  United States Court of Appeals
      for the Federal Circuit
                ______________________

       NYCAL OFFSHORE DEVELOPMENT
               CORPORATION,
              Plaintiff-Appellant,

                          v.

                  UNITED STATES,
                  Defendant-Appellee.
                ______________________

                      2013-5001
                ______________________

    Appeal from the United States Court of Federal
Claims in No. 05-CV-0249, Senior Judge Eric G. Brug-
gink.
               ______________________

              Decided: February 20, 2014
               ______________________

    THEODORE B. OLSON, Gibson, Dunn & Crutcher LLP,
of Washington, DC, argued for plaintiff-appellant. With
him on the brief was SCOTT P. MARTIN.

    GREGG M. SCHWIND, Senior Trial Counsel, Commer-
cial 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, Acting Assistant Attorney General, JEANNE E.
DAVIDSON, Director, PATRICIA M. MCCARTHY, Assistant
Director, and ALLISON KIDD-MILLER, Senior Trial Coun-
2                        NYCAL OFFSHORE DEVELOPMENT     v. US



sel. Of counsel on the brief were DANIEL W. KILDUFF and
MATTHEW T. BALLENGER, Attorneys, Office of the Solicitor,
United States Department of the Interior, of Washington,
DC.
                   ______________________

    Before NEWMAN, LOURIE, and BRYSON, Circuit Judges.
BRYSON, Circuit Judge.
     This damages dispute is the last phase of litigation
over a number of offshore oil and gas leases that the
United States sold to oil companies in the 1980s. The
litigation began in 2002, when the plaintiff oil companies
filed breach of contract actions against the government in
the Court of Federal Claims. After a trial, the court held
that the government had breached its contracts with the
oil companies by preventing them from drilling for oil in
the offshore areas covered by the leases. This court
affirmed the judgment of the Court of Federal Claims,
and the restitution awards made to the plaintiffs totaled
approximately $1 billion. Amber Res. Co. v. United
States, 538 F.3d 1358 (Fed. Cir. 2008).
    Not all of the plaintiffs in the Amber litigation accept-
ed the restitutionary remedy, however. The one holdout
was the appellant in this appeal, Nycal Offshore Devel-
opment Corp., which held a 4.25 percent interest in two of
the leases. Rather than accepting restitution as its reme-
dy, Nycal waived its right to restitution and pursued a
claim for lost profits. The Court of Federal Claims first
held that it was permissible for Nycal to seek lost-profits
damages even though the other owners of the leases in
which Nycal held a partial share had accepted restitution.
Nycal Offshore Dev. Corp. v. United States, 92 Fed. Cl.
209 (2010). The court then conducted a trial on Nycal’s
lost-profits claim, at the end of which the court concluded
that Nycal had not proved its case for lost profits. Nycal
Offshore Dev. Corp. v. United States, 106 Fed. Cl. 222
NYCAL OFFSHORE DEVELOPMENT       v. US                    3



(2012). Nycal now appeals. We affirm the judgment of
the Court of Federal Claims denying an award of lost
profits to Nycal.
                             I
                             A
    The factual background of this case is reviewed in de-
tail in this court’s opinion in Amber Resources Co. v.
United States, and in the Court of Federal Claims opinion
from which this appeal is taken. In brief summary, as
part of its program of selling oil and gas leases to oil
companies, the government in 1982 issued two leases for
oil fields off the Southern California coast. Nycal ulti-
mately obtained a 4.25 percent share of those leases.
ARCO, the original owner of the leases, drilled an explor-
atory well on one of the leased properties, but that well
produced only a small amount of oil flow. ARCO conduct-
ed no further exploration of either lease, but instead sold
the leases to a group led by Samedan Oil Corporation.
Samedan drilled another well, which produced a greater
flow of oil, but the oil from that well was of low quality.
Samedan subsequently made plans to drill another ex-
ploratory well, but before that well could be drilled, a
federal district court ruled that the government’s actions
in extending the oil and gas leases were contrary to law in
several respects. The Ninth Circuit affirmed the district
court’s ruling in 2002. The effect of that ruling was to
terminate the ability of Samedan and the other lease
owners to conduct drilling on the leased properties.
    Samedan and other oil companies filed suit, contend-
ing that the government had breached its lease agree-
ments with them. After the Court of Federal Claims held
that the government had breached the lease agreements,
all of the plaintiffs other than Nycal accepted restitution
as a remedy. Nycal, however, sought a greater recovery
by attempting to prove its right to an award of lost profits
as part owner of the Samedan leases.
4                       NYCAL OFFSHORE DEVELOPMENT     v. US



