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U. S. SETTLES WITH UNION PACIFIC RESOURCES

WASHINGTON, D.C. - The Justice Department today announced that Union Pacific Resources Company has agreed to pay $2.7 million to resolve claims that it underpaid royalties due for oil produced on Federal and Indian leases from January 1, 1988, to December 31, 1998.

The settlement resolves allegations that Union Pacific systematically under reported the value of oil it produced on Federal and Indian leases and, consequently, paid less royalties than it owed to the United States.

Federal leases are administered by the Minerals Management Service of the U.S. Department of Interior. Each month, oil companies are required to report the amount of oil produced and the value of the oil produced on Federal and Indian leases. The companies pay royalties based upon the value of the oil they report.

The Department previously has reached settlement agreements to resolve similar allegations with several other oil companies including Mobil Oil, Oxy USA, Chevron, BP Amoco, Conoco, and Pennzoil.

The investigation and settlement were jointly handled by the U.S. Attorney for the Eastern District of Texas and the Civil Division of the Department of Justice, with the assistance of the Department of the Interior's Office of Inspector General and the Minerals Management Service.

Two relators who had filed a complaint in the U.S. District Court in Lufkin, Texas, against Union Pacific on behalf of the United States under the qui tam provisions of the False Claims Act will share in the proceeds of the settlement.

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