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Exxon Mobil to pay $32.3 million in Qui Tam Case



ExxonMobil has agreed to pay $32.2 million to the US government in a settlement to resolve claims that it knowingly underpaid royalties owed on natural gas produced from federal and Native American leases. The alleged violations of the False Claims Act dates back to 1999—Exxon Mobil was found underreporting the value of natural gas from March 1 1988 to November 30 1999.

Qui Tam Relator Harold Wright filed the lawsuit against ExxonMobil on behalf of the US.  Since Mr. Wright is deceased his heirs will receive a $975,000 share of his settlement. The Mobil companies were merged into and became subsidiaries of ExxonMobil in November of 1999.

“We reject any accusation that the company deliberately under-reported the value of natural gas,’’ said David Eglinton, Exxon’s media adviser. “The settlement agreement in this case, signed by the government, expressly denies any knowing under-reporting with respect to royalty.”

The US Justice Department recently settled similar cases with Burlington Resources for $105.3m, Shell Oil for $56m, Chevron, Texaco and Unocal for $45.5m and Dominion Exploration and Production for $2m.

”The message to those who seek to evade their mineral royalty obligations is this: we will aggressively pursue you,” said Tony West, assistant attorney-general for the civil division of the Department of Justice.

”We at the justice department are committed to protecting the public trust by ensuring that those who remove valuable minerals, some of which are non-renewable, from American Indian or public lands pay their full, fair, negotiated share for those assets,’’ he said.

The Minerals Management Service of the US Department of the Interior oversees the collection of royalties and requires companies to report to MMS the value of the natural gas produce from their leases and pay a percentage of the value of those royalties.

Mobil companies allegedly falsely reduce the reported value of gas from these leases in order to claim excessive deductions for the cost of transporting gas and therefore understate the value they reported each month for their natural gas production.

”This settlement closes another important portion of long-standing litigation that MMS participated in to ensure that taxpayers receive their fair share of royalty revenues from energy production that occurs on federal lands,” said Liz Birnbaum, MMS director. ”The revenues collected from the settlement will be disbursed to appropriate federal, state and American Indian accounts that were affected by the underpayment of royalties.”




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