Qui Tam in the Mines

As far as we know, they aren’t sending kids into the mines like they used to do in the heady days of 1908, when you had to start working basically as soon as you could walk. That doesn’t mean that mining is any less dangerous today, however. Every year, there seems to be some type of mishap, usually involving fire, poisonous gas, being trapped hundreds of feet underground, or some combination thereof. What gets less attention, however, are the qui tam cases related to coal mining and other types of resource extraction.

Although it doesn’t necessarily tug at the heartstrings the way stories of trapped miners do,  fraud by by companies extracting coal and other natural resources from federal and Indian lands costs taxpayers millions of dollars in lost royalties. The typical situation is one in which a resource extractor removes more of a resource than it discloses to the government by falsifying records.

According to testimony given by Acting Inspector General for the Department of the Interior Mary L. Kendall before Congress regarding bill H.R. 3534, nearly $700 million has been recovered from 25 companies, much of it through qui tam cases. H.R. 3534, the Consolidated Land, Energy, and Aquatic Resources Act, is a bill that would “provide greater efficiencies, transparency, returns, and accountability in the administration of Federal mineral and energy resources by consolidating administration of various Federal energy minerals management and leasing programs into one entity to be known as the Office of Federal Energy and Minerals Leasing of the Department of the Interior.”

A perfect example of a False Claims Act violation by a resource extractor met its apex in December 2009, when Chevron agreed to pay $45 million to the United States to resolve claims that it knowingly underpaid royalties for natural gas extracted from federal and Indian land. As one of the assistant attorneys general involved in the case observed, royalties are an important source of income for Native Americans, the federal government, and various states. When companies underpay royalties, they usually end up cheating everyone to some degree. It’s important for whistleblowers to help ensure that resource extractors don’t take advantage of the complex nature of their business. As the demand increases for certain natural resources, such as natural gas, there are sure to be more opportunities for fraud.

If you have evidence of a company violating the law, contact one of our False Claims Act lawyers for an evaluation of your evidence and assistance reporting it to the federal government.