ContractsProf Blog

Editor: Myanna Dellinger
University of South Dakota School of Law

Wednesday, September 3, 2008

Government Owes $1.1 Billion for Breach of Contract

Oil_platform The Blog of the Legal Times, BLT for short (cute, non?) reports that the U.S. Court of Appeals has affirmed a judgment of the Court of Claims that the U.S. government breached its lease agreement relating to oil exploration off the California coast and awarding $1.1 billion to eleven oil and gas companies.

Apparently, the government entered into 35 such leases between 1979 and 1984. The oil companies then discovered oil fields that the government estimates contained over one billion barrels of oil. However, 1990 amendments to the 1972 Coastal Zone Management Act statutorily barred the oil companies from drilling in the region. The $1.1 billion, which BLT reports is one of the largest awarded in the 150-year history of the Federal Circuit, represents the amount paid under the leases. And a good thing too. They oil and gas companies can really use the money!!

I'm surprised this isn't bigger news, given that offshore drilling is a campaign issue.

[Jeremy Telman]

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