                             B
     In a comprehensive opinion, the Court of Federal
Claims addressed each of the arguments made by the
parties as to whether Nycal had proved its right to lost-
profits damages. The court began by noting that in a lost-
profits case, the plaintiff must prove that the damages it
seeks were foreseeable to the breaching party at the time
of contract formation, were actually caused by the breach,
and are reasonably certain. As to foreseeability, the court
found that the government—the breaching party in this
case—had reason to anticipate that the breach would
cause the type of loss that Nycal incurred, but that it was
not necessary for Nycal to show that the government
could anticipate the amount of that loss. Although the
government argued that the evidence did not show that it
should have foreseen that the leases would ever be profit-
able, the court concluded that, given the terms of the
lease agreements, the government assumed the risk that
if it interfered with the oil companies’ option to explore,
“it was on the hook for whatever profits could be estab-
lished with meaningful certainty.” Nycal, 106 Fed. Cl. at
228. In this setting, the court ruled, it was “sufficient to
establish foreseeability that there was a reasonable
probability of recoverable reserves.” Id.
    The court then turned to causation, which was the
principal issue in dispute. Nycal’s experts asserted that
the leases would have proved highly profitable and that
Nycal’s share of those profits would have been approxi-
mately $72 million. The government’s experts, on the
other hand, testified that the amount of recoverable oil
and gas in the two leases was not sufficient to make
production more than marginally profitable. In addition,
the government argued that even if there was enough oil
and gas in the reservoir to cover the cost of production,
Nycal could not establish causation, for three reasons:
First, Nycal could not have obtained the financing to
participate in development of the leases; second, Nycal
NYCAL OFFSHORE DEVELOPMENT     v. US                       5



failed to show the lease owners would have gone forward
with production; and third, further exploration and devel-
opment would have been barred by environmental per-
mitting requirements unrelated to the breach. As to the
first reason, the court found that the government had
raised serious concerns, but the court determined that it
did not have to resolve that issue because “environmental
problems would have prevented development.” Nycal, 106
Fed. Cl. at 229 n.10.
     The court began its causation analysis by addressing
what it called “the principal factual dispute dividing the
parties: the question of how much oil and gas could have
been recovered.” Nycal, 106 Fed. Cl. at 229. After a
detailed analysis of the prelitigation and postlitigation
estimates of the amount of recoverable oil and gas in the
lease areas, the court found that the areas contained
approximately 60 million barrels of recoverable oil. That
amount, the court found, was sufficient to give rise to “a
plausible scenario under which [Nycal] could have made a
profit from its 4.25 percent interest in that quantity of oil
and attendant natural gas.” Id. at 240. The court there-
fore turned to the question whether, as the government
contended, there were “independent shortcomings in
plaintiff’s proof of causation, namely, that plaintiff has
not proved that the owners would have gone forward with
production, and that the owners could not have overcome
the environmental restrictions on development.” Id.
    Addressing the government’s argument that the evi-
dence was insufficient to establish with reasonable cer-
tainty that the owners would have proceeded to
production on the leased properties, the court concluded
that, at minimum, the owners were committed to drilling
another exploratory well in an effort to determine wheth-
er there was sufficient oil and gas to warrant proceeding.
Because the exploratory well was not drilled and the
results of that well were not known, the court found that
it was uncertain whether the owners would have gone
6                       NYCAL OFFSHORE DEVELOPMENT     v. US



