MOBIL OIL EXPLORATION & PRODUCING SOUTHEAST, INC. v. UNITED STATES

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Syllabus
MOBIL OIL EXPLORATION & PRODUCING
SOUTHEAST, INC. v. UNITED STATES
certiorari to the united states court of appeals for
the federal circuit
No. 99–244. Argued March 22, 2000—Decided June 26, 2000*
Two oil companies, petitioners here, paid the Government $156 million in
return for lease contracts giving them the rights to explore for and
develop oil off the North Carolina coast, provided that the companies
received exploration and development permission in accordance with
procedures set out in, inter alia, the Outer Continental Shelf Lands
Act (OCSLA), the Coastal Zone Management Act of 1972 (CZMA), and
regulations promulgated pursuant to those Acts. OCSLA, among other
things, requires the Department of the Interior to approve a company’s
Plan of Exploration (Plan) within 30 days of its submission if the Plan
meets certain criteria. A company must also obtain an exploratory
well drilling permit after certifying under CZMA that its Plan is con-
sistent with each affected State’s coastal zone management program.
If a State objects, the Secretary of Commerce must override the objec-
tion or the certification fails. Interior may grant the permit if Com-
merce rules against the State. While the companies’ Plan was pending
before Interior, the Outer Banks Protection Act (OBPA) became law.
OBPA prohibited the Interior Secretary from approving any Plan until,
inter alia, an OBPA-created Environmental Sciences Review Panel
(Panel) reported to the Secretary and the Secretary certified to Con-
gress that he had sufficient information to make OCSLA-required ap-
proval decisions. In no event could he approve any Plan for 13 months.
Interior told Mobil the Plan met OCSLA requirements but that it would
not approve the Plan until the OBPA requirements were met. It also
suspended all North Carolina offshore leases. After the Panel made its
report, the Interior Secretary made the requisite certification to Con-
gress but stated that he would not consider the Plan until he received
further studies recommended by the Panel. North Carolina objected to
the CZMA certification, and the Commerce Secretary rejected Mobil’s
override request. Before the Commerce Secretary issued his rejection,
the companies joined a breach of contract lawsuit in the Court of Fed-
eral Claims. That court granted them summary judgment, finding that
*Together with No. 99–253, Marathon Oil Co. v. United States, also on
certiorari to the same court.

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the Government had broken its contractual promise to follow OCSLA,
that the Government thereby repudiated the contracts, and that that
repudiation entitled the companies to restitution of their payments. In
reversing, the Federal Circuit held that the Government’s refusal to
consider Mobil’s Plan was not the operative cause of any failure to carry
out the contracts’ terms because the State’s objection to the CZMA
certification would have prevented the exploration.
Held: The Government broke its promise, repudiated the contracts, and
must give the companies their money back. Pp. 614–624.
(a) A contracting party is entitled to restitution if the other party
“substantially” breached a contract or communicated its intent to do so.
Here, the Government breached the contracts and communicated such
intent. None of the provisions incorporated into the contracts granted
Interior the legal authority to refuse to approve the companies’ Plan,
while suspending the lease instead. First, such authority does not arise
from the OCSLA provision, 43 U. S. C. § 1334(a)(1)(A), that permits the
Secretary to promulgate regulations providing for suspension of an op-
eration or activity only upon “the request of a lessee.” Second, the
contracts say that they are subject to then-existing regulations and fu-
ture regulations issued under OCSLA and certain Department of En-
ergy Organization Act provisions. This explicit reference to future reg-
ulations makes it clear that the contracts’ catchall provisions referencing
“all other applicable . . . regulations” must include only statutes and
regulations already existing at the time of the contracts. Thus, the
contracts are not subject to future regulations promulgated under other
statutes, such as OBPA. Third, an OCSLA provision authorizing sus-
pensions in light of a threat of serious harm to the human environment
did not authorize the delay, for Interior explained that the Plan fully
complied with current legal requirements and cited OBPA to explain
the delay. Insofar as the Government means to suggest that OBPA
changed the relevant OCSLA standard, it must mean that OBPA in
effect created a new requirement. Such a requirement would not be
incorporated into the contracts. Finally, when imposing the delay, In-
terior did not rely upon any of the regulations to which the Government
now refers. OBPA required Interior to impose the contract-violating
delay and changed pre-existing contract-incorporated requirements
in several ways. By communicating its intent to follow OBPA, the
Government was communicating its intent to violate the contracts.
Pp. 614–620.
(b) The Government’s contract breach was substantial, for it deprived
the companies of the benefit of their bargain. Under the contracts,
the incorporated procedures and standards amounted to a gateway to

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SOUTHEAST, INC. v. UNITED STATES
Syllabus
the companies’ enjoyment of their rights to explore and develop oil.
Timely and fair consideration of a submitted Plan was a material condi-
tion of the contracts, yet the Government announced an OBPA-required
delay of 13 months minimum, and the delay turned out to be at least
four years. This modification of the procedures was not technical
or insubstantial, and it amounted to a repudiation of the contracts.
Pp. 620–621.
(c) Although acceptance of a once-repudiated contract can constitute
a waiver of the restitution right that repudiation would otherwise cre-
ate, none of the events that the Government points to—that the compa-
nies submitted the Plan to Interior two days after OBPA became law,
that the companies subsequently asked the Commerce Secretary to
override North Carolina’s objection to the CZMA certification, and that
the companies received suspensions of their leases pending OBPA-
mandated approval delays—amounts to significant postrepudiation per-
formance. Pp. 621–623.
(d) Finally, the Government’s argument that OBPA caused the com-
panies no injury because they could not have met the CZMA consistency
requirements misses the point: The companies seek not damages for
breach of contract but restitution of their initial payments. Because
the Government repudiated the contracts, the law entitles the compa-
nies to that restitution whether the contracts would, or would not, ulti-
mately have produced a financial gain or led them to obtain a definite
right to explore. Pp. 623–624.
177 F. 3d 1331, reversed and remanded.
Breyer, J., delivered the opinion of the Court, in which Rehnquist,
C. J., and O’Connor, Scalia, Kennedy, Souter, Thomas, and Gins-
burg, JJ., joined. Stevens, J., filed a dissenting opinion, post, p. 624.
Carter G. Phillips argued the cause for petitioners in both
cases. With him on the briefs for petitioner Marathon Oil
Co. were Richard D. Bernstein, Griffith L. Green, Michael
S. Lee, and Richard L. Horstman. E. Edward Bruce and
Steven J. Rosenbaum filed briefs for petitioner Mobil Oil
Exploration & Producing Southeast, Inc.
Kent L. Jones argued the cause for the United States in
both cases. With him on the brief were Solicitor General
Waxman, Acting Assistant Attorney General Ogden, Dep-

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Opinion of the Court
uty Solicitor General Wallace, David M. Cohen, Douglas N.
Letter, Thomas M. Bondy, and Mark A. Melnick.†
Justice Breyer delivered the opinion of the Court.
Two oil companies, petitioners here, seek restitution of
$156 million they paid the Government in return for lease
contracts giving them rights to explore for and develop oil
off the North Carolina coast. The rights were not absolute,
but were conditioned on the companies’ obtaining a set of
further governmental permissions. The companies claim
that the Government repudiated the contracts when it de-
nied them certain elements of the permission-seeking oppor-
tunities that the contracts had promised. We agree that the
Government broke its promise; it repudiated the contracts;
and it must give the companies their money back.
I
A
A description at the outset of the few basic contract law
principles applicable to this action will help the reader un-
derstand the significance of the complex factual circum-
stances that follow. “When the United States enters into
contract relations, its rights and duties therein are governed
generally by the law applicable to contracts between private
individuals.” United States v. Winstar Corp., 518 U. S. 839,
†J. Berry St. John, Craig Wyman, G. William Frick, David T. Deal,
and Douglas Morris filed a brief for the American Petroleum Institute as
amicus curiae urging reversal.
A brief of amici curiae urging affirmance was filed for the State of
California et al. by Bill Lockyer, Attorney General of California, Richard
M. Frank, Chief Assistant Attorney General, J. Matthew Rodriquez, Se-
nior Assistant Attorney General, and John A. Saurenman, Deputy Attor-
ney General, and by the Attorneys General for their respective States as
follows: Michael F. Easley of North Carolina, W. A. Drew Edmondson of
Oklahoma, Hardy Myers of Oregon, Charlie Condon of South Carolina,
and Christine O. Gregoire of Washington.

