BP Amoco to pay $32 million to resolve oil royalties case

Posted: Tuesday, April 11, 2000

WASHINGTON (AP) -- BP Amoco has agreed to pay $32 million to settle court and administrative claims that it underpaid royalties on oil it took from leased federal and Indian land since 1988, the Justice Department said Tuesday.

The settlement brings to more than $205 million the government has recovered from five oil companies as a result of a private whistleblower lawsuit originally filed under the False Claims Act. More cases are pending.

''We will continue to press forward with the prosecution of this False Claims Act lawsuit against other companies that have underpaid their royalty obligations,'' said Mike Bradford, U.S. attorney for the eastern district of Texas.

He commended the companies which have already settled for avoiding further litigation and noted that the BP Amoco settlement ''brings us one step closer to restoring to the taxpayers and Indian tribes of the United States the money due for production of oil on public lands.''

The BP Amoco settlement also was signed by several Indian tribes.

Two private whistleblowers, J. Benjamin Johnson Jr. and John Martinek, had filed the original complaint in U.S. District Court in Lufkin, Texas, against Amoco Corp. and British Petroleum Co., which merged in 1998 to form BP Amoco. Under the False Claims Act, they will share more than $5.4 million of the BP Amoco settlement.

Last month, the Justice Department joined lawsuits accusing Exxon-Mobil, Shell Oil Co., and Burlington Resources Inc., of intentionally underpaying royalties on oil and gas they took from leased federal and Indian land.

Previously the government reached settlements with Mobil Oil, for $45 million; Oxy USA, Inc., for $7.3 million; Chevron, for $95 million; and Conoco, for $26 million.

Private oil and gas companies obtain mineral leases from the Interior Department giving them the right to extract oil and gas from federal and Indian land in return for paying royalties. The False Claims Act allows the government to collect three times the account of unpaid royalties plus $5,000 to $10,000 for each underpayment. The act allows private whistleblowers to sue over these underpayments and to receive a portion, based on the value of their legal work, of whatever the government recovers.

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