Total Fina S.A., Total Minatome Corporation, Total Exploration Production USA Inc., Fina Oil and Chemical Company, Elf Exploration Inc., Total E&P USA I nc. and their affiliates have agreed to pay the United States $15 million to resolve claims that the companies violated the False Claims Act by knowingly underpaying royalties owed on natural gas produced from federal and Indian leases, the Justice Department announced yesterday.

Congress has authorized federal and Indian lands to be leased for the production of natural gas in exchange for the payment of royalties on the value of the gas that is produced. Each month, companies are required to report and pay to the U.S. Department of the Interior the amount of royalty that is due. This settlement resolves claims by the United States under the False Claims Act that the Total defendants improperly deducted from royalty values the cost of boosting gas up to pipeline pressures, improperly reported processed gas as unprocessed gas to reduce royalty payments, and engaged in a variety of other under-reporting of royalties that had been the subject of a series of outstanding administrative actions.

“ When companies are permitted to remove natural gas and other non-renewable resources from public lands, we must require them to keep their end of the bargain and pay their fair share of royalties,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “Through this case and others like it, we are demonstrating our commitment to protect natural resources and support important federal programs from which we all benefit.”

Total, the fifth largest publicly-traded integrated international oil and gas company in the world, has operations in more than 130 countries, and engages in all aspects of the petroleum industry, including oil and gas exploration, development and production, refining, marketing, trading and shipping. The Total and Fina corporate families merged in 1999, and became known as Total Fina. In 2000, the company acquired Elf Aquitaine.

“The Department of the Interior and ONRR remain committed to ensuring that energy companies accurately report production and pay the required royalties,” said Greg Gould, Interior’s Acting Deputy Assistant Secretary for Natural Resources Revenue. “We will continue to pursue every dollar due to taxpayers, Indian landowners, and the Federal Government from extracting these precious natural resources from Federal and American Indian lands.”

Today’s settlement arises from a lawsuit filed by Harrold Wright under the False Claims Act, and from a series of administrative actions separately initiated and pursued by the Department of the Interior’s Office of Natural Resources Revenue (and its predecessor, the Minerals Management Service). Under the qui tam, or whistleblower, provisions of the False Claims Act, private citizens may file actions on behalf of the United States and share in any recovery. Because Mr. Wright is deceased, his heirs will receive $23,000 plus interest as their share of the settlement. This represents a 25 percent share of the $92,000 in the settlement that is allocated to claims pursued by Mr. Wright. The United States will intervene against the Total defendants for the purpose of completing this settlement. The Department of Justice previously intervened against several other defendants in the Wright lawsuit. Settlements in the case to date exceed $280 million.

The investigation and settlement of this matter was jointly handled by the Justice Department’s Civil Division, the U.S. Attorney for the Eastern District of Texas, and the Department of the Interior’s Office of Natural Resource Revenue, Office of the Solicitor and Office of the Inspector General.

The case is U.S. ex rel. Wright v. Chevron USA, Inc. et al., 5:03-CV-264 (E.D. Tex.). The allegations contained in the complaint against the Total companies are merely accusations and do not constitute a determination of liability.

Source: Department of Justice