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895 (1996) (plurality opinion) (internal quotation marks omit-
ted). The Restatement of Contracts reflects many of the
principles of contract law that are applicable to this action.
As set forth in the Restatement of Contracts, the relevant
principles specify that, when one party to a contract repudi-
ates that contract, the other party “is entitled to restitution
for any benefit that he has conferred on” the repudiating
party “by way of part performance or reliance.” Restate-
ment (Second) of Contracts § 373 (1979) (hereinafter Restate-
ment). The Restatement explains that “repudiation” is a
“statement by the obligor to the obligee indicating that the
obligor will commit a breach that would of itself give the
obligee a claim for damages for total breach.” Id., § 250.
And “total breach” is a breach that “so substantially impairs
the value of the contract to the injured party at the time of
the breach that it is just in the circumstances to allow him
to recover damages based on all his remaining rights to per-
formance.” Id., § 243.
As applied to this action, these principles amount to the
following: If the Government said it would break, or did
break, an important contractual promise, thereby “substan-
tially impair[ing] the value of the contract[s]” to the compa-
nies, ibid., then (unless the companies waived their rights to
restitution) the Government must give the companies their
money back. And it must do so whether the contracts
would, or would not, ultimately have proved financially bene-
ficial to the companies. The Restatement illustrates this
point as follows:
“A contracts to sell a tract of land to B for $100,000.
After B has made a part payment of $20,000, A wrong-
fully refuses to transfer title. B can recover the $20,000
in restitution. The result is the same even if the mar-
ket price of the land is only $70,000, so that performance
would have been disadvantageous to B.” Id., § 373,
Comment a, Illustration 1.

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B
In 1981, in return for up-front “bonus” payments to the
United States of about $156 million (plus annual rental
payments), the companies received 10-year renewable lease
contracts with the United States. In these contracts, the
United States promised the companies, among other things,
that they could explore for oil off the North Carolina coast
and develop any oil that they found (subject to further roy-
alty payments) provided that the companies received explo-
ration and development permissions in accordance with vari-
ous statutes and regulations to which the lease contracts
were made “subject.” App. to Pet. for Cert. in No. 99–253,
pp. 174a–185a.
The statutes and regulations, the terms of which in effect
were incorporated into the contracts, made clear that obtain-
ing the necessary permissions might not be an easy matter.
In particular, the Outer Continental Shelf Lands Act
(OCSLA), 67 Stat. 462, as amended, 43 U. S. C. § 1331 et seq.
(1994 ed. and Supp. III), and the Coastal Zone Management
Act of 1972 (CZMA), 86 Stat. 1280, 16 U. S. C. § 1451 et
seq., specify that leaseholding companies wishing to explore
and drill must successfully complete the following four
procedures.
First, a company must prepare and obtain Department of
the Interior approval for a Plan of Exploration (Exploration
Plan or Plan). 43 U. S. C. § 1340(c). Interior must approve
a submitted Exploration Plan unless it finds, after “con-
sider[ing] available relevant environmental information,”
§ 1346(d), that the proposed exploration
“would probably cause serious harm or damage to life
(including fish and other aquatic life), to property, to
any mineral . . . , to the national security or defense,
or to the marine, coastal, or human environment.”
§ 1334(a)(2)(A)(i).

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Where approval is warranted, Interior must act quickly—
within “thirty days” of the company’s submission of a pro-
posed Plan. § 1340(c)(1).
Second, the company must obtain an exploratory well drill-
ing permit. To do so, it must certify (under CZMA) that
its Exploration Plan is consistent with the coastal zone
management program of each affected State. 16 U. S. C.
§ 1456(c)(3). If a State objects, the certification fails, unless
the Secretary of Commerce overrides the State’s objection.
If Commerce rules against the State, then Interior may
grant the permit. § 1456(c)(3)(A).
Third, where waste discharge into ocean waters is at issue,
the company must obtain a National Pollutant Discharge
Elimination System permit from the Environmental Protec-
tion Agency. 33 U. S. C. §§ 1311(a), 1342(a). It can obtain
this permit only if affected States agree that its Exploration
Plan is consistent with the state coastal zone management
programs or (as just explained) the Secretary of Commerce
overrides the state objections. 16 U. S. C. § 1456.
Fourth, if exploration is successful, the company must pre-
pare, and obtain Interior approval for, a Development and
Production Plan—a Plan that describes the proposed drilling
and related environmental safeguards. 43 U. S. C. § 1351.
Again, Interior’s approval is conditioned upon certification
that the Plan is consistent with state coastal zone manage-
ment plans—a certification to which States can object, sub-
ject to Commerce Department override. § 1351(a)(3).
C
The events at issue here concern the first two steps of the
process just described—Interior’s consideration of a submit-
ted Exploration Plan and the companies’ submission of the
CZMA “consistency certification” necessary to obtain an ex-
ploratory well drilling permit. The relevant circumstances
are the following:

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1. In 1981, the companies and the Government entered
into the lease contracts. The companies paid the Govern-
ment $156 million in up-front cash “bonus” payments.
2. In 1989, the companies, Interior, and North Carolina
entered into a memorandum of understanding. In that
memorandum, the companies promised that they would sub-
mit an initial draft Exploration Plan to North Carolina be-
fore they submitted their final Exploration Plan to Interior.
Interior promised that it would prepare an environmental
report on the initial draft. It also agreed to suspend the
companies’ annual lease payments (about $250,000 per year)
while the companies prepared the initial draft and while any
state objections to the companies’ CZMA consistency certi-
fications were being worked out, with the life of each lease
being extended accordingly.
3. In September 1989, the companies submitted their
initial draft Exploration Plan to North Carolina. Ten
months later, Interior issued the promised (“informal” pre-
submission) environmental report, after a review which all
parties concede was “extensive and intensive.” App. 179
(deposition of David Courtland O’Neal, former Assistant Sec-
retary of the Interior) (agreeing that the review was “the
most extensive and intensive” ever “afforded an exploration
well in the outer continental shelf (OCS) program”). Inte-
rior concluded that the proposed exploration would not “sig-
nificantly affec[t]” the marine environment or “the quality
of the human environment.” Id., at 138–140 (U. S. Dept. of
Interior Minerals Management Service, Environmental As-
sessment of Exploration Plan for Manteo Area Block 467
(Sept. 1990)).
4. On August 20, 1990, the companies submitted both their
final Exploration Plan and their CZMA “consistency certifi-
cation” to Interior.
5. Just two days earlier, on August 18, 1990, a new law,
the Outer Banks Protection Act (OBPA), § 6003, 104 Stat.
555, had come into effect. That law prohibited the Secre-

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tary of the Interior from approving any Exploration Plan or
Development and Production Plan or to award any drilling
permit until (a) a new OBPA-created Environmental Sci-
ences Review Panel had reported to the Secretary, (b) the
Secretary had certified to Congress that he had sufficient
information to make these OCSLA-required approval deci-
sions, and (c) Congress had been in session an additional 45
days, but (d) in no event could he issue an approval or permit
for the next 13 months (until October 1991). § 6003(c)(3).
OBPA also required the Secretary, in his certification, to ex-
plain and justify in detail any differences between his own
certified conclusions and the new Panel’s recommendations.
§ 6003(c)(3)(A)(ii)(II).
6. About five weeks later, and in light of the new statute,
Interior wrote a letter to the Governor of North Carolina
with a copy to petitioner Mobil. It said that the final sub-
mitted Exploration Plan “is deemed to be approvable in all
respects.” It added:
“[W]e are required to approve an Exploration Plan un-
less it is inconsistent with applicable law or because it
would result in serious harm to the environment. Be-
cause we have found that Mobil’s Plan fully complies
with the law and will have only negligible effect on the
environment, we are not authorized to disapprove the
Plan or require its modification.” App. to Pet. for Cert.
in No. 99–253, p. 194a (letter from Regional Director
Bruce Weetman to the Honorable James G. Martin, Gov-
ernor of North Carolina, dated Sept. 28, 1996).
But, it noted, the new law, the “Outer Banks Protection Act
(OBPA) of 1990 . . . prohibits the approval of any Exploration
Plan at this time.” It concluded, “because we are currently
prohibited from approving it, the Plan will remain on file
until the requirements of the OBPA are met.” In the mean-
time a “suspension has been granted to all leases offshore