forward. The court ruled that the uncertainty did not
preclude Nycal from going forward with its claim, howev-
er, because the breach prevented drilling of the explorato-
ry well. The court concluded that it would be “unfair to
burden plaintiff with the obligation to prove it more likely
than not that the owners would have gone forward with
production when the reason we will never know the
outcome was the government’s breach.” Nycal, 106 Fed.
Cl. at 243. Therefore, the court concluded that under the
circumstances of this case, Nycal had established as much
as it needed to about the likelihood that the owners would
have gone forward.
     The court then turned to the question whether envi-
ronmental and other obstacles would have prevented
development of the leased fields. As to that issue, the
court ruled that there were impediments unrelated to the
breach that would have precluded development. Nycal,
106 Fed. Cl. at 243. First, the plaintiff “could not have
obtained the necessary air pollution permits for the
project from the Santa Barbara Air Pollution Control
District” (“the District”), and second, the plaintiff “could
not have obtained access to the facilities at Las Flores
Canyon to process the oil, gas, and water produced at the
oil rig.” Id.
    With respect to the environmental permits, the court
explained that in Santa Barbara County, offshore activi-
ties are subject to a cap on certain kinds of emissions; if
an activity exceeds that cap, the responsible party must
offset all of its emissions. The court noted that the off-
shore drilling and production activity would generate
substantial emissions. In addition, the court found that
the lease owners would have had to build an onshore
processing facility, which, according to the evidence,
would be grouped with the offshore platform for purposes
of calculating emissions.
NYCAL OFFSHORE DEVELOPMENT    v. US                       7



    The court analyzed the likely volume of emissions
that would be created by the drilling and associated
operations and found that the only option for the lease
owners would be to purchase “emissions credits” from
other sources. As to that issue, however, the court found
that even accepting all of the favorable assumptions made
by Nycal, “the owners would have been well short of the
credits needed for rig operation and the . . . drilling.”
Nycal, 106 Fed. Cl. at 246. Summing up its findings on
that issue, the court concluded that Nycal “has not proven
that the breach was the cause of its lost opportunity to
explore and develop the leases. The owners’ inability to
obtain air pollution permits was an intervening cause of
the lost opportunity to develop the lease.” Id.
    The court added that Nycal’s answer that “time and
money would eventually provide a solution to the permit-
ting dilemma” did not overcome the problem, but created
a new one: uncertainty as to damages. Conjecture that a
solution would have been found, but without knowing
when, or what it would have cost, “injects an intolerable
level of uncertainty into calculating damages.” Nycal, 106
Fed. Cl. at 247. The court found that the owners’ costs
would not be reasonably certain without a set timeline,
and that it is unknown how much additional cost would
have been incurred to create or obtain emissions credits.
    In sum, the court found that the federal government’s
actions are “not the reason the owners ultimately would
have been unable to proceed.” Nycal, 106 Fed. Cl. at 247.
“Plaintiff’s inability to demonstrate that it is more likely
than not that it would have obtained the necessary envi-
ronmental permits is thus an independent basis for ruling
that it cannot establish lost profits.” Id.
    The court then addressed what it referred to as “an-
other major obstacle to the development” of the leased
properties: the need to process the oil, gas, and water
produced from the drilling platform. As to that issue, the
8                       NYCAL OFFSHORE DEVELOPMENT     v. US



court analyzed the available options in detail and found
that the owners would not have been able to use existing
capacity at Exxon’s onshore processing site. In addition,
the court found that building a new onshore facility
“would simply have added to the virtual impossibility of
obtaining the necessary permits.” Nycal, 106 Fed. Cl. at
251. The court concluded that its finding that a new
facility would not have been permitted “is sufficient to
preclude the necessary finding that the breach caused
damages.” Id. at 253.
    Summarizing its findings, the Court of Federal
Claims stated that although Nycal had satisfied the
requirement of showing that it would have been foreseea-
ble to government officials that breach of the lease
agreement could result in significant lost profits, Nycal
had failed to prove that the breach was the proximate
cause of any loss. Instead, the court concluded, the gov-
ernment proved “that an intervening cause, for which the
United States was not responsible, would have precluded
development of the [leased oil fields]: an inability on [the
owners’] part to obtain the necessary air pollution per-
mits” for the exploratory drilling, the permanent oil rig,
and the associated onshore processing facility. Nycal, 106
Fed. Cl. at 253. Plaintiff, according to the court, “was
unable to rebut this overwhelming evidence.” Id.
                             II
    Nycal’s first argument on appeal is that the trial court
improperly allocated the burden of proof with respect to
whether the government’s conduct caused Nycal’s loss. In
particular, Nycal argues that the court improperly im-
posed upon it the burden of proving that the lease owners
would have been able to overcome the obstacles created by
the need to obtain emissions credits from the District and
NYCAL OFFSHORE DEVELOPMENT    v. US                       9



the need to obtain access to an onshore production facili-
ty. 1
    The basic principles that apply to proof of causation in
a lost-profits case are well settled. The showing of causa-
tion requires “comparison between the breach and non-
breach worlds.” Yankee Atomic Elec. Co. v. United States,
536 F.3d 1268, 1273 (Fed. Cir. 2008). It is the plaintiff’s
burden to prove causation. See Rumsfeld v. Applied Cos.,
325 F.3d 1328, 1336 (Fed. Cir. 2003); Glendale Fed. Bank,
FSB v. United States, 239 F.3d 1374, 1380 (Fed. Cir.



