Keyes Helium Company, LLC, Certain Underwriters v. United States

N OTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
KEYES HELIUM COMPANY, LLC, CERTAIN
UNDERWRITERS AND CERTAIN INSURANCE
COMPANIES, SUBSCRIBING TO POLICY NO.
B1740200667000,
Plaintiffs-Appellants
v.
UNITED STATES,
Defendant-Appellee
______________________
2024-1132
______________________
Appeal from the United States Court of Federal Claims
in No. 1:22-cv-00434-PEC, Judge Patricia E. Campbell-
Smith.
______________________
Decided: June 23, 2025
______________________
BRET SUMNER, Beatty & Wozniak, P.C., Denver, CO,
argued for plaintiff-appellant Keyes Helium Company,
LLC.
SAMUEL J. D OLAN , Hall Maines Lugrin, PC, Houston,
TX, argued for plaintiff-appellant Certain Underwriters
and Certain Insurance Companies. Also represented by
Case: 24-1132 Document: 64 Page: 1 Filed: 06/23/2025

-- 1 of 12 --

KEYES HELIUM COMPANY , LLC v. US 2
CAROLINE E. B OSSIER, MAURICIO RONDON.
J OSHUA D AVID T ULLY , Commercial Litigation Branch,
Civil Division, United States Department of Justice, Wash-
ington, DC, argued for defendant-appellee. Also repre-
sented by BRIAN M. BOYNTON, T ARA K. HOGAN, P ATRICIA M.
MCCARTHY .
______________________
Before L OURIE, D YK, and REYNA, Circuit Judges.
L OURIE, Circuit Judge.
Keyes Helium Company, LLC and its subrogated in-
surers (collectively, “Keyes”) appeal from a final judgment
of the United States Court of Federal Claims (“the Claims
Court”) dismissing various claims arising from a contract
for the storage and delivery of helium with the United
States (“the government”). See Keyes Helium Co., LLC v.
United States, 167 Fed. Cl. 283 (2023), J.A. 1–15. For the
following reasons, we affirm-in-part, reverse-in-part, va-
cate-in-part, and remand.
BACKGROUND
The government, acting through the Bureau of Land
Management (“BLM”), a division of the United States De-
partment of the Interior, administers the federal helium
program. See Helium Stewardship Act, 50 U.S.C. § 167.
Keyes, a private helium refiner, operates the first refinery
on BLM’s helium pipeline system. Together, BLM and
Keyes executed a contract for the storage and delivery of
helium. See J.A. 42–60 (“Contract for the Storage and De-
livery of Helium” or “Contract”).
The Contract, which was renewed in August 2020, pro-
vided that BLM would store Keyes’ crude helium within
the federal helium system subject to certain pre-conditions.
For instance, the Contract required that for Keyes’ crude
helium-gas volumes to be stored at BLM’s facility, the gas
Case: 24-1132 Document: 64 Page: 2 Filed: 06/23/2025

-- 2 of 12 --

KEYES HELIUM COMPANY , LLC v. US 3
mixture had to contain “at least 65 percent helium by vol-
ume” and could not contain “more than 3 percent methane
[] by volume.” J.A. 46, § 2.1(a). At Keyes’ request, the Con-
tract also required that BLM deliver the stored helium gas
mixture to Keyes’ refinery. J.A. 47–48, § 2.3. At the point
of delivery, the Contract imposed certain conditions on
BLM. Specifically, the Contract required that BLM deliver
“a helium-gas mixture containing not less than 50 percent
helium by volume.” Id. (emphasis added). For BLM deliv-
eries that met that specification, among other require-
ments, Keyes agreed “to compensate” BLM for the related
delivery costs. Id. The relevant delivery requirements im-
posed on BLM by Section 2.3 of the Contract, as discussed
above, state:
(a) The helium will be delivered to Person1 at Per-
son’s Delivery/Acceptance Point where the Fed-
eral Helium Pipeline is connected with a line
that goes to Person’s facilities, and in a helium-
gas mixture containing not less than 50 percent
helium by volume, and at a pressure existing in
the system at the time and at the point of deliv-
ery, and will be delivered under conditions that
permit suitable measurement and analysis
specified by Article VI.
(b) Person agrees to compensate the United States,
pursuant to Article VI, for any costs that the
United States incurs to deliver a helium-gas
mixture containing not less than 50 percent he-
lium by volume.
Id. (emphasis added). Moreover, the contract contains no
limitations on damages except for instances of force
majeure, which is not at issue here. J.A. 57, § 9.1.
1 “Person” refers to Keyes. J.A. 44.
Case: 24-1132 Document: 64 Page: 3 Filed: 06/23/2025