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the State of North Carolina.” Ibid. See also App. 129–131
(letter from Lawrence H. Ake, Minerals Management Serv-
ice, to William C. Whittemore, Mobil Exploration & Produc-
ing U. S. Inc., dated Sept. 21, 1990 (notice of suspension of
leases, citing 30 CFR § 250.10(b)(7) (1990) as the basis for
the suspensions)).
About 18 months later, the Secretary of the Interior, after
receiving the new Panel’s report, certified to Congress that
he had enough information to consider the companies’ Explo-
ration Plan. He added, however, that he would not consider
the Plan until he received certain further studies that the
new Panel had recommended.
7. In November 1990, North Carolina objected to the com-
panies’ CZMA consistency certification on the ground that
Mobil had not provided sufficient information about possible
environmental impact. A month later, the companies asked
the Secretary of Commerce to override North Carolina’s
objection.
8. In 1994, the Secretary of Commerce rejected the com-
panies’ override request, relying in large part on the fact
that the new Panel had found a lack of adequate information
in respect to certain environmental issues.
9. In 1996, Congress repealed OBPA. § 109, 110 Stat.
1321–177.
D
In October 1992, after all but the two last-mentioned
events had taken place, petitioners joined a breach-of-
contract lawsuit brought in the Court of Federal Claims.
On motions for summary judgment, the court found that the
United States had broken its contractual promise to follow
OCSLA’s provisions, in particular the provision requiring In-
terior to approve an Exploration Plan that satisfied OCSLA’s
requirements within 30 days of its submission to Interior.
The United States thereby repudiated the contracts. And
that repudiation entitled the companies to restitution of the

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up-front cash “bonus” payments they had made. Conoco
Inc. v. United States, 35 Fed. Cl. 309 (1996).
A panel of the Court of Appeals for the Federal Circuit
reversed, one judge dissenting. The panel held that the
Government’s refusal to consider the companies’ final Explo-
ration Plan was not the “operative cause” of any failure to
carry out the contracts’ terms because the State’s objection
to the companies’ CZMA “consistency statement” would
have prevented the companies from exploring regardless.
177 F. 3d 1331 (1999).
We granted certiorari to review the Federal Circuit’s
decision.
II
The record makes clear (1) that OCSLA required Interior
to approve “within thirty days” a submitted Exploration
Plan that satisfies OCSLA’s requirements, (2) that Interior
told Mobil the companies’ submitted Plan met those require-
ments, (3) that Interior told Mobil it would not approve the
companies’ submitted Plan for at least 13 months, and likely
longer, and (4) that Interior did not approve (or disapprove)
the Plan, ever. The Government does not deny that the con-
tracts, made “pursuant to” and “subject to” OCSLA, incorpo-
rated OCSLA provisions as promises. The Government fur-
ther concedes, as it must, that relevant contract law entitles
a contracting party to restitution if the other party “substan-
tially” breached a contract or communicated its intent to do
so. See Restatement § 373(1); 11 W. Jaeger, Williston on
Contracts § 1312, p. 109 (3d ed. 1968) (hereinafter Williston);
5 A. Corbin, Contracts § 1104, p. 560 (1964); see also Ankeny
v. Clark, 148 U. S. 345, 353 (1893). Yet the Government de-
nies that it must refund the companies’ money.
This is because, in the Government’s view, it did not
breach the contracts or communicate its intent to do so; any
breach was not “substantial”; and the companies waived
their rights to restitution regardless. We shall consider
each of these arguments in turn.

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A
The Government’s “no breach” arguments depend upon
the contract provisions that “subject” the contracts to vari-
ous statutes and regulations. Those provisions state that
the contracts are “subject to” (1) OCSLA, (2) “Sections 302
and 303 of the Department of Energy Organization Act,” (3)
“all regulations issued pursuant to such statutes and in exist-
ence upon the effective date of ” the contracts, (4) “all regula-
tions issued pursuant to such statutes in the future which
provide for the prevention of waste and the conservation” of
Outer Continental Shelf resources, and (5) “all other applica-
ble statutes and regulations.” App. to Pet. for Cert. in
No. 99–253, at 175a. The Government says that these provi-
sions incorporate into the contracts, not only the OCSLA
provisions we have mentioned, but also certain other statu-
tory provisions and regulations that, in the Government’s
view, granted Interior the legal authority to refuse to ap-
prove the submitted Exploration Plan, while suspending the
leases instead.
First, the Government refers to 43 U. S. C. § 1334(a)(1)(A),
an OCSLA provision that authorizes the Secretary to pro-
mulgate regulations providing for “the suspension . . . of any
operation or activity . . . at the request of a lessee, in the
national interest, to facilitate proper development of a lease.”
(Emphasis added.) This provision, as the emphasized terms
show, requires “the request of a lessee,” i. e., the companies.
The Government does not explain how this requirement was
satisfied here. Hence, the Government cannot rely upon
the provision.
Second, the Government refers to 30 CFR § 250.110(b)(4)
(1999), formerly codified at 30 CFR § 250.10(b)(4) (1997), a
regulation stating that “[t]he Regional Supervisor may . . .
direct . . . a suspension of any operation or activity . . . [when
the] suspension is necessary for the implementation of the
requirements of the National Environmental Policy Act or to
conduct an environmental analysis.” The Government says

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that this regulation permitted the Secretary of the Interior
to suspend the companies’ leases because that suspension
was “necessary . . . to conduct an environmental analysis,”
namely, the analysis demanded by the new statute, OBPA.
The “environmental analysis” referred to, however, is an
analysis the need for which was created by OBPA, a later
enacted statute. The lease contracts say that they are sub-
ject to then-existing regulations and to certain future regu-
lations, those issued pursuant to OCSLA and §§ 302 and 303
of the Department of Energy Organization Act. This ex-
plicit reference to future regulations makes it clear that the
catchall provision that references “all other applicable . . .
regulations,” supra, at 615, must include only statutes and
regulations already existing at the time of the contract, see
35 Fed. Cl., at 322–323, a conclusion not questioned here by
the Government. Hence, these provisions mean that the
contracts are not subject to future regulations promulgated
under other statutes, such as new statutes like OBPA.
Without some such contractual provision limiting the Gov-
ernment’s power to impose new and different requirements,
the companies would have spent $156 million to buy next to
nothing. In any event, the Court of Claims so interpreted
the lease; the Federal Circuit did not disagree with that in-
terpretation; nor does the Government here dispute it.
Instead, the Government points out that the regulation in
question—the regulation authorizing a governmental sus-
pension in order to conduct “an environmental analysis”—
was not itself a future regulation. Rather, a similar regula-
tion existed at the time the parties signed the contracts, 30
CFR § 250.12(a)(iv) (1981), and, in any event, it was promul-
gated under OCSLA, a statute exempted from the contracts’
temporal restriction. But that fact, while true, is not suffi-
cient to produce the incorporation of future statutory re-
quirements, which is what the Government needs to prevail.
If the pre-existing regulation’s words, “an environmental
analysis,” were to apply to analyses mandated by future