   1     At the outset, the government raises two argu-
ments that were rejected by the Court of Federal Claims.
First, the government contends that Nycal may not seek
lost profits, but instead is bound by the decision to seek
restitution made by the holders of the remaining 95.75
percent interest in the two leases. The government’s
authority for that proposition is inapposite. The govern-
ment cites cases holding that a party may not recover
both restitution and lost profits as remedies for breach of
the same indivisible contract. We see no justification for
extending that principle to hold that a party with an
interest in property that is the subject of an agreement
cannot elect to seek lost profits rather than restitution as
a remedy for breach of contract simply because other
parties with separate interests in the same property have
sought restitution instead of lost profits.
    Second, the government argues that the Court of Fed-
eral Claims erroneously failed to require Nycal to prove
the magnitude of its lost profits as part of Nycal’s showing
that its lost profits were foreseeable. We need not address
that issue, or the government’s related argument that the
evidence did not show that any profits were reasonably
foreseeable, because the trial court’s judgment can be
upheld based on the court’s treatment of the causation
issue.
10                      NYCAL OFFSHORE DEVELOPMENT      v. US



2001); San Carlos Irrigation & Drainage Dist. v. United
States, 111 F.3d 1557, 1563 (Fed. Cir. 1997). To satisfy
that burden, the plaintiff must show, by a preponderance
of the evidence, that the plaintiff’s alleged loss was “the
proximate result of the breach.” Energy Capital Corp. v.
United States, 302 F.3d 1314, 1324-25 (Fed. Cir. 2002);
Cal. Fed. Bank, F.S.B. v. United States, 245 F.3d 1342,
1349 (Fed. Cir. 2001).
     Nycal does not take direct issue with those proposi-
tions, but instead argues that those propositions do not
apply here because this case involves an “intervening
cause.” In the case of such an intervening cause, Nycal
argues, the burden of proof shifts to the defendant to show
that the intervening cause was the reason for the plain-
tiff’s loss.
     We reject that argument. The burden of proof on the
issue of causation in a lost-profits case rests on the plain-
tiff without regard to the nature of the impediment that
the plaintiff would have had to overcome in the nonbreach
world to make a profit. In some instances the impediment
will be obvious. For example, in a case such as this one,
the plaintiff might fail to prove that there are enough oil
reserves in the leased properties to make the lease
agreement profitable. Or the plaintiff might fail to prove
that it had the ability to extract and process enough oil to
make a profit. Alternatively, there might be less obvi-
ous—but equally fatal—impediments to the plaintiff’s
ability to show that it would have been able to make a
profit in the absence of a breach, such as that it lacked
sufficient financing or technical expertise to complete the
project. An inability to obtain the necessary permits to
conduct drilling and processing activities is akin to those
impediments, and they are treated the same as the more
obvious ones.
    There is no ready way to distinguish, in a lost-profits
case, between proof of causation in general and what
NYCAL OFFSHORE DEVELOPMENT     v. US                       11



Nycal refers to as “intervening” causes. As a colloquial
matter, it may be appropriate to refer to certain prospec-
tive impediments to profit as “intervening,” but for bur-
den-of-proof purposes the use of that term does not justify
treating certain factors bearing on causation differently
from others. For example, there is no reason to distin-
guish between a failure of proof of causation based on
factors such as the high expense of production, unavaila-
bility of capital, and low oil prices, on the one hand, and a
failure of proof based on factors such as the inability to
comply with safety or environmental regulations, on the
other. All may bear, to a greater or lesser extent, on the
ultimate issue of causation. And once they are identified
as significant factors in the analysis, there is no reason
that the plaintiff should bear the burden of proof as to
some of them but not as to others. 2




