The DOJ announced that oil and natural gas company Hilcorp San Juan L.P. has agreed to pay $34.6 million to resolve allegations of violating the False Claim Act (FCA).

According to the government, Hilcorp underpaid royalties to the Office of Natural Resources Revenue (ONRR) from August 2017 through December 2018. Congress allows Hilcorp to lease federal land in the San Juan Basin in exchange for royalty payments based on the value of the oil and gas produced. The Government contends that Hilcorp only made royalty payments based on estimated volumes and prices. Hilcorp neither indicated that their payments were based on estimates nor made subsequent payments based on the actual volumes and values. Per 30 U.S.C § 172 (h), actual royalties must be paid at the end of the month following the month an estimated payment was made. As such, the government alleges that that Hilcorp knowingly and improperly avoided its obligation to pay the ONRR full royalty payments.

Hilcorp ultimately cooperated with the government’s investigation and assisted in determining losses for royalty underpayments. Hilcorp’s cooperation afforded them credit under the DOJ Justice Manual, Section 4-4.112, Guidelines for Taking Disclosure, Cooperation, and Remediation into Account in False Claims Act Matters. Upon announcement of this settlement, Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division commented that “U.S. taxpayers deserve a fair share of the revenues received by companies that extract natural resources from public lands” and the government “[…]remains committed to ensuring that energy companies accurately report and pay to the United States the amount of royalties that are owed for their use of these resources.”

The attorneys at Chilivis Grubman represent clients of all types and sizes in connection with False Claims Act investigations and litigation. If you need assistance with such a matter, please contact us today.