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statutes, then they would make the companies subject to the
same unknown future requirements that the contracts’ spe-
cific temporal restrictions were intended to avoid. Conse-
quently, whatever the regulation’s words might mean in
other contexts, we believe the contracts before us must be
interpreted as excluding the words “environmental analysis”
insofar as those words would incorporate the requirements
of future statutes and future regulations excluded by the
contracts’ provisions. Hence, they would not incorporate
into the contracts requirements imposed by a new statute
such as OBPA.
Third, the Government refers to OCSLA, 43 U. S. C.
§ 1334(a)(1), which, after granting Interior rulemaking au-
thority, says that Interior’s
“regulations . . . shall include . . . provisions . . . for the
suspension . . . of any operation . . . pursuant to any
lease . . . if there is a threat of serious, irreparable, or
immediate harm or damage to life . . . , to property, to
any mineral deposits . . . , or to the marine, coastal, or
human environment.” (Emphasis added.)
The Government points to the OBPA Conference Report,
which says that any OBPA-caused delay is “related to . . .
environmental protection” and to the need “for the collection
and analysis of crucial oceanographic, ecological, and socio-
economic data,” to “prevent a public harm.” H. R. Conf.
Rep. No. 101–653, p. 163 (1990); see also Brief for United
States 32. At oral argument, the Government noted that
the OBPA mentions “tourism” in North Carolina as a “major
industry . . . which is subject to potentially significant dis-
ruption by offshore oil or gas development.” § 6003(b)(3).
From this, the Government infers that the pre-existing
OCSLA provision authorized the suspension in light of a
“threat of . . . serious harm” to a “human environment.”
The fatal flaw in this argument, however, arises out of the
Interior Department’s own statement—a statement made

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when citing OBPA to explain its approval delay. Interior
then said that the Exploration Plan “fully complies” with cur-
rent legal requirements. And the OCSLA statutory provi-
sion quoted above was the most pertinent of those current
requirements. Supra, at 609. The Government did not
deny the accuracy of Interior’s statement, either in its brief
filed here or its brief filed in the Court of Appeals. Insofar
as the Government means to suggest that the new statute,
OBPA, changed the relevant OCSLA standard (or that
OBPA language and history somehow constitute findings In-
terior must incorporate by reference), it must mean that
OBPA in effect created a new requirement. For the reasons
set out supra, at 616, however, any such new requirement
would not be incorporated into the contracts.
Finally, we note that Interior itself, when imposing the
lengthy approval delay, did not rely upon any of the regula-
tions to which the Government now refers. Rather, it relied
upon, and cited, a different regulation, 30 CFR § 250.110(b)(7)
(1999), which gives Interior the power to suspend leases
when “necessary to comply with judicial decrees prohibiting
production or any other operation or activity.” The Govern-
ment concedes that no judicial decree was involved in this
action and does not rely upon this regulation here.
We conclude, for these reasons, that the Government vio-
lated the contracts. Indeed, as Interior pointed out in its
letter to North Carolina, the new statute, OBPA, required
Interior to impose the contract-violating delay. See App.
129 (“The [OBPA] contains provisions that specifically pro-
hibit the Minerals Management Service from approving any
Exploration Plan, approving any Application for Permit to
Drill, or permitting any drilling offshore the State of North
Carolina until at least October 1, 1991”). It therefore made
clear to Interior and to the companies that the United States
had to violate the contracts’ terms and would continue to
do so.

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Moreover, OBPA changed pre-existing contract-
incorporated requirements in several ways. It delayed ap-
proval, not only of an Exploration Plan but also of Develop-
ment and Production Plans; and it delayed the issuance of
drilling permits as well. It created a new type of Interior
Department environmental review that had not previously
existed, conducted by the newly created Environmental Sci-
ences Review Panel; and, by insisting that the Secretary ex-
plain in detail any differences between the Secretary’s find-
ings and those of the Panel, it created a kind of presumption
in favor of the new Panel’s findings.
The dissent argues that only the statements contained in
the letter from Interior to the companies may constitute a
repudiation because “the enactment of legislation is not typi-
cally conceived of as a ‘statement’ of anything to any one
party in particular,” and a repudiation requires a “statement
by the obligor to the obligee indicating that the obligor will
commit a breach.” Post, at 630–631, n. 4 (opinion of Ste-
vens, J.) (quoting Restatement § 250). But if legislation
passed by Congress and signed by the President is not a
“statement by the obligor,” it is difficult to imagine what
would constitute such a statement. In this action, it was
the United States who was the “obligor” to the contract.
See App. to Pet. for Cert. in No. 99–253, at 174a (lease, iden-
tifying “the United States of America” as the “Lessor”).
Although the dissent points out that legislation is “addressed
to the public at large,” post, at 631, n. 4, that “public” in-
cludes those to whom the United States had contractual obli-
gations. If the dissent means to invoke a special exception
such as the “sovereign acts” doctrine, which treats certain
laws as if they simply created conditions of impossibility,
see Winstar, 518 U. S., at 891–899 (principal opinion of
Souter, J.); id., at 923–924 (Scalia, J., concurring in judg-
ment), it cannot do so here. The Court of Federal Claims
rejected the application of that doctrine to this action, see

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35 Fed. Cl., at 334–336, and the Government has not con-
tested that determination here. Hence, under these circum-
stances, the fact that Interior’s repudiation rested upon the
enactment of a new statute makes no significant difference.
We do not say that the changes made by the statute were
unjustified. We say only that they were changes of a kind
that the contracts did not foresee. They were changes in
those approval procedures and standards that the contracts
had incorporated through cross-reference. The Government
has not convinced us that Interior’s actions were author-
ized by any other contractually cross-referenced provision.
Hence, in communicating to the companies its intent to follow
OBPA, the United States was communicating its intent to
violate the contracts.
B
The Government next argues that any violation of the con-
tracts’ terms was not significant; hence there was no “sub-
stantial” or “material” breach that could have amounted to a
“repudiation.” In particular, it says that OCSLA’s 30-day
approval period “does not function as the ‘essence’ of these
agreements.” Brief for United States 37. The Court of
Claims concluded, however, that timely and fair consider-
ation of a submitted Exploration Plan was a “necessary re-
ciprocal obligation,” indeed, that any “contrary interpreta-
tion would render the bargain illusory.” 35 Fed. Cl., at 327.
We agree.
We recognize that the lease contracts gave the companies
more than rights to obtain approvals. They also gave the
companies rights to explore for, and to develop, oil. But the
need to obtain Government approvals so qualified the likely
future enjoyment of the exploration and development rights
that the contract, in practice, amounted primarily to an op-
portunity to try to obtain exploration and development
rights in accordance with the procedures and under the
standards specified in the cross-referenced statutes and reg-
ulations. Under these circumstances, if the companies did

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not at least buy a promise that the Government would not
deviate significantly from those procedures and standards,
then what did they buy? Cf. id., at 324 (the companies
bought exclusive rights to explore and develop oil “if they
met” OCSLA requirements (emphasis added)).
The Government’s modification of the contract-
incorporated processes was not technical or insubstantial.
It did not announce an (OBPA-required) approval delay of a
few days or weeks, but of 13 months minimum, and likely
much longer. The delay turned out to be at least four years.
And lengthy delays matter, particularly where several suc-
cessive agency approvals are at stake. Whether an appli-
cant approaches Commerce with an Interior Department ap-
proval already in hand can make a difference (as can failure
to have obtained that earlier approval). Moreover, as we
have pointed out, OBPA changed the contract-referenced
procedures in several other ways as well. Supra, at 619.
The upshot is that, under the contracts, the incorporated
procedures and standards amounted to a gateway to the
companies’ enjoyment of all other rights. To significantly
narrow that gateway violated material conditions in the con-
tracts. The breach was “substantia[l],” depriving the com-
panies of the benefit of their bargain. Restatement § 243.
And the Government’s communication of its intent to commit
that breach amounted to a repudiation of the contracts.
C
The Government argues that the companies waived their
rights to restitution. It does not deny that the United
States repudiated the contracts if (as we have found) OBPA’s
changes amounted to a substantial breach. The Govern-
ment does not claim that the United States retracted its re-
pudiation. Cf. id., § 256 (retraction will nullify the effects
of repudiation if done before the other party either changes
position in reliance on the retraction or communicates that
it considers the repudiation to be final). It cannot claim that