    2   We do not attach any significance to the fact that
the trial court used the term “intervening cause” in refer-
ring to the problems with the emissions permits and the
onshore production facility. In contract lost-profits cases,
many factors bearing directly on causation are independ-
ent of the conduct of either party, such as (on the facts of
this case) the presence of oil reserves, the price of oil, the
cost of production, and the difficulties in satisfying regu-
latory requirements.      Evidence of such “intervening
causes” is not analyzed separately from other causes, but
is “an integral part of the proximate cause analysis.”
Nat’l Mkt. Share, Inc. v. Sterling Nat’l Bank, 392 F.3d
520, 527 (2d Cir. 2004). Nor do we attach significance to
the trial court’s one-time use of the term “defenses” while
discussing the impediments to the drilling and production
project. The context makes clear that the court used that
term informally, and not as a legal term of art. See Nycal,
106 Fed. Cl. at 240.
12                      NYCAL OFFSHORE DEVELOPMENT      v. US



    To be sure, some potential impediments—perhaps in-
cluding whether the plaintiff could have obtained the
necessary permitting—might not be immediately obvious
to a plaintiff who is trying to prove causation. In a simi-
lar instance involving a potential offset to a claim of lost
profits, we have required the defendant to point out the
potential offset and have required the plaintiff to then
show that the potential offset would not have prevented
the plaintiff from earning the profits it claims. See, e.g.,
Energy Nw. v. United States, 641 F.3d 1300, 1308 n.5
(Fed. Cir. 2011) (“While the burden of proof for causation
remains squarely with the plaintiff, a defendant seeking
an offset has an obligation to move forward by pointing
out the costs it believes the plaintiff avoided because of
the breach’ . . . . ”); S. Nuclear Operating Co. v. United
States, 637 F.3d 1297, 1304 (Fed. Cir. 2011) (same); see
also Boston Edison Co. v. United States, 658 F.3d 1361,
1369 (Fed. Cir. 2011). In this case, the government
focused the attention of the parties and the court on the
emissions-permits problem, so that issue was clearly in
dispute as part of the causation analysis. As such, the
plaintiff was properly required to prove, as part of its
showing on causation, that it would have been able to
conduct drilling and processing operations without run-
ning afoul of the District’s antipollution restrictions.
    Nycal’s argument to the contrary is based on case au-
thority dealing with distinctly different issues. Nycal
relies heavily on the Supreme Court’s decision in Bigelow
v. RKO Radio Pictures, 327 U.S. 251 (1946). The question
before the Supreme Court in that case was whether the
evidence of damages in an antitrust case was sufficient to
support the jury’s verdict. In the course of its opinion, the
Court discussed the principle that the defendant should
not be heard to argue that the evidence of damages was
insufficiently precise “where the defendant by his own
wrong has prevented a more precise computation.” Id. at
NYCAL OFFSHORE DEVELOPMENT    v. US                      13



264. “Any other rule would enable the wrongdoer to profit
by his wrongdoing at the expense of his victim.” Id.
     Bigelow does not stand for the proposition that the de-
fendant in a lost-profits case bears the burden of proof on
causation, or any factor bearing on causation. The Court
recognized that a “wrongdoer may not object to the plain-
tiff’s reasonable estimate of the cause of injury and of its
amount, supported by the evidence, because [the estimate
is] not based on more accurate data which the wrongdo-
er’s misconduct has rendered unavailable.” Bigelow, 327
U.S. at 265. That observation, however, goes to the
degree of precision demanded of the plaintiff, not to the
question whether the plaintiff bears the burden of proof.
    Nycal relies on several other cases as well, none of
which are helpful to it. Some are based on statutes that
dictate a shift in the burden of proof in prescribed circum-
stances. See Walther v. Sec’y of Health & Human Servs.,
485 F.3d 1146 (Fed. Cir. 2007) (under Vaccine Act, after
petitioner has made prima facie showing of causation,
government bears burden to show cause of injury other
than vaccine); Edwards-Warren Tire Co. v. J.J. Blazer
Constr. Co., 565 F.2d 401 (6th Cir. 1977) (under Ohio
statute, after proof that accepted goods did not conform to
manufacturer’s warranty, burden shifts to defendant to
show product misuse or other cause). Others involve tort
causes of action in which courts imposed on the defendant
the burden of proving that the plaintiff’s injury was the
result of a superseding cause, i.e., an independent act by
someone other than the defendant that has the legal
effect of negating the defendant’s liability. See BCS
Servs., Inc. v. Heartwood 88, LLC, 637 F.3d 750, 757 (7th
Cir. 2011); Roberts v. Printup, 595 F.3d 1181, 1189-90
(10th Cir. 2010); Gathercrest, Ltd. State Bank of Ind. v.
First Am. Bank & Trust, 805 F.2d 995, 997 (11th Cir.
1986).
14                       NYCAL OFFSHORE DEVELOPMENT       v. US



