Appeals Court OKs Oil Firms' Billion-Dollar Award

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A federal appeals court has affirmed a ruling awarding oil companies a billion dollars for breach of contract. The case involves leases off the California coast that were sold to the oil firms a quarter of a century ago.


A federal appeals court has ordered the government to pay more than one billion dollars to oil companies in a breach of contract case. As NPR's Wendy Kaufman reports, the case involves drilling leases sold to the oil companies more than two decades ago.

WENDY KAUFMAN: Back in the early 1980s, oil companies bought leases that entitled them to drill for oil off the California coast. They did exploration work, concluded the sites had potential. But before they could begin producing oil, Congress passed a law giving California expanded authority over offshore drilling, and the state subsequently told the oil companies they couldn't drill.

Eleven companies, none of which are household names, sued the federal government, claiming the rules for drilling were changed by Congress in the middle of the game. While the Court of Federal Claims did not give the companies everything they had wanted, the court did award the firms the amount they'd paid for the leases - about a billion dollars. It was that ruling that was upheld yesterday.

Attorney Steven Rosenbaum, who represents the oil company, says while the companies would've preferred to drill on their leases, a billion dollar judgment is not a hollow victory.

Mr. STEVEN ROSENBAUM (Attorney): This is not, in the larger scheme of things, you know, the business outcome that they would like to see. But obviously as compared to the result the federal government would've preferred, which was the companies walk away with nothing, obviously we've achieved a much better result than that.

KAUFMAN: The federal government could appeal the ruling. Meanwhile, many Republicans in the administration and in Congress are pressing for more offshore drilling.

Wendy Kaufman, NPR News.

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