Energy Companies to Pay $6.9 Million to Resolve False Claims Act Allegations

On August 20, 2010, the U.S. Department of Justice announced that two oil companies, Dominion Oklahoma Texas Exploration & Production, Inc. and Marathon Oil Company, will pay the United States $2,219,974.98 and $4,697,476.57, respectively, in an effort to resolve claims that the companies each violated the False Claims Act.  These allegations stem from complaints that both energy corporations knowingly underpaid royalties owed on natural gas leases from federal and Indian land.  More specifically, the complaint claimed that Dominion and Marathon improperly deducted from the royalties the values of the cost of boosting gas up to pipeline pressures and that Dominion improperly reported processed gas as unprocessed gas to reduce royalty payments.

The Dominion and Marathon settlements arise from the lawsuit filed by Harold Wright under the False Claims Act, which allows private citizens to file suits on behalf of the United States and share in any recovery.  Mr. Wright is now deceased and, as a result, his heirs will receive $1.822 million from these settlements.  Other settlements to date in this case include agreements with Burlington Resources for $105.3 million, Shell for $56 million, Chevron, Texaco, and Unocal for $45.5 million, and Mobil for $32.2 million.

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