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Opinion of the Court
the companies waived their rights simply by urging perform-
ance. Id., § 257 (the injured party “does not change the ef-
fect of a repudiation by urging the repudiator to perform in
spite of his repudiation”); see also 11 Williston § 1334, at 177–
178. Nor has the Government convinced us that the com-
panies’ continued actions under the contracts amount to
anything more than this urging of performance. See 2
E. Farnsworth, Contracts § 8.22, p. 544 (2d ed. 1998) (citing
United Cal. Bank v. Prudential Ins. Co., 140 Ariz. 238, 282–
283, 681 P. 2d 390, 433–434 (App. 1983) (urging performance
and making “efforts of its own to fulfill the conditions” of the
contract come to the same thing)); cf. 11 Williston § 1337, at
186–187. Consequently the Government’s waiver claim
must come down to a claim that the companies received at
least partial performance. Indeed, acceptance of perform-
ance under a once-repudiated contract can constitute a
waiver of the right to restitution that repudiation would oth-
erwise create. Restatement § 373, Comment a; cf. Restate-
ment of Restitution § 68, Comment b (1936).
The United States points to three events that, in its view,
amount to continued performance of the contracts. But it
does not persuade us. First, the oil companies submitted
their Exploration Plan to Interior two days after OBPA be-
came law. Supra, at 611. The performance question, how-
ever, is not just about what the oil companies did or re-
quested, but also about what they actually received from the
Government. And, in respect to the Exploration Plan, the
companies received nothing.
Second, the companies subsequently asked the Secretary
of Commerce to overturn North Carolina’s objection to the
companies’ CZMA consistency certification. And, although
the Secretary’s eventual response was negative, the compa-
nies did at least receive that reply. Supra, at 613. The
Secretary did not base his reply, however, upon application
of the contracts’ standards, but instead relied in large part
on the findings of the new, OBPA-created, Environmental

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Sciences Review Panel. See App. 224, 227, n. 35, 232–233,
239, 244 (citing the Panel’s report). Consequently, we can-
not say that the companies received from Commerce the kind
of consideration for which their contracts called.
Third, the oil companies received suspensions of their
leases (suspending annual rents and extending lease terms)
pending the OBPA-mandated approval delays. Supra, at
612–613. However, a separate contract—the 1989 memo-
randum of understanding—entitled the companies to receive
these suspensions. See App. to Brief for United States 2a
(letter from Toni D. Hennike, Counsel, Mobil Exploration &
Producing U. S. Inc., to Ralph Melancon, Regional Supervi-
sor, U. S. Dept. of Interior Minerals Management Service,
dated Feb. 21, 1995 (quoting the memorandum as a basis for
the requested suspensions)). And the Government has pro-
vided no convincing reason why we should consider the sus-
pensions to amount to significant performance of the lease
contracts in question.
We conclude that the companies did not receive significant
postrepudiation performance. We consequently find that
they did not waive their right to restitution.
D
Finally, the Government argues that repudiation could not
have hurt the companies. Since the companies could not
have met the CZMA consistency requirements, they could
not have explored (or ultimately drilled) for oil in any event.
Hence, OBPA caused them no damage. As the Government
puts it, the companies have already received “such damages
as were actually caused by the [Exploration Plan approval]
delay,” namely, none. Brief for United States 43–44; see
also 177 F. 3d, at 1340. This argument, however, misses the
basic legal point. The oil companies do not seek damages
for breach of contract. They seek restitution of their initial
payments. Because the Government repudiated the lease
contracts, the law entitles the companies to that restitution

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Stevens, J., dissenting
whether the contracts would, or would not, ultimately have
produced a financial gain or led them to obtain a definite
right to explore. See supra, at 608. If a lottery operator
fails to deliver a purchased ticket, the purchaser can get his
money back—whether or not he eventually would have won
the lottery. And if one party to a contract, whether oil com-
pany or ordinary citizen, advances the other party money,
principles of restitution normally require the latter, upon re-
pudiation, to refund that money. Restatement § 373.
III
Contract law expresses no view about the wisdom of
OBPA. We have examined only that statute’s consistency
with the promises that the earlier contracts contained. We
find that the oil companies gave the United States $156 mil-
lion in return for a contractual promise to follow the terms
of pre-existing statutes and regulations. The new statute
prevented the Government from keeping that promise. The
breach “substantially impair[ed] the value of the contract[s].”
Id., § 243. And therefore the Government must give the
companies their money back.
For these reasons, the judgment of the Federal Circuit
is reversed. We remand the cases for further proceedings
consistent with this opinion.
It is so ordered.
Justice Stevens, dissenting.
Since the 1953 passage of the Outer Continental Shelf
Lands Act (OCSLA), 43 U. S. C. § 1331 et seq., the United
States Government has conducted more than a hundred lease
sales of the type at stake today, and bidders have paid the
United States more than $55 billion for the opportunity to
develop the mineral resources made available under those
leases.1 The United States, as lessor, and petitioners, as les-
1 Conoco, Inc. v. United States, 35 Fed. Cl. 309, 315, n. 2 (1996); see also
U. S. Dept. of Interior, Minerals Management Service, Mineral Revenues
1999, Report on Receipts From Federal and American Indian Leases 35

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Stevens, J., dissenting
sees, clearly had a mutual interest in the successful explora-
tion, development, and production of oil in the Manteo Unit
pursuant to the leases executed in 1981. If production were
achieved, the United States would benefit both from the sub-
stantial royalties it would receive and from the significant
addition to the Nation’s energy supply. Self-interest, as
well as its duties under the leases, thus led the Government
to expend substantial resources over the course of 19 years
in the hope of seeing this project realized.
From the outset, however, it was apparent that the Outer
Banks project might not succeed for a variety of reasons.
Among those was the risk that the State of North Carolina
would exercise its right to object to the completion of the
project. That was a risk that the parties knowingly as-
sumed. They did not, however, assume the risk that Con-
gress would enact additional legislation that would delay the
completion of what would obviously be a lengthy project in
any event. I therefore agree with the Court that the Gov-
ernment did breach its contract with petitioners in failing to
approve, within 30 days of its receipt, the plan of exploration
petitioners submitted. As the Court describes, ante, at 609–
610, the leases incorporate the provisions of the OCSLA into
their terms, and the OCSLA, correspondingly, sets down this
30-day requirement in plain language. 43 U. S. C. § 1340(c).
I do not, however, believe that the appropriate remedy for
the Government’s breach is for petitioners to recover their
full initial investment. When the entire relationship be-
tween the parties is considered, with particular reference to
the impact of North Carolina’s foreseeable exercise of its
right to object to the project, it is clear that the remedy
ordered by the Court is excessive. I would hold that peti-
tioners are entitled at best to damages resulting from the
delay caused by the Government’s failure to approve the plan
within the requisite time.
(reporting more than $64 billion in royalties from federal offshore mineral
leases from 1953–1999).

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Stevens, J., dissenting
I
To understand the nature of the breach, and the appro-
priate remedy for it, it is necessary to supplement the
Court’s chronological account. From the time petitioners
began discussing their interest in drilling an exploratory well
45 miles off the coast from Cape Hatteras in the fall of 1988,
until (and even after) the enactment of the Outer Banks Pro-
tection Act (OBPA), § 6003, on August 18, 1990, their explora-
tion proposal was fraught with problems. It was clear to
petitioners as early as October 6, 1988 (and almost certainly
before), that the State of North Carolina, whose approval
petitioners knew they had to have under their lease terms
in order to obtain the requisite permits from the Department
of the Interior (DOI), was not going to go along readily.
App. 61–63 (letter from North Carolina Governor James G.
Martin to Ralph Ainger, Acting Regional Manager, Minerals
Management Service (MMS) (a division of the DOI)). As
the Court explains, ante, at 610, without the State’s approval
pursuant to the Coastal Zone Management Act (CZMA), 16
U. S. C. § 1451 et seq., incorporated into the OCSLA by multi-
ple references, no DOI licensing, permitting, or lessee explo-
ration of any kind could ensue, 43 U. S. C. § 1340(c).
That is why petitioners pursued multiparty negotiations
with the Federal Government and the State to help facilitate
the eventual approval of their proposal. As part of these
negotiations, petitioners entered into a memorandum of un-
derstanding with North Carolina and the Federal Govern-
ment, and, according to the terms of that agreement, submit-
ted a draft plan of exploration (POE) to DOI and to the State.
App. 79–85. The Government also agreed to prepare draft
and final environmental impact reports on petitioners’ draft
POE and to participate in public meetings and hearings re-
garding the draft POE and the Government’s findings about
its environmental impact. Id., at 81–82. Among other
things, this agreement resulted in the Government’s prepa-
ration in 1990 of a three-volume, 2,000-page special environ-

