U.S. Must Repay Oil Companies $1.1 Billion

WASHINGTON (CN) - The federal government must repay $1.1 billion to oil companies for breaching 35 leases the companies received to develop oil and gas resources off the California coast, the Court of Federal Claims ruled.

Eleven oil companies paid the government $1.1 billion for the right to explore for oil and gas off the coast of California.

In 1990, Congress tightened the rules governing the coastal lands, and the activity was suspended 11 years later. The trial court found that the government owed the companies a refund of the $1.1 billion they paid for the leases.

Judge Bryson rejected the government's argument that Congress' actions led to the suspension.

"Not only had the parties in this case been performing under the lease agreements for years before the 1990 amendments were enacted," Bryson ruled, "but they continued to perform under the lease agreement for another 11 years on the assumption that the 1990 amendments did not apply to the lease suspensions."

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