    Nycal also relies on cases standing for the proposition
that if a plaintiff in a patent case succeeds in establishing
a reasonable probability that sales made by the infringing
defendant would have been made by the patentee (as, for
example, in a two-supplier market), the burden then
shifts to the defendant to show that, absent infringement,
not all of the infringer’s sales would have gone to the
plaintiff. See Kaufman Co. v. Lantech, Inc., 926 F.2d
1136, 1141-42 (Fed. Cir. 1991); see also Rite-Hite Corp. v.
Kelley Co., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc).
That line of cases does not support Nycal’s position. In
patent lost-profits cases, the burden to prove causation is
clearly on the plaintiff; it is only after the plaintiff has
shown a reasonable probability that the infringer’s sales
were made at the expense of the patentee that the burden
shifts to the defendant to show that the claimed damages
are not as great as the plaintiff’s initial showing might
suggest. 3



     3   Although Nycal asserts that it established “a ‘rea-
sonable probability’ that its damages were caused by the
government’s breach,” the trial court held to the contrary.
The court found that Nycal had not proved that the
breach was the proximate cause of any loss to Nycal
either by showing that the breach was the “but for” cause
of the loss or a “substantial factor” contributing to it. See
Citizen Fed. Bank v. United States, 474 F.3d 1314, 1318
(Fed. Cir. 2007) (selection of either the “substantial fac-
tor” or “but for” test for causation in a lost-profits contract
case “depends upon the facts of the particular case and
lies largely within the trial court’s discretion”). To the
contrary, the court found that the government had estab-
lished by “overwhelming evidence” that “an intervening
cause, for which the United States was not responsible,
would have precluded development” of the leased proper-
ties. Nycal, 106 Fed. Cl. at 253.
NYCAL OFFSHORE DEVELOPMENT     v. US                       15



    Finally, Nycal cites cases involving the contract de-
fense of frustration of purpose, in which the burden of
proof falls on the defendant to show that it is excused
from performance because the purpose of the contract was
no longer served by mutual performance. See, e.g., Sea-
board Lumber Co. v. United States, 308 F.3d 1283, 1296
(Fed. Cir. 2002). As explained above, however, causation
is not a defense to a claim of lost profits, but is an element
of the plaintiff’s proof of damages. The defense of frustra-
tion of purpose is given a narrow construction because it
defeats the explicit terms of the parties’ agreement. Proof
of the elements of lost profits, by contrast, is essential to
ensuring that the plaintiff is compensated for the breach,
but not overcompensated by receiving a recovery exceed-
ing the benefits it would have obtained if the contract had
been performed.
    In sum, none of the cases cited by Nycal deal with the
issue in this case, which is whether the plaintiff must
bear the burden of proof as to causation in a lost-profits
case. 4 As to that issue, this court’s decisions are uniform
and clear: the burden of proof is imposed on the plaintiff,
as the trial court correctly held in this case. We therefore
reject Nycal’s argument that the trial court misallocated
the burden of proof on the issue of causation.




    4    Nycal cites a New York case, Haven Associates. v.
Donro Realty Corp., 503 N.Y.S.2d 826 (App. Div. 1986),
for the proposition that the burden of proving intervening
cause in a lost-profits case falls on the defendant. But, as
the Second Circuit explained in National Market Share,
Inc. v. Sterling National Bank, 392 F.3d 520, 527 (2d Cir.
2004), the plaintiff in Haven had already established
proximate causation, and the court shifted to the defend-
ant the burden of proof with respect to a factor that went
to the quantum of damages.
16                       NYCAL OFFSHORE DEVELOPMENT      v. US