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mental report on the proposed project, released on June 1 of
that year.
Although the State thereafter continued to express its dis-
satisfaction with the prospect of exploration and develop-
ment, voicing its displeasure with the Government’s draft
environmental findings, id., at 86–95, and rejecting petition-
ers’ application for a separate required permit, id., at 96–97,2
petitioners nonetheless submitted a final POE to DOI on Au-
gust 20, 1990, pursuant to the lease contract terms. This
final plan, it must be noted, was submitted by petitioners
two days after the enactment of the OBPA—the event peti-
tioners claim amounted to (either) an anticipatory repudia-
tion of the lease contracts, or a total breach, Brief for Peti-
tioner in No. 99–244, p. 19 (“[I]n enacting the OBPA, the
Government anticipatorily repudiated its obligations under
the leases . . .”); Brief for Petitioner in No. 99–253, p. 21
(“The enactment of the OBPA placed the United States in
total breach of the petitioners’ leases”).
Following petitioners’ submission of the final POE, DOI
then had a duty, under the terms of the OCSLA as incorpo-
rated into the lease contract, to approve that plan “within
thirty days of its submission.” 43 U. S. C. § 1340(c)(1). In
other words, DOI had until September 19, 1990, to consider
the submitted plan and, provided that the plan was complete
and otherwise satisfied the OCSLA criteria, to issue its
statement of approval. (Issuing its “approval,” of course, is
different from granting petitioners any “license or permit for
2 The Federal Water Pollution Control Act, 86 Stat. 816, 33 U. S. C.
§ 1251 et seq., requires lessees to obtain a National Pollutant Discharge
Elimination System (NPDES) permit from the Environmental Protection
Agency (EPA) before lessees may move forward with any exploration plan
that includes discharging pollutants into the ocean, §§ 1311(a), 1342(a).
The EPA cannot issue an NPDES permit, however, before the lessee has
certified to the State’s satisfaction that the discharge would comply with
the State’s CZMA requirements. Unless the Secretary of Commerce
overrides any state objection arising during this process, 16 U. S. C.
§ 1456(c)(3), lessees will not receive the necessary permit.

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Stevens, J., dissenting
any activity described in detail in an exploration plan and
affecting any land use or water use” in a State’s coastal zone,
§ 1340(c)(2); actual permission to proceed had to wait for the
State’s CZMA certification.) Despite this hard deadline,
September 19 came and went without DOI’s issuance of
approval.
DOI’s explanation came two days later, on September 21,
1990, in a letter to Mobil Oil from the MMS’s Acting Regional
Supervisor for Field Operations, Lawrence Ake. Without
commenting on DOI’s substantive assessment of the POE,
the Ake letter stated that the OBPA “specifically prohibit[s]”
the MMS from approving any POE “until at least October 1,
1991.” App. 129. “Consequently,” Mr. Ake explained, the
MMS was suspending operation on the Manteo Unit leases
“in accordance with 30 CFR § 250.10(b)(7),” ibid., a regula-
tion issued pursuant to the OCSLA and, of course, incorpo-
rated thereby into the parties’ lease agreement. One week
after that, on September 28, 1990, the MMS’s Regional Di-
rector, Bruce Weetman, sent a letter to Governor Martin of
North Carolina, elaborating on MMS’s actions upon receipt
of the August 20 POE. App. to Pet. for Cert. in No. 99–253,
pp. 193a–195a. According to Weetman, the POE “was
deemed complete on August 30, and transmitted to other
Federal Agencies and the State of North Carolina on that
date. Timely comments were received from the State of
North Carolina and the U. S. Coast Guard. An analysis of
the potential environmental [e]ffects associated with the Plan
was conducted, an Environmental Assessment (EA) was pre-
pared, and a Finding of No Significant Impact (FONSI) was
made.” Id., at 193a. Based on these steps taken by the
MMS, it concluded that the POE was “approvable” but that
the MMS was “currently prohibited from approving it.”
Thus, the letter concluded, the POE would “remain on file”
pending the resolution of the OBPA requirements, and the
lease suspensions would continue in force in the interim.
Id., at 194a.

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II
In my judgment, the Government’s failure to meet the re-
quired 30-day deadline on September 19, 1990, despite the
fact that the POE was in a form that merited approval, was
a breach of its contractual obligation to the contrary.3 After
this, its statement in the September 21 Ake letter that the
OBPA prohibited approval until at least October 1991 must
also be seen as a signal of its intent to remain in breach of
the 30-day deadline requirement for the coming year. The
question with which the Court is faced, however, is not
whether the United States was in breach, but whether, in
light of the Government’s actions, petitioners are entitled to
restitution rather than damages, the usual remedy for a
breach of contract.
As the Court explains, ante, at 608, an injured party may
seek restitution as an alternative remedy only “on a breach
by non-performance that gives rise to a claim for damages
for total breach or on a repudiation.” Restatement (Second)
of Contracts § 373 (1979) (hereinafter Restatement (Second)).
Whether one describes the suspect action as “repudiation”
(which itself is defined in terms of total breach, see ante, at
608) or simply “total breach,” the injured party may obtain
restitution only if the action “so substantially impairs the
value of the contract to the injured party . . . that it is just
in the circumstances to allow him to recover damages based
on all his remaining rights to performance.” Restatement
(Second) § 243. Although the language varies to some small
degree, every major statement of contract law includes the
same admonition. See, e. g., 5 A. Corbin, Contracts § 1104,
pp. 558, 562 (1964) (“Restitution is an available remedy only
3 It is incorrect, in my view, to assert that the Government failed to give
the proposal “timely and fair consideration,” ante, at 620, because, as the
Weetman letter establishes, the Government did engage in such an evalua-
tion process even after the enactment of the OBPA. It was in failing to
issue the approval on the heels of that evaluation that the Government
ran afoul of its obligations.

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Stevens, J., dissenting
when the breach is of vital importance. . . . In the case of a
breach by non-performance, . . . [t]he injured party, however,
can not maintain an action for restitution of what he has
given the defendant unless the defendant’s non-performance
is so material that it is held to go to the ‘essence’; it must be
such a breach as would discharge the injured party from any
further contractual duty on his own part”). In short, there
is only repudiation if there is an action that would amount
to a total breach, and there is only such a breach if the sus-
pect action destroys the essential object of the contract. It
is thus necessary to assess the significance or “materiality”
of the Government’s breach.
Beyond this, it is important to underscore as well that res-
titution is appropriate only when it is “just in the circum-
stances.” Restatement (Second) § 243. This requires us to
look not only to the circumstances of the breach itself, but to
the equities of the situation as a whole. Finally, even if a
defendant’s actions do not satisfy the foregoing require-
ments, an injured party presumably still has available the
standard contract remedy for breach—the damages petition-
ers suffered as a result.
III
Given these requirements, I am not persuaded that the
actions by the Government amounted either to a repudiation
of the contracts altogether, or to a total breach by way of its
neglect of an “essential” contractual provision.
I would, at the outset, reject the suggestion that there was
a repudiation here, anticipatory or otherwise, for two rea-
sons. First, and most basic, the Government continued to
perform under the contractual terms as best it could even
after the OBPA’s passage.4 Second, the breach-by-delay
4 My rejection of the repudiation theory, of course, encompasses a rejec-
tion of the notion that the very enactment of the OBPA itself constituted
an anticipatory repudiation of the parties’ contract. Brief for Petitioner
in No. 99–244, p. 19. Repudiation, as the Court explains, is in the first
instance a “ ‘statement by the obligor to the obligee indicating that the