-- 3 of 12 --

KEYES HELIUM COMPANY , LLC v. US 4
Following multiple alleged off-specification (“off-spec”)
deliveries of helium to Keyes facility, Keyes filed a com-
plaint against the government asserting breach of contract
by BLM, among other claims, on April 14, 2022. See J.A.
20–60. Keyes’ complaint identified at least two instances
in which it alleged that BLM delivered off-spec helium gas
mixtures containing less than the required 50% helium by
volume and, in some instances, containing greater than
60% methane by volume. See J.A. 29–31 (December 2020
Off-Spec Delivery Event); J.A. 33 (February 2021 Off-Spec
Delivery Event). Keyes explained that BLM breached its
Contract with Keyes by “[f]ailing to deliver the helium-gas
mixture in accordance with the terms and conditions of the
[Contract].” J.A. 36, para 84 a. Keyes specifically alleged
that, on December 15, 2020, BLM began delivering crude
helium into Keyes’ refinery system that contained helium
concentrations below 50% by volume and “methane concen-
trations in excess of 60% [by] volume.” J.A. 36, para 83. As
a result, Keyes alleged that it incurred significant damages
that were both “reasonably foreseeable” and “proximate” to
BLM’s breach of the Contract. J.A. 37, para 85, 86.
In opposition to the government’s motion to dismiss,
Keyes also asserted that its complaint sufficiently pleaded
a claim for breach of an implied duty of good faith and fair
dealing because it alleged facts sufficient to establish that
BLM’s delivery of “damaging levels of contaminants with
the crude helium completely destroyed its ability to achieve
the benefit of the bargain with the United States (i.e.,
transporting crude helium for refining and resale).”2 J.A.
148.
2 In the alternative, Keyes requested that the Claims
Court allow it to amend its complaint to more clearly state
the claim for breach of the duty of good faith and fair
Case: 24-1132 Document: 64 Page: 4 Filed: 06/23/2025

-- 4 of 12 --

KEYES HELIUM COMPANY , LLC v. US 5
As an alternative to its breach of contract claims, Keyes
alleged that the government would also have liability for
damages sounding in tort in the District Court of the
Northern District of Texas as a result of the government’s
off-spec deliveries. J.A. 37–38. It alleged that BLM failed
to exercise its duty of reasonable care in “performing ser-
vices relating to the delivery of helium” and “obtaining
and/or disclosing information regarding the unacceptable
and damaging levels of methane in the helium.” J.A. 37.
Finally, in addition to its claim for breach of contract
and alternative tort claims, Keyes alleged a takings claim
under the Fifth Amendment of the United States Constitu-
tion actionable under the Tucker Act, 28 U.S.C. § 1491.
J.A. 38–39. Keyes alleged that “the United States has paid
nothing to Keyes Helium Company for its valuable helium
lost as a result of the acts and omissions of the United
States acting through BLM,” and instead of “allocate[ing]
replacement helium volumes to Keyes Helium Company,
the United States allocated these helium volumes to other
companies on the BLM helium system.” J.A. 38–39, para
93–94.
The Claims Court dismissed all of Keyes’ claims, in-
cluding its alternative tort claims, under Rule 12(b)(6) of
the Rules of the United States Court of Federal Claims on
August 31, 2023. Keyes timely appealed, and we have ju-
risdiction under 28 U.S.C. § 1295(a)(3).
D ISCUSSION
Keyes contends on appeal that the Claims Court erred
in dismissing its breach of contract claims, alternative
claim in tort, and takings claim. After consideration of all
dealing. J.A. at 149 (citing Metricolor LLC v. L’Oreal S.A.,
791 F. App’x 183, 189 (Fed. Cir. 2019).
Case: 24-1132 Document: 64 Page: 5 Filed: 06/23/2025

