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Mobil Gas Agrees To Pay $32.2 Million To Settle Lawsuit Alleging It Underpaid Royalties On Federal And American Indian Land Leases

On April 5, 2010, the U.S. Department of Justice announced that it has entered into a settlement agreement with Mobil Natural Gas Inc. and its affiliated entities to resolve allegations that the companies violated the False Claims Act by underpaying royalties owed pursuant to Federal and American Indian land leases.  Gas companies are required to report the value of natural gas produced from federal and American Indian lands on a monthly basis and pay a percentage of that value as royalties to the federal government.  According to the qui tam lawsuit filed on behalf of the Government by a whistleblower, defendant Mobil engaged in a variety of practices, such as claiming excessive deductions for the cost of transporting the gas, in order to under-report the value of the gas produced each month, thereby decreasing the amount of royalties owed to the Government.  Mobil has agreed to pay the Government $32.2 million to settle the lawsuit, $975,000 of which will be paid to the whistleblower as a reward for exposing Mobil’s fraudulent activity.  Because the whistleblower is deceased, the reward will be passed on to the whistleblower’s heirs.