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Marathon Oil Co. v. United States

Citation: 29 ELR 20332
No. 97-5146, 158 F.3d 1253/(Fed. Cir., 10/15/1998, 05/13/1999)

The court holds that the Outer Banks Protection Act's (OBPA's) temporary moratorium on oil exploration did not cause the United States to breach outer continental shelf (OCS) oil and gas leases with two oil companies. The court first holds that the phrase "all other applicable statutes and regulations" in the OCS leases does not include subsequent legislation such as the OBPA. The court then holds, however, that the OCS leases did require the oil companies to comply with applicable statutes and regulations before they could obtain permits and approvals for oil exploration. North Carolina objected from the beginning to the proposed oil exploration as being inconsistent with its Coastal Zone Management Act program throughout the entire moratorium period. Thus, North Carolina's legally valid objection to the consistency certification left unfulfilled the lessees' obligation under the contract to demonstrate compliance with applicable statutes and regulations. The court then holds that the OCS Lands Act does not provide for restitution for some or all of the money the companies initially paid for the leases. In addition, the court holds that the leases do not provide a basis for the lessees to claim restitution of some or all of their money. The lessees contracted for the exclusive opportunity to explore in a certain area; the inability of the lessees to explore, if not attributable to the federal government, does not create an entitlement to any refund of the consideration paid to obtain the lease.

Counsel for Plaintiffs
E. Edward Bruce
Covington & Burling
1201 Pennsylvania Ave. NW, Washington DC 20004
(202) 662-6000

Counsel for Defendant
Mark A. Melnick
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Before Newman and Rader, JJ.