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forecast in the Ake letter was not “of sufficient gravity that,
if the breach actually occurred, it would of itself give the
obligee a claim for damages for total breach.” Restatement
(Second) § 250, and Comment d; see also 11 W. Jaeger, Willis-
ton on Contracts § 1312 (3d ed. 1968).
While acknowledging the OBPA’s temporary moratorium
on plan approvals, the Ake letter to petitioner Mobil states
that the Government is imposing a lease suspension—rather
than a cancellation or recision—and even references an exist-
ing OCSLA regulatory obligation pursuant to which it is at-
tempting to act. The Weetman letter explains in detail the
actions the MMS took in carefully considering petitioners’
POE submission; it evaluated the plan for its compliance
with the OCSLA’s provisions, transmitted it to other agen-
cies and the State for their consideration, took the comments
of those entities into account, conducted the requisite analy-
ses, and prepared the requisite findings—all subsequent to
the OBPA’s enactment. It cannot be doubted that the Gov-
ernment intended to continue performing the contract to the
extent it thought legally permissible post-OBPA.
Indeed, petitioners’ own conduct is inconsistent with the
contention that the Government had, as of August 18, 1990,
obligor will commit a breach.’ ” Ante, at 608 (quoting Restatement (Sec-
ond) § 250). Except in some abstract sense, the enactment of legislation
is not typically conceived of as a “statement” of anything to any one party
in particular, for it is, by its nature, addressed to the public at large. To
the extent this legislation was directed to anyone in particular, it was to
the Secretary of the Interior, directing him to take or not take certain
actions, not to particular lessees. Finally, while it surely imposed upon
the Secretary obligations inconsistent with the Secretary’s existing du-
ties under the leases, the OBPA itself contemplated that the parties to
the lease contracts would continue, after a delay, to operate under the
OCSLA-based contractual scheme. The Secretary was, within the con-
fines of the newly enacted requirements, to continue to take steps to
“carry out his responsibilities under the Outer Continental Shelf Lands
Act with respect to authorizing the activities described in subsection (c)(1)
[(i. e., approve exploration, development and production plans for lessees,
or grant an application for permit to drill; permit drilling)].” § 6003(d),
104 Stat. 557.

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Stevens, J., dissenting
or indeed as of September 19, 1990, fully repudiated its obli-
gations under the parties’ contracts. As I have mentioned,
it was after the enactment of the OBPA that petitioners sub-
mitted their final plan to the DOI—just as if they understood
there still to be an existing set of contractual conditions to be
fulfilled and expected to fulfill them. Petitioners, moreover,
accepted the Government’s proffered lease suspensions, and
indeed, themselves subsequently requested that the suspen-
sions remain in effect “from June 8, 1992 forward” under 30
CFR § 250.10(b)(6) (1990), an OCSLA regulation providing
for continued lease suspension at the lessee’s request “to
allow for inordinate delays encountered by the lessee in ob-
taining required permits or consents, including administra-
tive or judicial challenges or appeals.” 5
After the State of North Carolina filed its formal CZMA
objections on November 19, 1990 (indicating that the State
believed a contract still existed), petitioners promptly sought
in December 1990—again under statutory terms incorpo-
rated into the contracts—to have the Secretary of Commerce
override the objections, 43 U. S. C. § 1340(c)(1), to make it
possible for the exploration permits to issue. In a response
explainable solely on the basis that the Government still be-
lieved itself to be performing contractually obligatory terms,
the Secretary of Commerce undertook to evaluate petition-
ers’ request that the Secretary override the State’s CZMA
objections. This administrative review process has, I do not
doubt, required a substantial expenditure of the time and
resources of the Departments of Commerce and Interior,
along with the 12 other administrative agencies whose com-
ments the Secretary of Commerce solicited in evaluating the
request to override and in issuing, on September 2, 1994,
5 See App. 170–171 (letter from Leslie Burton, Senior Counsel for Mobil
Oil, to Bruce Weetman, Regional Director, MMS, Sept. 23, 1992); see also
App. to Brief for United States 1a (letter from Toni Hennike, Counsel,
Mobil Oil, to Ralph Melancon, Regional Supervisor, MMS, Feb. 21, 1995)
(requesting reinstatement of lease suspensions).

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Stevens, J., dissenting
a lengthy “Decision and Findings” in which he declined to
do so.
And petitioners were not finished with the leases yet.
After petitioners received this adverse judgment from Com-
merce, they sought the additional lease suspensions de-
scribed, see App. to Brief for United States 1a (letter from
Toni Hennike, Counsel, Mobil Oil, to Ralph Melancon, Re-
gional Supervisor, MMS, Feb. 21, 1995), insisting that “the
time period to seek judicial review of the Secretary’s deci-
sions had not expired when the MMS terminated the [pre-
existing] suspensions,” and that “[s]ince the Secretary’s deci-
sion is being challenged, it is not a final decision and will not
be until it is upheld by a final nonappealable judgment issued
from a court with competent jurisdiction,” id., at 2a. In-
deed, petitioners have pending in the United States District
Court for the District of Columbia at this very moment their
appeal from the Secretary of Commerce’s denial of petition-
ers’ override request of North Carolina’s CZMA objections.
Mobil Oil Exploration & Producing Southeast, Inc. v.
Daley, No. 95–93 SSH (filed Mar. 8, 2000).
Absent, then, any repudiation, we are left with the possi-
bility that the nature of the Government’s breach was so “es-
sential” or “total” in the scope of the parties’ contractual
relationship as to justify the remedy of restitution. As
above, I would reject the suggestion that the OBPA some-
how acted ex proprio vigore to render a total breach of the
parties’ contracts. See ante, at 621 (“OBPA changed the
contract-referenced procedures in several other ways as
well”); Brief for Petitioner in No. 99–253, at 21. The OBPA
was not passed as an amendment to statutes that the leases
by their terms incorporated, nor did the OBPA state that its
terms were to be considered incorporated into then-existing
leases; it was, rather, an action external to the contract, ca-
pable of affecting the parties’ actions but not of itself chang-
ing the contract terms. The OBPA did, of course, impose a
legal duty upon the Secretary of the Interior to take actions

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Stevens, J., dissenting
(and to refrain from taking actions) inconsistent with the
Government’s existing legal obligations to the lessees. Had
the Secretary chosen, despite the OBPA, to issue the re-
quired approval, he presumably could have been haled into
court and compelled to rescind the approval in compliance
with the OBPA requirement.6 But that this possibility re-
mained after the passage of the OBPA reinforces the conclu-
sion that it was not until the Secretary actually took action
inconsistent with his contractual obligations that the Gov-
ernment came into breach.
In rejecting the Government’s argument that the breach
was insufficiently material, the Court’s reliance on the dan-
ger of rendering the parties’ bargain illusory, see ante, at
620, is simply misplaced. I do not contest that the Govern-
ment was contractually obliged to give petitioners’ POE
prompt consideration and to approve the POE if, after that
consideration, it satisfied existing OCSLA demands; nor
would I suggest that petitioners did not receive as part of
their bargain a promise that the Government would comply
with the procedural mechanisms established at the time of
contracting. But that is all quite beside the point; the ques-
tion is not whether this approval requirement was part of
the bargain but whether it was so “essential” to the bargain
in the scope of this continuing contract as to constitute a
total breach.
6 The result of such a proceeding may well have been the issuance of a
judicial decree enjoining the Secretary’s actions. Ironically, the Secre-
tary would then have been authorized under the regulatory provisions
expressly incorporated into the parties’ contracts to suspend the leases.
30 CFR § 250.10(b)(7) (1990) (“The Regional Supervisor may also direct . . .
suspension of any operation or activity, including production, because . . .
(7) [t]he suspension is necessary to comply with judicial decrees prohibit-
ing production or any other operation or activity, or the permitting of
those activities . . .”). Indeed, this was the very provision the DOI
relied on in explaining why it was suspending petitioners’ leases. App.
129–130.