-- 5 of 12 --

KEYES HELIUM COMPANY , LLC v. US 6
the parties’ arguments, we agree that the Claims Court
erred in its breach of contract analysis, which also infected
its dismissal of the alternative tort claim. However, we dis-
agree that the Claims Court erred in dismissing Keyes’ tak-
ings claim. We discuss each issue in turn.
The Claims Court may dismiss a complaint if it fails “to
state a claim upon which relief can be granted.” RCFC,
Rule 12(b)(6). “We review the Claims Court’s dismissal for
failure to state a claim de novo.” Oliva v. United States,
961 F.3d 1359, 1362 (Fed. Cir. 2020). To survive a motion
to dismiss, the claimant must provide sufficient factual
matter in its complaint to state a plausible claim for relief.
Id. “We take all plausible factual allegations in the com-
plaint as true and construe the facts in the light most fa-
vorable to the non-moving party.” Id.
Regarding the breach of contract claim, “[w]hether a
contract creates a duty is a legal question of contract inter-
pretation and thus freely reviewable by this court.” San
Carlos Irr. & Drainage Dist. v. United States, 877 F.2d 957,
959–60 (Fed. Cir. 1989). The Claims Court determined
that Keyes had failed to establish a breach because there
was no “contractually explicit basis for its claim,” i.e., there
was no relevant obligation under the Contract. Keyes,
167 Fed. Cl. at 292. We disagree.
The Claims Court correctly recited that “[t]o recover for
breach of contract, a party must allege and establish: (1) a
valid contract between the parties, (2) an obligation or duty
arising out of the contract, (3) a breach of that duty, and (4)
damages caused by the breach.” Id. at 290 (citing San Car-
los, 877 F.2d at 959) (emphasis added). The court, how-
ever, overlooked its own recitation of the law, which
explains that a breach of contract analysis necessarily
flows from the alleged obligation identified in the contract.
That is, once a duty is established under the contract at
issue, we ask whether there was a breach of “that duty,”
and, if so, then we ask whether there were any “damages
Case: 24-1132 Document: 64 Page: 6 Filed: 06/23/2025

-- 6 of 12 --

KEYES HELIUM COMPANY , LLC v. US 7
caused by the breach.” San Carlos, 877 F.2d at 959 (em-
phasis added); see also Oliva, 961 F.3d at 1363 (“damages
for breach of contract require a showing of causation, which
in turn necessitates a comparison between the breach and
non-breach worlds.” (cleaned up)).
The Claims Court’s analysis was therefore incorrect be-
cause it reverses the breach of contract analysis. Instead
of identifying BLM’s alleged obligations under the Contract
and considering whether any had been breached, it started
with the alleged harm and attempted to identify a “contrac-
tually explicit basis,” or obligation, that flowed from that
harm. Keyes, 167 Fed. Cl. at 292. Specifically, the Claims
Court began its analysis by stating that “[h]ere, the harm
detailed at length by plaintiff centers on measured me-
thane levels in defendant’s deliveries to plaintiff.” Id. It
then concludes that because there is no obligation that cor-
responds to that harm, there can be no breach. See id.
(“neither the contract nor plaintiff indicates how the detec-
tion of elevated methane levels is related to any contractual
obligation.”). That was error. The question is not whether
“produced methane levels trigger any duty owed by defend-
ant under the contract,” id., as the Claims Court states; it
is whether the Contract prescribes an obligation of BLM
that Keyes has plausibly shown to have been breached by
BLM. And only after that is established, can one under-
take a proper causation analysis to determine whether
there are any “damages that stem from the breach.” Id.
(citing San Carlos, 877 F.2d at 959).
Here, Keyes’ complaint plausibly establishes that (1)
the Contract imposes an obligation on BLM’s delivery, and
(2) BLM subsequently breached that obligation. The Con-
tract clearly obligated BLM to deliver “a helium-gas mix-
ture containing not less than 50 percent helium by volume.”
J.A. 47–48, § 2.3(a) (emphasis added). And Keyes identi-
fies at least two alleged instances where BLM delivered off-
spec helium gas mixtures, including on December 15, 2020,
and February 27, 2021. See J.A. 29–31 (December 2020
Case: 24-1132 Document: 64 Page: 7 Filed: 06/23/2025

