas in the area. Over the next 20 years, it allowed other oil companies to drill on the sites but the holes came up dry.
In 1990, state lawmakers banned oil exploration from Florida waters because of environmental pollution concerns.
Coastal applied for a drilling permit in 1992 and the Florida Cabinet, comprised of executive branch leaders, denied the permit in 1998 due to environmental risks. A state appeals court upheld the Cabinet's decision in 1999.
Coastal then sued the state over potential lost income from the northern parcel in January 2001, arguing that Florida's regulatory policy had in essence, condemned the company's holdings. It said the Florida Constitution requires just compensation for the taking of property rights.
The judge disagreed, ruling that the company had failed to prove that its already risky venture lost any value after the 1998 permit denial.
Smith said a 1976 agreement between the state and Coastal clearly said that the company could not sink a single drill bit unless it received environmental permits, which were never forthcoming.
"The denial of their applications for drilling does not represent a taking," Smith said. "There does not appear to this court that there was an investment-backed expectation that has been realistic in this case."
State officials welcomed Tuesday's victory but said it was only the next stop on for an issue that will likely be decided by the Florida Supreme Court.
Coastal President Phil Ware said after the ruling that the company would appeal.
"Obviously its frustrating," Ware said outside the courtroom. "The state has been dragging this out for 10 years already. We're not going to quit."