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Stevens, J., dissenting
Whether the breach was sufficiently “substantial” or mate-
rial to justify restitution depends on what impact, if any, the
breach had at the time the breach occurred on the successful
completion of the project. See E. Farnsworth, Contracts
§ 8.16 (3d ed. 1999) (“The time for determining materiality is
the time of the breach and not the time that the contract was
made. . . . Most significant is the extent to which the breach
will deprive the injured party of the benefit that it justifiably
expected”). In this action the answer must be close to none.
Sixty days after the Government entered into breach—from
September 19, 1990, to November 19, 1990—the State of
North Carolina filed its formal objection to CZMA certifica-
tion with the United States. App. 141–148. As the OCSLA
makes clear, “The Secretary shall not grant any license or
permit for any activity described in detail in an exploration
plan and affecting any land use or water use in the coastal
zone of a State with a coastal zone management program . . .
unless the State concurs or is conclusively presumed to con-
cur with the consistency certification accompanying such
plan . . . , or the Secretary of Commerce makes the finding
[overriding the State’s objection].” 43 U. S. C. § 1340(c)(2)
(emphasis added); see also § 1351(d). While this objection
remained in effect, the project could not go forward unless
the objection was set aside by the Secretary of Commerce.
Thus, the Government’s breach effectively delayed matters
during the period between September 19, 1990, and Novem-
ber 19, 1990. Thereafter, implementation was contractually
precluded by North Carolina.
This fact does not, of course, relieve the Government of
liability for breach. It does, however, make it inappropriate
to conclude that the Government’s pre-November 19 actions
in breach were sufficiently “material” to the successful com-
pletion of the parties’ project to justify giving petitioners all
of their money back. At the time of the Government’s
breach, petitioners had no reasonable expectation under the
lease contract terms that the venture would come to fruition

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Stevens, J., dissenting
in the near future. Petitioners had known since 1988 that
the State of North Carolina had substantial concerns about
petitioners’ proposed exploration; North Carolina had al-
ready officially objected to petitioners’ NPDES submission—
a required step itself dependent on the State’s CZMA
approval. App. 106–111. At the same time, the Federal
Government’s own substantial investments of time and
resources, as well as its extensive good-faith efforts both
before and after the OBPA was passed to preserve the ar-
rangement, gave petitioners the reasonable expectation that
the Government would continue trying to make the contract
work. And indeed, both parties continued to behave con-
sistently with that expectation.
While apparently recognizing that the substantiality of the
Government’s breach is a relevant question, see ante, at 608,
the Court spends almost no time at all concluding that the
breach was substantial enough to award petitioners a $156
million refund, ante, at 620–621. In a single brief paragraph
of explanation, the Court first posits that the Government
“did not announce an . . . approval delay of a few days or
weeks, but of 13 months minimum and likely much longer.”
Ante, at 621. The Court here is presumably referring to the
Ake letter to Mobil written a few days after the expiration
of the 30-day deadline. But the Government’s “statement”
to this effect could matter only in the context of evaluating
an intended repudiation; because, as I have explained, that
“announcement” cannot be seen as a repudiation of the con-
tract, I do not see how the statement itself exacerbates the
effect of the Government’s breach. What matters in evalu-
ating a breach, of course, is not what the Government said,
but what the Government did. And what the Government
did was, as I have explained, continue to perform in every
other way possible—evaluating the August 20 POE; sus-
pending the leases, including suspensions in response to peti-
tioners’ express requests (suspensions that continue in effect

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Stevens, J., dissenting
to this day); and responding over years to petitioners’ appeal
from the State’s CZMA objection.7
The Court also asserts, without support, that “[w]hether
an applicant approaches Commerce with an Interior Depart-
ment approval already in hand can make a difference (as can
failure to have obtained that earlier approval).” Ibid. Al-
though the Court thereby implies that the Secretary of Com-
merce’s handling of petitioners’ CZMA override request was
somehow tied to the DOI’s failure to issue the required ap-
proval, there is record evidence that petitioners’ CZMA ap-
peals were not “suspended, impeded, or otherwise delayed
by enactment or implementation of the . . . OBPA . . . .”
App. 187 (declaration of Margo E. Jackson, Conoco Inc. v.
United States, No. 92–331–C (Fed. Cl., Apr. 6, 1994) (Com-
merce Department supervisor in charge of handling Mobil’s
appeals)). Whether or not the Secretary’s decision was in-
7 The Court’s cursory efforts to discount this evidence of continued per-
formance fall far short. In light of the Weetman letter’s detailed descrip-
tion of the Government’s efforts to evaluate the POE as submitted, the
Court’s assertion that “in respect to the exploration plan, the companies
received nothing,” ante, at 622, cannot be correct. The Court itself insists
on making an indispensable part of the parties’ contract mutual promises
to follow certain procedures, ante, at 620; if that is the case, we must
credit the Government’s efforts to follow those procedures as performance
of that promise, and that performance was “received” by petitioners.
The Court also suggests that the Government was obligated to extend
the lease suspensions to petitioners under the terms of the parties’ sepa-
rately adopted memorandum of understanding; the Government should
therefore, by the Court’s logic, receive no credit under the lease contracts
for continuing to perform. Ante, at 623. Whether or not the Govern-
ment was separately obligated to extend the suspensions it did (and of
course the memorandum agreement only exists because of and as part of
the parties’ efforts to fulfill the lease contract terms), both the Govern-
ment in extending the initial suspensions, and petitioners, in requesting
additional suspensions, expressly relied upon regulations incorporated into
the OCSLA lease contracts, see supra, at 631–632. The Court must
stretch to avoid crediting the Government’s performance.

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Stevens, J., dissenting
fluenced by OBPA-required findings is, of course, a question
of fact that, despite the Court’s assertion, ante, at 622–623,
none of the lower courts in this action decided. Regardless,
there is certainly no contractual basis for the proposition
that DOI’s approval is a condition precedent or in any re-
spect material to overcoming a state-filed CZMA objection.
That objection, petitioners most certainly knew, was coming
whether or not DOI approved the submitted POE.
In the end, the Court’s central reason for finding the
breach “not technical or insubstantial” is that “lengthy de-
lays matter.” Ante, at 621. I certainly agree with that
statement as a general principle. But in this action, that
principle does not justify petitioners’ request for restitution.
On its face, petitioners’ contention that time was “of the es-
sence” in this bargain is difficult to accept; petitioners them-
selves waited seven years into the renewable 10-year lease
term before even floating the Outer Banks proposal, and
waited another two years after the OBPA was passed before
filing this lawsuit. After then accepting a full 10 years of
the Government’s above-and-beyond-the-call performance,
time is now suddenly of the essence? As with any venture
of this magnitude, this undertaking was rife with possi-
bilities for “lengthy delays,” indeed “inordinate delays en-
countered by the lessee in obtaining required permits or
consents, including administrative or judicial challenges or
appeals,” 30 CFR § 250.10(b)(6) (1990). The OBPA was not,
to be sure, a cause for delay that petitioners may have antici-
pated in signing onto the lease. But the State’s CZMA and
NPDES objections, and the subsequent “inordinate delays”
for appeals, certainly were. The Secretary’s approval was
indeed “a gateway to the companies’ enjoyment of all other
rights,” but the critical word here is “a”; approval was only
one gateway of many that the petitioners knew they had to
get through in order to reap the benefit of the OCSLA leases,
and even that gate was not closed completely, but only “nar-
row[ed],” ante, at 621. Any long-term venture of this com-

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plexity and significance is bound to be a gamble. The fact
that North Carolina was holding all the aces should not give
petitioners the right now to play with an entirely new deck
of cards.
IV
The risk that North Carolina would frustrate performance
of the leases executed in 1981 was foreseeable from the date
the leases were signed. It seems clear to me that the
State’s objections, rather than the enactment of OBPA, is the
primary explanation for petitioners’ decision to take steps to
avoid suffering the consequences of the bargain they made.
As a result of the Court’s action today, petitioners will enjoy
a windfall reprieve that Congress foolishly provided them in
its decision to pass legislation that, while validly responding
to a political constituency that opposed the development of
the Outer Banks, caused the Government to breach its own
contract. Viewed in the context of the entire transaction,
petitioners may well be entitled to a modest damages recov-
ery for the two months of delay attributable to the Govern-
ment’s breach. But restitution is not a default remedy; it is
available only when a court deems it, in all of the circum-
stances, just. A breach that itself caused at most a delay of
two months in a protracted enterprise of this magnitude does
not justify the $156 million draconian remedy that the
Court delivers.
Accordingly, I respectfully dissent.