                             III
    Nycal contends that even if it bore the burden of proof
as to causation, it satisfied that burden.
                              A
    First, Nycal takes issue with the trial court’s finding
that the District would not have granted the lease owners
the necessary permits, because denying those permits
would have effected a regulatory taking of the owners’
property under the Fifth Amendment. In substance,
Nycal’s argument is that the lease owners’ takings claim
would have been so strong, and the threat of litigation a
matter of such concern to the District, that the District
would have found a way to allow the drilling and produc-
tion process to go forward.
     There are several flaws in this argument. To begin
with, it was waived below, as the trial court noted. Nycal,
106 Fed. Cl. at 247 n.40. There is only the barest hint of
the “takings” argument in the record below, and that hint
came too late in any event. The trial court correctly noted
that the takings argument was not made in the complaint
or at trial. Nycal, however, points to one sentence in its
post-trial brief stating that a decision by the District not
to issue a permit “would raise issues of regulatory taking
that duplicate the lost profits calculation here at issue.”
But that sentence does not suggest Nycal’s current argu-
ment: that the District would have capitulated to Nycal
because of the force of Nycal’s takings argument. 5 The


     5   Nycal expanded upon the takings issue in its post-
trial reply brief, but even there the argument was limited
to an assertion that to avoid takings liability, “some
accommodation . . . was a legal and practical necessity”
and that “some workable solution was inevitable.” Even if
that brief allusion to the likely effect of a takings claim on
the District would have been sufficient to put the trial
NYCAL OFFSHORE DEVELOPMENT       v. US                   17



trial court therefore did not abuse its discretion in con-
cluding that the “takings” argument was waived.
    Waiver aside, Nycal introduced no evidence on the
takings issue at trial. The trial court therefore had no
basis from which to assess the strength of the takings
claim. Nor did the court have any evidence from which to
judge the likelihood that Samedan would have raised the
takings issue with the District, or the likelihood that the
District would have given in to Samedan if it had. Be-
cause the takings argument has no evidentiary support, it
must be rejected.
                             B
    Nycal next directly challenges four of the trial court’s
factual findings as “deeply flawed.” We review the court’s
factual findings under the “clear error” standard.
    First, Nycal disputes the trial court’s finding that the
emissions resulting from drilling an exploratory well
would have exceeded the District’s emissions cap. The
court based that conclusion on its finding that the District
would have aggregated all the emissions from the wells
drilled by Samedan’s mobile drilling rig, including wells
on properties outside the leases at issue in this case. In
making that finding, the trial court noted that the District
had made a similar decision with respect to a previous
offshore oil drilling project known as SWARS. Nycal
contends that Samedan’s project was very different from
the SWARS project and that it cannot be inferred from
the treatment of the SWARS project that the District
would have handled Samedan’s project in the same man-
ner.


court on notice of the argument now being pressed, it
came too late when raised for the first time in a reply
brief in the trial court. See Qwest Gov’t Servs., Inc. v.
United States, 112 Fed. Cl. 24, 36 (2013).
18                      NYCAL OFFSHORE DEVELOPMENT      v. US



    Nycal’s argument runs up against trial testimony to
the contrary. Two knowledgeable witnesses testified at
trial that the District intended to treat the multiple wells
as a single project, as had been done in the case of the
SWARS project. That evidence is sufficient to support the
trial court’s finding on that issue.
    Second, Nycal argues that the trial court was wrong
to find that Samedan would not have been able to pur-
chase credits to offset the emissions from its exploratory
well and permanent platform. Nycal argues that it could
have obtained those credits by making a payment to a
“new technology fund” established by the District that
provides grants to projects that reduce emissions. Nycal
points out that the SWARS project was allowed to proceed
after the operator of that project made a $750,000 pay-
ment to the fund.
    Based on evidence at trial, the trial court found that
there were not enough offset credits available to offset the
emissions that Samedan’s project would create. Nycal’s
witness conceded that the available offsets were “extreme-
ly limited,” and the government’s permitting expert
testified that “offsets in Santa Barbara are very limited,
or non-existent.” Moreover, Nycal did not introduce
evidence of any projects that could be funded through the
new-technology fund and result in significant emissions
offsets. 6 The trial court’s finding on the unavailability of
offsets is therefore not clearly erroneous.