-- 7 of 12 --

KEYES HELIUM COMPANY , LLC v. US 8
Off-Spec Delivery Event); J.A. 33 (February 2021 Off-Spec
Delivery Event). In fact, Keyes alleged that, in at least one
instance during December 2021, BLM’s delivery contained
a “level of methane content, as high as 62.6724%,” J.A. 32,
para 62, which necessarily breaches the requirement of “a
helium-gas mixture containing not less than 50 percent he-
lium by volume,” J.A. 47–48, § 2.3(a). Moreover, Keyes also
alleged that BLM previously admitted that it had delivered
off-spec helium during administrative proceedings. J.A.
34, para 73. Taken together, Keyes’ allegations have plau-
sibly established BLM’s breach of its delivery obligation
under Section 2.3(a) of the Contract.
BLM relies on the Claim Court’s interpretation “that
[Section 2.3(b) of] the Contract ‘anticipates that a delivery
may contain less than 50 percent helium, and allows that
in such an instance, defendant is not obligated to pay for
the nonconforming delivery.” Appellee Br. 15 (citing Keyes,
167 Fed. Cl. at 292; J.A. 48 § 2.3(b)). It argues that because
Section 2.3(b) anticipates off-spec deliveries and that “in
those circumstances, Keyes Helium is not obligated to pay,”
Appellee Br. 28, Section 2.3(b) of the Contract therefore op-
erates to negate BLM’s liability for off-spec deliveries, id.
at 30. But Section 2.3(b) merely provides that Keyes
agreed to compensate BLM for costs that it incurred for on-
spec deliveries under Section 2.3(a), i.e., deliveries that
contains “not less than 50 percent helium by volume.” J.A.
47–48, § 2.3(a). It does not absolve BLM of its liability for
an express breach of Section 2.3(a).
In addition to alleging that the government breached
its obligation to deliver a helium-gas mixture composed of
not less than 50% helium under Section 2.3, the complaint
also alleged that the government breached its agreement
with Keyes by “[f]ailing to follow industry standard by de-
livering crude helium with methane levels more than dou-
ble the amount generally accepted in the industry.”
J.A. 36. Helium industry standards allegedly set the max-
imum limit for methane in helium-gas mixtures at around
Case: 24-1132 Document: 64 Page: 8 Filed: 06/23/2025

-- 8 of 12 --

KEYES HELIUM COMPANY , LLC v. US 9
3%, see J.A. 30; see also J.A. 46 (requiring that helium de-
livered to the government be “no more than 3 percent me-
thane (CH4) by volume). The Claims Court erred in failing
to consider that maximum methane limitation standard in
interpreting the contract, including whether the govern-
ment’s delivery obligation incorporated that standard and,
if so, whether BLM’s failure to perform accordingly gave
rise to a breach of the agreement. See Hunt Const. Grp.,
Inc. v. United States, 281 F.3d 1369, 1373 (Fed. Cir. 2002)
(“evidence of trade practice may be useful in interpreting a
contract term having an accepted industry meaning,” espe-
cially “where there is a term with an accepted industry
meaning that was omitted from the contract.”) (cleaned
up). We do not at this stage decide whether industry prac-
tice would support a claim, only that the Claims Court
erred in failing to consider it.
The Claims Court’s dismissal of Keyes’ breach of con-
tract claim must therefore be reversed. This claim survives
the 12(b)(6) stage and is remanded for further proceedings.
On the merits, the court should consider whether Keyes’
plausibly alleged breach of BLM’s delivery obligation under
Section 2.3(a) is causally connected to the resultant harm,
i.e., whether it was reasonably foreseeable that an off-spec
helium gas mixture could contain elevated methane levels
sufficient to cause damage to Keyes’ facility and opera-
tions. Damages for breach of contract are recoverable
where: “(1) the damages were reasonably foreseeable by the
breaching party at the time of contracting; (2) the breach is
a substantial causal factor in the damages; and (3) the
damages are shown with reasonable certainty.” Kansas
Gas & Elec. Co. v. United States, 685 F.3d 1361, 1369 (Fed.
Cir. 2012) (quotations and citation omitted).
Turning to the next issue, the Claims Court, while ac-
knowledging that Keyes “did not enumerate a separate
claim for breach of the implied duty of good faith and fair
dealing,” nonetheless held that such claim “must fail for
the same reason that its breach of contract claim does.” See
Case: 24-1132 Document: 64 Page: 9 Filed: 06/23/2025

-- 9 of 12 --

KEYES HELIUM COMPANY , LLC v. US 10
Keyes, 167 Fed. Cl. at 292 (“The contract imposes no duty
on defendant to monitor the methane levels in its deliveries
and thus, defendant bears no contractual responsibility for
any asserted damage resulting from such conditions.”). As
discussed above, that sort of reverse breach of contract
analysis is inappropriate, and thus the Claims Court’s im-
plied duty of good faith and fair dealing determination
must be vacated and remanded for reconsideration.
On remand, the Claims Court should heed its own
words, which explained that “[i]mplied in every contract is
a duty of good faith and fair dealing.” Keyes, 167 Fed. Cl.
at 292 (citing Precision Pine & Timber, Inc. v. United
States, 596 F.3d 817, 828 (Fed. Cir. 2010). And while, as
the court states, “[t]he implied duty of good faith and fair
dealing . . . ‘cannot expand a party’s contractual duties be-
yond those in the express contract,’” Keyes, 167 Fed. Cl. at
292 (citing Precision, 596 F.3d at 831), “all that the quoted
language means is that the implied duty of good faith and
fair dealing depends on the parties’ bargain in the particu-
lar contract at issue,” Metcalf Const. Co. v. United States,
742 F.3d 984, 994 (Fed. Cir. 2014).
The question therefore is not whether “[t]he contract
imposes [a] duty on defendant to monitor the methane lev-
els in its deliveries,” Keyes, 167 Fed. Cl. at 292, because
“[t]hat goes too far: a breach of the implied duty of good
faith and fair dealing does not require a violation of an ex-
press provision in the contract.” See Metcalf, 742 F.3d at
994 (rejecting the government’s “constrain[ed] view . . .
that there was no breach of the implied duty because
‘Metcalf cannot identify a contract provision that the
Navy’s inspection process violated’”). Instead, the question
is whether Keyes’ complaint plausibly establishes that
BLM’s alleged breach of an implied duty frustrated Keyes’
bargained-for benefit under the Contract, i.e., receiving vol-
umes of crude helium gas that it could refine and sell to its
customers. See id. 994–95 (explaining that “[t]he implied
duty of good faith and fair dealing . . . prevents a party’s
Case: 24-1132 Document: 64 Page: 10 Filed: 06/23/2025

