Approval and agreement may sound like the same thing, but the recent Court of Federal Claims decision in Pioneer Reserve, LLC v United States (November 21, 2014) points out that the difference can be very important. Pioneer and the United States executed a mitigation banking instrument, which gave Pioneer “wetlands mitigation credits” that it could sell to developers. Pioneer sold some of the credits. The Army Corps of Engineers then reduced the number of credits to which Pioneer was entitled and Pioneer sued for breach of contract.
The government moved to dismiss the suit, arguing that approval of the mitigation banking instrument was a regulatory act (see 33 CFR 325 for the regulations regarding such instruments). The signature of the representative of the Army Corps of Engineers was thus, approval of the request for credits and not a contract binding the government to issue a specified number of credits. The Court of Federal Claims disagreed, finding that the document was a contract binding the government.
The court relied on the language of the instrument, rather than the nature of the instrument. That is, whether the instrument is a contract or merely a regulatory instrument depends on whether the document consists of “regulatory proclamations” or “manifests the government’s intent to contract.” Here, there were definite terms and conditions indicating that there had been negotiations. This bargaining was evidence of an agreement. Thus, this instrument was a contract that could be enforced against the government in the Federal Court of Claims.