US, Unocal settle final case of alleged royalty underpayments

The US Justice Department Monday said Union Oil Co. of California has agreed to pay $21.5 million to settle allegations the company underpaid oil royalties for an 18 year period that began in 1980. Unocal is the last of 16 companies to settle allegations first raised in a private lawsuit by whistleblowers.

Dec. 4, 2001

2 min read

By the OGJ Online Staff

WASHINGTON, DC, Dec. 4 --The US Justice Department Monday said Union Oil Co. of California has agreed to pay $21.5 million to settle allegations the company underpaid oil royalties for an 18 year period that began in 1980.

Unocal is the last of 16 companies to settle allegations first raised in a private lawsuit by whistleblowers. Justice later intervened, and received a total of $440 million in back payments.

None of the companies admited wrongdoing in the settlements.

In the latest and final case, Unocal will pay $20.8 million in cash and will cancel claims for refunds of overpayments of $742,518 due from the US Minerals Management Service.

In 1997, J. Benjamin Johnson Jr. and John Martinek filed a complaint in the US District Court in Lufkin, Tex., against Unocal on behalf of the US under whistleblower provisions of the False Claims Act. The two will share in the proceeds of the settlement, the Justice Department said.

The FCA allows private citizens or whistleblowers with special knowledge of wrongdoing to litigate claims of fraud on behalf of the government. Though filed by private citizens, each suit is investigated by the Justice Department to assess whether the government will join or "intervene."

Other companies who have already settled with Justice include: the former Mobil Corp., $45 million; Oxy USA Inc., $7.3 million; Chevron Corp., $95 million; Conoco Inc., $26 million; BP PLC [formerly Amoco], $32 million; Texaco Inc., $43 million; Pennzoil Co., $11.9 million; Union Pacific Resources Group, $2.7 million; Sun Oil Co., $200,000; Kerr-McGee Corp., $13 million; Exxon Corp., $7 million; Royal Dutch/Shell Group, $110 million; Burlington Resources Inc. $8.5 million; USX-Marathon Group, $7.7 million; and Phillips Petroleum Co., $8 million.