In this litigation filed under the whistleblower provisions of the False Claims Act, the Relator alleged that numerous producers systematically underpaid royalties due for natural gas produced on federal and Indian lands, both onshore and offshore since the 1980s. Each month, companies were required to report to the U.S. Department of the Interior the value of the natural gas produced on those lands and to pay a percentage of the reported value as royalties.
Econ One was retained by counsel for the Relator to quantify the alleged underpayments. Jeffrey Leitzinger submitted two expert reports and provided deposition testimony relating to that quantification work. Claims against the defendants included: (1) improper deduction from royalty values of the cost of boosting gas up to pipeline pressures; (2) use of affiliate transactions to falsely reduce the reported value of gas taken from federal and Indian leases; and (3) improper reporting of processed gas as unprocessed gas to reduce royalty payments. The case resulted in settlements of $275 million for nine defendants, including Burlington Resources for $105.3 million, Shell for $56.0 million, Chevron for $45.5 million, ExxonMobil for $32.2 million, BP Amoco for $20.5 million, Marathon for $4.7 million, and Dominion for $2.2 million.