-- 10 of 12 --

KEYES HELIUM COMPANY , LLC v. US 11
acts or omissions that . . . are inconsistent with the con-
tract’s purpose and deprive the other party of the contem-
plated value”).
The Claims Court also dismissed Keyes’ alternative
tort claim because it determined that it too rose and fell
with its contract claim. See Keyes, 167 Fed. Cl. at 293
(holding that because “[Keyes’] breach of contract claim
cannot stand . . . neither can [Keyes’] allegedly related tort
claim”). Again, because the court’s breach of contract anal-
ysis is flawed and because it relied on that analysis to dis-
miss the tort claim, we must vacate and remand its
dismissal of that claim. On remand, the court should de-
termine whether Keyes’ “action sounds in contract,” or
whether Keyes “has stated an independent action in tort.”3
Awad v. United States, 301 F.3d 1367, 1372 (Fed. Cir.
2002). If Keyes’ “action sounds in contract,” it “is properly
within the jurisdiction of the Court of Federal Claims.” Id.
If not, the court should either dismiss or transfer the inde-
pendent tort claims accordingly.
Finally, we turn to Keyes’ takings claim under the
Fifth Amendment. As the Claims Court explained,
“[Keyes] claims that its lost helium is the property interest
at issue.” Keyes, 167 Fed. Cl. at 293. On appeal, Keyes
claims that it actually has two independent property rights
at issue here: its “property interest in its facilities” and its
property interest in “lost helium volumes.” Appellant Br.
42. Regardless, Keyes’ complaint regarding its takings
claim, with respect to either property interest, was appro-
priately dismissed for failure to state a claim.
3 The Claims Court appeared to address the merits
of the tort claim while only assuming, but not determining,
its jurisdiction over such claim. See Keyes, 167 Fed. Cl. at
293.
Case: 24-1132 Document: 64 Page: 11 Filed: 06/23/2025

-- 11 of 12 --

KEYES HELIUM COMPANY , LLC v. US 12
First, Keyes fails to state a claim regarding the taking
of its “property interest in its facilities” because there is no
allegation in the complaint that its physical facilities were
taken for public use, see J.A. 38–39, which is a requirement
for a takings claim. U.S. Const. amend. V; see Lingle v.
Chevron U.S.A. Inc., 544 U.S. 528, 543 (2005). Second,
Keyes also fails to state a claim regarding the taking of its
“lost helium volumes” because, as the Claims Court appro-
priately explains, any claim Keyes may have to lost helium
volumes necessarily implicates the Contract through which
Keyes receives that helium, and thus Keyes must seek re-
lief through a breach of contract action. Keyes, 167 Fed. Cl.
at 293; see St. Christopher Assocs., L.P. v. United States,
511 F.3d 1376, 1385 (Fed. Cir. 2008) (“In general, takings
claims do not arise under a government contract be-
cause . . . the government is acting in its proprietary rather
than its sovereign capacity, and because remedies are pro-
vided by the contract.”). We therefore affirm the Claims
Court’s dismissal of Keyes’ takings claim.
CONCLUSION
We have considered Keyes remaining arguments and
find them unpersuasive. For the foregoing reasons, we re-
verse the Claims Court’s decision with respect to the
breach of contract claim, vacate with respect to the implied
duty of good faith and fair dealing and alternative tort
claims, affirm with respect to the takings claim, and re-
mand for consideration consistent with this opinion.
AFFIRMED-IN-PART, REVERSED-IN-PART,
VACATED-IN-PART, AND REMANDED
COSTS
No costs.
Case: 24-1132 Document: 64 Page: 12 Filed: 06/23/2025

-- 12 of 12 --