Department of Justice Seal



FRIDAY, MARCH 31, 2000

(202) 514-2007


TDD (202) 514-1888



WASHINGTON, D.C. -- The Department of Justice announced today that it has intervened in several lawsuits against Exxon-Mobil, Shell Oil Company and Burlington Resources Inc. The three companies are accused of knowingly undervaluing gas extracted from public and Indian lands to reduce royalties owed the United States and the Indian nations under federal mineral leases.

Since 1998, the Department of Justice has intervened against seven oil companies for knowingly undervaluing oil extracted from public and Indian lands. To date, the Department of Justice has recovered in excess of $170 million in its oil royalty suits.

"This intervention today by the Department of Justice in these gas suits demonstrates the government's determination to recover monies owed to the United States for the sale of valuable assets from public lands," said David W. Ogden, Acting Assistant Attorney General of the Department of Justice's Civil Division. The three cases are pending in U.S. District Court for the Eastern District of Texas in Lufkin, Texas.

Gas royalty payments on federal production are governed by the Federal Oil and Gas Royalty Management Act of 1982. Mineral lease agreements between the Department of the Interior and private oil and gas companies grant the companies the right to extract gas from federal and Indian lands in exchange for paying royalties. The collection of oil and gas royalties from companies leasing those mineral rights are overseen by the Minerals Management Service of the Department of the Interior.

Under the False Claims Act, the United States may recover three times the amount of the unpaid royalties, in addition to civil penalties of $5,000 to $10,000 per violation. Under certain circumstances, the whistle blower is entitled to a portion of the government's recovery.

The allegations in the gas royalty cases have been investigated by the Office of the United States Attorney for the Eastern District of Texas, the Civil Division of the Department of Justice, and the Department of Interior.

The three lawsuits are: U.S. ex rel. Wright et al. v. AGIP et al., CA No. 9:98CV30 (E.D.Tex.); U.S. ex rel. Osterhoudt v. Amoco et al., CA98CV101 (E.D.Tex.); and U.S. ex rel. Murray v. Mobil, CA No. 9:99CV340 (E.D.Tex.).