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Court Awards Companies $1.1 Billion for U.S. Government's Breach of Oil and Gas Leases

November 21, 2005

Covington Lawyers Go 8-for-8 Versus the U.S. Government; Winning $1.8B for Clients

WASHINGTON, D.C, November 21, 2005 - In one of the largest awards in its 140-year history, on Thursday, November 17, 2005, the United States Court of Federal Claims unsealed its $1.1 billion award to 12 oil and gas companies.  Covington & Burling represented 11 of those companies, who brought suit against the U.S. Government for its breach of 36 oil and gas leases off the coast of California.  The Government had sold the leases in the early 1980s for up-front bonuses in that amount, in exchange for which the lessees received the right to "explore, develop, and produce" oil and gas in the leased areas.  Due to subsequent changes in the legislation governing those activities, none of the lessees has been allowed to produce the substantial oil and gas resources discovered through their exploration efforts. 

The firm has represented clients in a number of other breach of contract lawsuits in the United States Court of Federal Claims.  Covington partner Steven Rosenbaum, counsel of record in the California oil lease litigation, has an eight-for-eight record in this court over nearly 20 years, resulting in close to two billion dollars in awards for the firm's clients.  The most recent claim was awarded on summary judgment.  Three of the previous awards came after trials.  "These awards affirm that the United States must live up to its contractual obligations like anyone else," said Mr. Rosenbaum.  In addition to representing companies in the oil and gas industry, Mr. Rosenbaum has successfully represented clients in breach of contract cases relating to low-income housing, phosphate mining and uranium mining.

The Covington team included partners Steven J. Rosenbaum, E. Edward Bruce, and associate Thomas J. Cosgrove. 

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