(CN) – Chevron, Texaco, Unocal and their affiliates will pay more than $45.5 million to resolve allegations of False Claims Act violations. Federal prosecutors say the companies knowingly underpaid royalties for natural gas from federal and Indian leases from March 1988 to November 2008.
The Department of Justice claims that the companies improperly deducted from royalties the cost of boosting gas up to pipeline pressures, used affiliate transactions to falsely reduce the value of gas taken from the leases, and improperly reported processed gas as unprocessed gas.
Each month companies are required to report to the Minerals Management Service of the U.S. Department of the Interior the value of the natural gas produced from their federal and Indian leases and to pay a percentage of the reported value as royalties.
“Most of the $45 million settlement will be disbursed to appropriate federal, state and American Indian accounts that were affected by Chevron companies’ underpayment of natural gas royalties and improper deductions,” Interior Secretary Ken Salazar said in a statement. “This administration is changing the way Interior does business and settlements, such as this one, demonstrate our determination to assure the American public receives fair market value for the resources we manage in their name.”
The settlement resolves a complaint in Texarkana Federal Court filed by Harrold Wright under whistleblower provisions of the False Claims Act, which allow private citizens to file actions on behalf of the United States and share in recovery.
Because Wright is deceased, his heirs will receive more than $12.3 million, plus interest. Wright alleged that several companies systematically underpaid royalties for natural gas from federal and Indian lands.
The Department of Justice has previously settled with Burlington Resources for $105.3 million, Shell Oil for $56 million and Dominion Exploration and Production Company for $2 million.