     6  Nycal attaches great significance to a letter sent
by the District in 2000 that offered the lease owners “the
opportunity to participate” with the District “in pre-
application discussions regarding the delineation-drilling
project.” Contrary to Nycal’s characterization, that letter
does not indicate that the District would have approved
NYCAL OFFSHORE DEVELOPMENT     v. US                      19



     Third, Nycal argues that the court erroneously found
that Samedan would not have been able to construct an
onshore processing facility for the oil, gas, and water
produced on the leased properties because the emissions
from that facility would have been aggregated with Sa-
medan’s offshore activities. Nycal’s answer is that it
could have secured the necessary credits, whether by
paying into the District’s new-technology fund or other-
wise. Again, however, the court’s finding that the possi-
bilities of obtaining credits by contributing to the new-
technology fund were very limited or nonexistent is sup-
ported by evidence and must be sustained.
    Fourth, Nycal contends that, even if the trial court
was correct in finding that Samedan could not have
constructed a new onshore facility, Samedan could have
obtained access to Exxon’s existing onshore processing
facility at Las Flores Canyon. When Exxon was permit-
ted to construct that facility, it was required to promise to
provide “equitable access” to other companies. Nycal
argues that Exxon’s obligation would have required it to
offer its excess capacity to Samedan.
    Although the trial court found that Exxon had some
obligation, which was not fully explored at trial, to allow
the use of its existing facilities or the unused land at the
Las Flores Canyon site for construction of a new facility,
the court found that Exxon planned to use any excess
capacity at its Las Flores processing facility for its own
purposes, and that Exxon had denied two previous re-
quests to use its facilities. Moreover, the court found that
Exxon lacked the capacity to process the natural gas and
water that would have been produced from the leased
properties. Beyond that, although Exxon had agreed to
provide “equitable access” to its facilities, the court did


the drilling project by accepting a payment to the new-
technology fund or otherwise.
20                       NYCAL OFFSHORE DEVELOPMENT      v. US



not find that Exxon’s agreement required it to process oil,
gas, and water from other producers regardless of its own
needs. Those findings are not clearly erroneous and
support the trial court’s conclusion that Samedan would
not have been able to use Exxon’s facility for its pro-
cessing needs.
                              C
     In its final argument, Nycal addresses the alternative
ground for decision by the trial court: that even if Same-
dan had obtained the required emissions permits by
paying into the new-technology fund and been able to
construct a processing facility, Nycal’s claim would still
fail because it was unknown how much such efforts would
cost, and thus the amount of damages would be fatally
uncertain. Nycal’s response is, in essence, that if drilling
had been permitted to proceed, the profits from the oil
and gas produced from the leased properties would have
been so great that any costs incurred in obtaining the
requisite emission permits and constructing a processing
facility would have been inconsequential. In making that
argument, Nycal relies on this court’s cases holding that
imprecision in the calculation of lost profits is not fatal to
a damages award.
    The government responds that the uncertainties as to
cost were not questions of “absolute exactness or mathe-
matical precision,” Bluebonnet Sav. Bank v. United States,
266 F.3d 1348, 1355 (Fed. Cir. 2001), but were of suffi-
cient magnitude that they left the court unable to calcu-
late damages with any degree of certainty.
    The trial court agreed with the government’s charac-
terization. The court observed that “[c]onjecture that, ‘we
would have come up with a solution, although we don’t
know when, or what it would have cost’ injects an intoler-
able level of uncertainty into calculating damages.”
Nycal, 106 Fed. Cl. at 247. The court added that, even
“[a]ccepting on faith that, given enough money and time,
NYCAL OFFSHORE DEVELOPMENT     v. US                       21



the owners could have eventually obtained the necessary
permits means we cannot rely on plaintiff’s schedule of
development, nor would we know how much it would have
cost to build and operate the various facilities” or to create
or obtain emissions credits. Id.
    We acknowledge that there is force to the trial court’s
conclusion that the evidence is not sufficient to permit the
court to make “a fair and reasonable approximation of the
damages.” Energy Capital Corp. v. United States, 302
F.3d 1314, 1329 (Fed. Cir. 2002), quoting Locke v. United
States, 283 F.2d 521, 524 (Ct. Cl. 1960). However, in light
of our disposition of the causation issue, it is unnecessary
for us to reach the trial court’s alternative ground of
decision, and we decline to do so. Accordingly, we uphold
the trial court’s ruling that Nycal failed to meet its bur-
den of proving causation and thus has not established its
right to a lost-profits award.
                        AFFIRMED
